Purpose in a Digital Organization

Microsoft has found that aligning personal and organizational purposes provides a measurable boost to culture, learning and bottom-line success—even during challenging times. 

February 22, 2024 | Joe Whittinghill, Microsoft

We are in the midst of the Digital Age and we are learning that the experiences of organizations and people will be more challenging, more tumultuous and more ever-changing than desired. Technology now permeates every aspect of our professional and personal lives. We continue to learn about the causes and complexities of consuming vast quantities of information, staying focused, scaling up and moving at necessary speed to be successful or in extreme cases, survive. However, we are also seeing early signs of a compelling future of positive possibilities.

At Microsoft, we have come to believe that purpose is the deeply held belief of why our organization exists. Purpose provides a north star that instills confidence and engagement amongst us. We encourage employees to define and live their own purpose, explore Microsoft’s purpose, and identify convergence and alignment opportunities to increase engagement and their and the company’s impact. This approach has proven valuable as we navigate the complexities of the Digital Age where collaboration tools, social media, increased connectedness and faster speed of communications allows for higher levels of scrutiny of the decisions, actions and positions of organizations.

Purpose in a digital organization provides clarity that instills confidence and engagement. An authentic purpose inspires a collective “we” mindset within employees and organizations. Purpose can empower employees to make decisions and act in alignment with the organization. When given a clear purpose that resonates and is easily recalled, employees feel a strong sense of contribution to something worthwhile, and in doing so are more likely to respect and trust leaders and the organization. That said, statements of purpose must be backed with clear definition, impactful action and modeling from leadership to each member of the organization.

To that end, applying a well-defined and authentic organizational purpose allows employees to see opportunities to bring their own passions, strengths and values to life in the workplace. For us, this alignment has created great impact in employee recruitment, engagement and retention. Purpose provides a strong anchor—a way to create focus and resilience while navigating these challenging and promising times.

This article outlines our journey to create an organizational foundation that emphasizes purpose and culture as Microsoft’s key pillars.

What Is the Purpose of Purpose?

In 2014, Microsoft’s Board of Directors voted unanimously to name Satya Nadella as CEO, only the third CEO in the company’s 40-year history. Nadella knew that in addition to the urgent need for our technology and business strategy to evolve, even more pressing was the need to evolve our culture and redefine our purpose. He also knew creating the case for change was one of the most important actions he needed to take in his first months as CEO. Nadella put it this way in the days leading up to his first shareholder meeting as CEO, “We needed to find out who we were, why we were this way and to consider what the world would look like without us in it. In short, we needed to rediscover our soul.” This set off discussions, research and actions to define what we would come to call our Mission to Culture story.

Shortly after the shareholder meeting, a new Microsoft mission—only the second in our 40 years—was shared: “Empower everyone and every organization on the planet to achieve more.” The new mission has proven to be powerful, enduring and critical in guiding the company. Our mission is our organizational purpose. It answers why we exist and provides the clarity and connectedness employees seek.

However, there are two sides to this relationship. It is imperative that along with the organizational purpose employees develop and live a personal purpose—one’s own sense of passion and beliefs. This combination allows employees to identify and live their own purpose, delve into ours and identify opportunities for convergence and impact. We believe this binding act enables people to find meaning in the work they do.

To reinforce this, in 2018, Kathleen Hogan, Microsoft’s Chief Human Resources Officer, developed the 5Ps of employee fulfillment—a theory of human resources management inspired by Maslow’s hierarchy of needs (see Figure 1). The theory maps the pursuit of employee fulfillment as a pyramid, with more basic needs such as pay and perks at the bottom and self-actualization—the desire to fulfill one’s self through work—at the top. The pyramid is designed to address the spectrum between the basic needs of an organization’s employees and higher self-actualization needs around the people you work with, the pride you have in your work and organization, and the sense of purpose you achieve.

David Rock, CEO of the NeuroLeadership Institute, shared his perspectives with us recently as we were discussing the purpose of purpose.

Work in a technology firm can be bewildering. Writing code to make a button raise a certain way at a specific moment when scrolled over a unique way can feel like focusing on a tiny sliver of the universe, where actions out of context have little meaning.

A significant body of research shows that when we know WHY we are doing a task, we have greater motivation to act on that task, as well as greater flexibility. Knowing that this button helps people call for help in a ride-share emergency, gives you reason to write the code, and tells you to probably make the button bigger versus smaller if you unexpectedly have to make that judgment call. Knowing how your work makes a difference, how it helps others, or the big picture ‘why’ of a task activates powerful reward networks that are attuned to pro-social activities. This is the story of the janitor at NASA in the 1960s who feels he is helping man get to the moon, not just push a broom around.

In a similar way, knowing the purpose not just of a task, but our job, or a business unit, or a whole organization, helps us stay motivated and flexible. For example, a purpose like Microsoft used to have, ‘a computer in every home’, created an overarching schema that allowed everything and everyone to fit together. An organizing principle like this creates links, or coherence, between goals, actions, people, places and problems. Research shows that tasks that involve this kind of connection involve the medial prefrontal cortex, a network involved in how information all fits together. In studies involving memory, activating this network means creating stronger, longer last memories. In this way, purpose brings intentions, actions, emotions and our social world into one overarching plan, helping us navigate with greater intention and flexibility.1

Importance of Purpose Goes Beyond Microsoft

Through industry research we know that purpose is important, and that the growing employee expectation is that their organization has a clearly defined purpose. This is no small challenge for organizations that have historically focused mainly on design, production, delivery and profit, with less focus on how the work makes a difference.

In a recent McKinsey survey of U.S. workers, 82 percent of more than 1,000 respondents affirmed the importance of corporate purpose, but only 42 percent reported that their organization’s stated purpose had much effect (see Figure 2).²

The 2018 Global Talent Trends study by Mercer identified “working with a purpose” as one of the main trends shaping the workforce.³ The report says “employees crave meaningful work: 75 percent of thriving employees—those who are fulfilled personally and professionally—say that they work for a company with a strong sense of purpose (almost double those who don’t feel like they are thriving).” And a third survey in 2016 found that 88 percent of millennials believe employers should play a vital role in addressing issues such income, inequality, hunger and the environment.

A healthy dose of skepticism is useful when considering organizational purpose. In her recently released book Uncharted, Margaret Heffernan comments on the importance of avoiding purpose as another passing trend and differentiating purpose from other corporate statements:

It has become fashionable in recent years to talk of the need to adopt a purpose: something akin to a guiding ambition, which defines what an organization does and stands for. The speed with which the word “purpose” has been adopted speaks volumes about just how purposeless much work feels now. When 181 business leaders, representing 30 percent of the U.S. market’s capitalization, signed a statement asserting that the purpose of all companies was to “promote an economy that serves all Americans,” many applauded a broader and longer-term vision for business.4

Will purpose statements turn into another vague management fad? Most are meaningless, lathered on top of old values statements and mission statements without any substantive change in power structures or decision-making. What the debate around corporate purpose most clearly articulates is how far organizations struggle to define or articulate a meaningful role for themselves in the larger world that they inhabit, and on which they depend.

Creating a Purpose Reflected in Our Culture

Nadella spoke about the immense challenge he faced when he became CEO of Microsoft. “I needed to make explicit the core beliefs of our organization. In talking with CEOs of other companies, it became clear to me that some might be taking for granted the legacy of their organizations and what the current purpose of it is. I felt I needed that sense of purpose that has been what Microsoft has been built to be rekindled. I landed on a plan that a sense of purpose and culture are the two pillars that I needed to become much more explicit.”

Nadella went on to say, “Microsoft’s strategy has been to build technology so that others could build more technology, products and services that empower.” This has become the core purpose of the company, to be a platform, tools and solution provider that empowers people and organizations to achieve more. And to do so, we needed a culture that stood for a learning. Therefore, Nadella and the senior leadership team bet our transformation on the notion of growth mindset—to be learn-it-alls, not know-it-alls.

We believe there is a straight-line connection between the mission of the company and the culture we create. It is the same binding we want for personal purpose to the organization’s purpose. If we are achieving our mission, our culture will reflect it. Given that our purpose is to empower, our culture and our actions must reflect that.

Our simple definition of culture is that it is the reflection of what has occurred, what is occurring and what the organization strives to have occur.

In her article “10 Things We’ve Learned About Culture,”⁵ Hogan observed that one of the key lessons in our culture journey was to have a purpose-driven mission. She noted that:

“The majority of employees today want work that gives them meaning and purpose—they want to know they’re making a difference. While your strategy will evolve, your culture and sense of purpose should be eternal, or at least long-lasting. Culture paired with a purpose-driven mission allows your employees to use your company platform to realize their own aspirations and passions.”

The Digital Age, especially now during a global pandemic, has brought uncertainty that manifests differently in organizations, personal life and society. We have spent considerable time studying neuroscience research to bolster our understanding of human behavior, and how in organized structures people react from psychology, sociology and anthropology. Neuroscience shows that uncertainty triggers the activation of the limbic system in the brain that generates fight, flight, freeze and flock responses.¹

A key communication objective has been to help our colleagues to understand what automatic responses to uncertainty are and provide tools to navigate these situations. When “triggered,” we coach our employees to pause, zoom out and make a choice. We also know that the brain views uncertainty as a greater threat than bad news. The simple act of taking a moment, creating space and perspective, and considering what options you have before choosing an action has been incredibly helpful to us. This has also been a key exercise to demonstrate and build awareness around a fixed mindset versus a growth mindset. In turn, these activities create inclusion.

It hasn’t been easy—it is one thing to say a growth mindset is needed. Nadella himself noted, “What is harder is me being comfortable confronting my own fixed mindset every day.” Every employee has had their own journey confronting what applying a growth mindset means and feels like. This reality created another part of our culture journey—clarifying the role of the manager and setting clearer expectations. Through our management excellence framework to model, coach and care, we not only ask managers to demonstrate a growth mindset, but also to help employees to define and understand their purpose and find ways to live that purpose at Microsoft (see Figure 3).

Start with Defining Personal and Organizational Purpose

There are many ways to define your purpose. It does not need to be perfect. It can change, evolve and mature over time. Just a few years ago we would have said, your purpose at work can be different than your life purpose. Today, we believe that if they are complimentary and congruent this intersection is a powerful way to live your life and accomplish your goals.

We have worked with Dr. Michael Gervais for many years to bring the concept of purpose and high-performance mindsets into a corporate environment. Gervais refers to your purpose as your personal philosophy that “serves as a compass to align your thoughts, words and actions. It expresses your basic beliefs and values. Your personal philosophy guides every decision you make, influences the friends you choose, the love you find, the purchases you make, jobs you inhabit, where you live in the world, the way you feel about yourself and the possibilities you hold for yourself.”6

Gervais has helped thousands begin to answer some of the deeper questions in life (see Figure 4): Who am I? What am I about? What is my purpose? He also gives three simple questions that we share with our employees to help them get started defining their purpose including a power question to help get started, “Who are people that you look up to and what do they stand for?” The end result is a brief, yet very personal, purpose statement. When undertaking an exercise like this, Nadella had a simple rule of thumb to consider when defining your purpose, “What is unique that only you can do? What is it you like to do that challenges you and allows you to be a learn-it-all?”

For defining our organization purpose, throughout our culture journey we collected a tremendous amount of input about what is working, what is not, and what would make us better. We have used focused groups, surveys, team discussions and created cabinets to gather input. Equally important was ensuring alignment at the senior leadership team level. The senior leadership team at Microsoft often uses a tool called debate-and-decide, which can be rigorous, lively and at times result in contentious discussions about what choices to make. In the end, an aligned and committed executive leadership team is critical to long-term success. Put another way, we don’t believe the CEO can just declare what the purpose of the organization is. Taking the time to co-create and debate creates clarity, generates energy and will deliver success in achieving the mission of the company.

Harvard Business Review published a study by Thomas W. Malnight, Ivy Buche and Charles Dhanaraj called “Put Purpose at the Core of Your Strategy.” In it they explained how executives can develop a purpose at their organizations through retrospective or prospective action. It also describes the benefits they are quite likely to see once they do: a more unified organization, more-motivated stakeholders, broader impact and more profitable growth.7

Malnight, et al, shared some other important findings to consider:

Companies have long been building purpose into what they do, but usually it’s seen as an add-on—as a way to, say, give back to the community. The high-growth companies in the study, in contrast, had made purpose central to their strategies, using it to redefine playing fields and reshape value propositions.
Leaders need to think hard about how to make purpose central to their strategy. The two best tactics for doing that are to transform the leadership agenda and to disseminate purpose throughout the organization.
By putting purpose at the core of strategy, firms can realize three specific benefits: more unified organizations, more motivated stakeholders and a broader positive impact on society.

Making It Real and Measuring Success

A critical step once your purpose is defined is to make it real and measure success. We use two simple change and measurement models in our culture transformation work at Microsoft. This framework served the critical function of focusing on the importance of using a stepwise approach to instilling understanding of our culture transformation (see Figure 5).

Our change model starts with creating meaning and understanding of the desired future state. Second, activate the shared vision of what we want to achieve and how we expect to get there. And third, learning real-time what is being done and understood in the system, and adjust actions and plans accordingly.

When measuring culture change, it is vital that you continually ask: What is the distance between the organization’s espoused purpose and the daily lived experience of employees, external staff, partners and customers working with you? Our measurement model aligns to awareness, adoption and advocacy as reported by employees.

Using our mission as an example, step one is to ensure each person is aware of our mission—its meaning both to the company and to them personally. Step two is to invite each person to adopt that mission into their day-to-day lives. How are you, personally, empowering people and organizations to achieve more? Step three, as an example, is to ask that each person explain the mission, their understanding of it and how they are making decisions and taking action to achieve it. This advocacy step is based on the belief that in a learning culture, those that can advocate by explaining and coaching others about the topic, exemplify the high form of engagement and achievement we seek.

We are measuring change with data using a whole system approach looking at the following parameters. Figure 6 shows the four-year trend of two questions as an illustration. We collect these responses through Microsoft Daily Pulse and annual focus groups. We provide this data regularly to CEO, CHRO, senior leadership team, and broadly to organization leaders.

While we are pleased with the progress over time, we are intensely focused on continuing the ascent we are on to achieve the culture and lived experience we seek. A key learning we have had is to not focus on the positive satisfaction only. We spend more time now on understanding what is behind the dissatisfaction responses, who those populations are and consult with them on how to improve.

Purpose Is Foundational to the Future of Digital Organizations

At Microsoft, we have observed a straight-line connection between our company’s mission and its culture. Additionally, we have found the straight-line connection between personal purpose and organizational purpose to be increasingly significant. Both become interconnected: employee purpose aligned to the organization’s purpose helps achieves our mission and is reflected in our culture.

As we continue to transform in the Digital Age, and since the future is one of technology being a ubiquitous component of organizational and personal life, we believe striving to achieve our purpose as an organization and as individuals will continue to be a worthy aim. We also do not believe we have cracked the code on how to transform. We share our story only in hope that it may be helpful to others as they create their own. Meanwhile, we continue to challenge ourselves, every day: How can we be better?

Joe Whittinghill is Corporate Vice President, Talent, Learning, and Insights at Microsoft. He can be reached at joewhit@microsoft.com.

References

1 David Rock, email message to author, August 6, 2020.

2 Arne Gast et al., “Purpose: Shifting from why to how,” McKinsey Quarterly, McKinsey & Company, April 22, 2020, https://www.mckinsey.com/business-functions/organization/our-insights/purpose-shifting-from-why-to-how.

3 Kate Bravery et al., “2018 Global Talent Trends Study,” Mercer, May 28, 2018, https://www.mercer.com/our-thinking/career/voice-on-talent/people-first-mercers-2018-global-talent-trends-study.html.

4 Margaret Heffernan, Uncharted: How to Map the Future Together (New York: Avid Reader Press, 2020).

5 https://www.linkedin.com/pulse/10-things-weve-learned-culture-kathleen-hogan/

6 Michael Gervais, “Living in Alignment with your Personal Philosophy,” LinkedIn, February 12, 2018, https://www.linkedin.com/pulse/living-alignment-your-personal-philosophy-michael-gervais.

7 Thomas W. Malnight, Ivy Buche, and Charles Dhanaraj, “Put Purpose at the Core of Your Strategy,” Harvard Business Review, September 1, 2019, https://hbr.org/2019/09/put-purpose-at-the-core-of-your-strategy.

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Purpose in a Digital Organization

What Is the Purpose of Purpose?

Creating a Purpose Reflected in Our Culture

Start with Defining Personal and Organizational Purpose

Making It Real and Measuring Success

Purpose Is Foundational to the Future of Digital Organizations

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