Confusing core purpose with strategic purpose is driving some CEOs and directors nuts!
Merriam-Webster dictionary defines purpose as the reason why something is done or used: the aim or intention of something.
In mandatory director training, we learn about a club’s core purpose. Your club’s core purpose is described in your constitutional objects; it was often the original reason the club was granted a liquor licence. Your registered club’s core purpose may be retired services league, golf, league or music.
For many clubs, the core purpose remains a central part of the club’s raison d'être and subsequently takes up significant board discussion and decision making. This is where we find the first challenge in Beyond the Blazer: Closing the Gap between Board Leadership Reality and 21st Century Expectations.
The club’s core purpose needs to be considered strategically in line with the club’s ability to continue to raise adequate funds to support the core purpose. While the core purpose is often as the first object in the constitution, it does not give leave for the board to put the company into financial jeopardy in the pursuit of the core purpose.
CEOs and directors have told me challenges arise in similar situations as these:
The core purpose is pursued to the detriment of other business areas, such as little or no investment in revenue-generating facilities and maintenance
Capital expenditure and maintenance decisions relating to the core purpose significantly depletes equity and may put pressure on future earnings through borrowings
The core purpose is intangible (i.e. not a physical asset) and the philosophy behind the core purpose has been ‘lost’ over the years
The core purpose is valued over a comprehensive strategic vision.
A high performance board will balance the core purpose within the overall strategy. As part of strategic planning, to achieve the strategic vision the board and CEO agree on the strategic purpose of their actions, including the strategy of the core purpose. Strategic purpose is defined here as the actions that lead you to your strategic vision.
For example, a bowling club’s core purpose may include ‘promote the game of lawn bowls’. However, the strategic vision of the club would not only be to promote lawn bowls as, in my experience, most clubs don’t make a profit from their bowls operation. To pursue the single vision of promoting lawn bowls would be unwise and possible place the organisation into financial jeopardy!
The strategic vision is beyond the four walls of the clubhouse, beyond the grass of the playing fields and into the community beyond. The strategic vision may be about connecting to other membership groups, such as social members, and the wider community or may be about developing assets like land and buildings to generate diverse incomes. The strategic purposes are the intended actions or decisions that lead the club to the strategic vision.
Sometimes it will be something to do with the core purpose. Other times, it won’t.
Solving the Challenge
To solve this challenge facing many CEOs and boards, the first questions to ask when undertaking any action or decision, are:
What is the strategic purpose of this action or decision?
How is this action or decision helping me/us achieve our strategic vision?
The answer may be:
Fantastic! - The action or decision helps us achieve our strategic vision by… Therefore, the strategic purpose of this action or decision is…
Re-calibrate - The action or decision does not help us achieve our strategic vision… so what is the strategic purpose of this action or decision… why are we doing it… what should we be doing instead?
Get planning - We have not defined our strategic vision… so we may not have a strategic purpose for doing anything.
Core purpose: Also called core function, this is the reason the club exists and is usually found in the club’s constitutional objects.
Strategic vision: A clear, compelling, future-orientated customer-focused and unique statement that creates enthusiasm for remaining strategically agile.
Strategic purpose: An action or decision that directs the club towards it strategic vision.
Time-waster: An action or decision that does not direct the club towards it strategic vision but the club does it anyway!