Purpose defines organizations. Some companies may surface and articulate it; for others it is a more silent, unnamed force influencing everything. The pandemic of 2020 has reinvigorated the discussion around purpose. More and more organizations are reflecting not just on their economic objectives, but the overall purpose of their existence. Issues like the need for healthier communities, sustainable and inclusive economic growth, nurturing our planet and future generations, greater choices and control to individuals, resilience to economic and environmental disruptions are very much a part of these reflections.
Today, purpose statements don’t just manifest in taglines but are being baked into operating and business models. Bank of America is helping make financial lives better through the power of every connection. Vitality is no longer just a medical insurer, but also an orchestrator of wellness. Damen Shipyards is repositioning itself as a maritime solutions provider rather than just a shipbuilder. AT&T’s purpose is to create connection – with each other, with what people need to thrive in their everyday lives, and with the stories and experiences that matter. Energy company Total no longer just produces and sells fuel but wants to become a responsible energy major providing energy that is affordable, reliable and clean. Each of these companies has set in motion a transformation program, led by digital technology, to bring that purpose to life.
The first wave of digital saw the boundaries between industries blur as enterprises expanded horizontally looking for value in adjacencies. As this transformation becomes more mature -- accelerated by the pandemic -- the very boundaries of enterprises are blurring as they seek to become more porous, giving and drawing value from ecosystems designed around a purpose.
The Three Horizons to Purpose-led Growth
The digital transformation-led business shifts are likely to play out over three horizons.
Build the Digital Core
The first horizon is about laying the foundation. By building the digital core with cloud as the unifying digital fabric, organizations take the first step towards elastically expanding their boundaries. They also secure resilience, adaptability, and operational efficiencies. Enterprises may enter this phase through any technology such as cloud, IoT, data, agile or AI, but the foundation is strengthened by the combinatorial power of all of these. Some of the questions enterprises try to address here are: Do we have the right collaboration platforms for our workforce, does my enterprise have cloud enablement, are my physical assets connected and data-driven? How resilient and agile is my application environment, are systems and infrastructure accessible, how secure are they?
Innovate Business Models
The strong digital core and the capabilities it generates pave the way for the next horizon – transformation at a business process and business model level. Organizations can combine the power of digital technologies to create connected and personalized customer experiences, which in turn sets the stage for business model innovations. This stage is significantly driven by innovation and integration of best practices and learnings across industries into the operating model. For instance, customer experience is a space that the retail industry has perfected and significantly invested in but is now being adopted by other industries such as banking, manufacturing and utilities. Similarly, healthcare and other heavily regulated industries could learn from the best practices in financial services.
Transform and Grow around Purpose-led Ecosystems
The third horizon is a higher-order transformation and more challenging. It is about purpose-led changes to industry structures by adopting ecosystems as an operating model. Sustainable businesses are those that are shifting from delivering point-products or point-solutions to meeting holistic purposes for their end-consumers. For this, they are open to collaborating with competitors and partners across industries, government, academia, startups and others, often through platform play. Platforms not only digitize information across the chain and remove intermediaries, but also bring transparency and catalyze cross-domain innovation.
As organizations progress along this continuum towards the third horizon, they unlock exponential value for not just their own businesses, but also for those in their ecosystem. Perpetual value creation leveraging collective knowledge and self-funding transformation characterizes this phase.
Disruptions make us redraw the assumptions in our business plans and the future. And the big lesson from the pandemic in 2020 is that in an increasingly borderless world, it is purpose that is a unifying force. Leaders must draw up a roadmap to a purpose-led growth over the long term to unlock continuous business value.