Does Purpose Scale?

My new favorite business book of the year is Purpose: The Starting Point of Great Companies by Nikos Mourkogiannis. It builds upon many of the ideas of Jim Collin’s Built to Last, with a greater strategic focus. Mourkogiannis shows that while Purpose has an abstract value as a company’s “moral DNA,” it has real applications that are fundamental to success. I will write more about this book here, or on the 8000CEOREAD business book blog.

But for now I must share a passage that ties into my last post on how scale ultimately subverts the animating idea of even the best companies. Mourkogiannis examines the key question at the heart of both Burlingham and Fishman’s books.

“Was Sam Walton concerned that the company’s size and its growth dynamic might weaken its Purpose? Yes. He even speculated in his autobiography that the customer might be better served by five $20 billion companies than one $100 billion company. He went on to write, ‘What’s really worried me over the years is…that we might someday fail to take care of our customers, or that our managers might fail to take care of and motivate our associates. I also was worried that we might lose the team concept or fail to keep the family concept viable…as we grow.’

“The Wal-Mart in recent headlines—the giant box that swallows everything in its postal code—would be beyond Walton’s imagining. He was not a visionary. He had a single gift, and it worked for him to the end of his life. There was, as a result, no need for him to doubt himself. What he did for the customer—that was God’s work.

“The scores of altruistic companies starting out today will face similar challenges to those Wal-Mart faced in the 1970s. They will need to be ruthless on behalf of their altruistic Purposes. (Sam Walton succeeded brilliantly at that.) And then, when the shadow side, the inevitable consequences of their Purpose, becomes clear—for every altruistic endeavor wreaks some toll on someone, whether intentionally or not—they will need to reframe their action to keep their altruism intact. That’s the far more difficult challenge, and it’s not clear yet whether even Wal-Mart, in the absence of their founder’s presence, will be able to rise to the occasion.”