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On this week's episode of Inside Outside Innovation, we sit down with Paul Skinner, author of the new book, the Purpose Upgrade. Paul and I talk about how companies can use purpose to find better problems to solve, build better solutions, and achieve better outcomes. Let's get started.
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Interview Transcript with Paul Skinner, Author of the Purpose Upgrade
Brian Ardinger: Welcome to another episode of Inside Outside Innovation. I'm your host, Brian Ardinger, and as always, we have another amazing guest. Today we are talking to Paul Skinner. He's the founder of Agency of the Future, and author of the new book the Purpose Upgrade: Change your Business to Save the World. Change the World, Save your Business. Welcome, Paul.
Paul Skinner: Thank you, Brian. It's a fantastic pleasure to make it onto your show for a second time. In some ways, even better than the first time because now I have some sense of what I have to look forward to.
Brian Ardinger: Well, yes. Welcome back to the show. One of the reasons we wanted to have you back on is you've written another book. First time we spoke a couple years ago, your first book had just come out called The Collaborative Advantage.
It was quite an interesting topic and obviously you've expanded on it. One of the things I want to ask, I've just published my first book, Accelerated and I can't imagine writing a second book. So, talk to me about that process of why did you feel a second book was important and give us a little bit of background into that.
Paul Skinner: Thank you for that. And yeah, I, I certainly agree. There's so much work in writing a book that I don't think you really want to set about it until it becomes something that impinges on you so much that you can't not write it. And congratulations on your book. And my prediction is that in couple of years or so, you'll start to feel the urge.
And so, I guess in my case, the second book has in some ways grown out of the legacy of the first book. So, we talked about Collaborative Advantage. I think it was episode 149, so about halfway up to where you are today. And I remember at the time arguing that many of the problems we faced in business were typically not problems we could solve on our own.
Therefore, we needed to forge shared purpose with others. And I proposed collaborative advantage as a somewhat audacious fundamental alternative to the conventional goal of strategy of creating competitive advantage. Now the idea there of course, was that in competitive advantage, that you line up your resources to create a superior offering that you deliver to your stakeholders who are the seen as the passive recipients of that value.
But I felt that that underestimated the value creation process and the role that all our stakeholders actively play in it. You know, people are not just consumers. You know, if we met in a Starbucks and had a chat with an economist and said, who was creating the most value around us? He might say the barista, the franchisee, the brand owner, the landlord. But he probably wouldn't say us, the customers.
But actually, if I met you in Starbucks, the real attraction would be the conversation with you and the warm brown liquid would be relatively incidental. Similarly, you know, investors are not just walking checkbooks, they're people who commit to the future and can help us live up to it. You know, partners don't just have to be suppliers delivering to a contract but can define that future with us.
Communities are not just markets. They're the thing that make it all worthwhile. And our shared home isn't just an asset to be exploited but is the thing that makes life and work possible. Now, if you see stakeholders as the active creators of change and the business there to empower that rather than just sort of siphoning off value, then that means you can raise your ambition.
And I'd say that's a good job because if we look back to the kinds of problems we talked about on the last episode of the show that we did together, then you could say those were the good old problems, really. I mean, since then we've had the biggest global health emergency of our lifetimes, the biggest interruption to life and work as usual.
We've got serious war in Europe since February of 2022. The cost-of-living crisis, energy crisis, food crisis. And so, if shared problems gave rise to the need for collaborative advantage, I believe that bigger problems gives rise to the need for a fundamental purpose upgrade. And the good news is that that can be an important source of renewal if we face up to those problems.
Brian Ardinger: And that's a great point. You know, since we last talked, obviously the world has changed and, and I would say that the idea of collaborative advantage, and that is probably more relevant to businesses now from the standpoint of it's at least in their front of mind.
When the world changes overnight and they've got to, you know, look out for their, not only their customers, but their employees and understand that the world's changing around them. I'd imagine that has opened up the conversation to a number of different companies that you probably worked with or talked to about this particular topic.
What are you seeing? Is this idea resonating and or what are some of the things that you're seeing tactically that companies are doing to embrace this?
Paul Skinner: Yeah, I mean, as it happens, I've spent a lot of my time, I've worked with three groups that you might think as being very sort of separate from each other. You know, business leaders, many of whom will be listening
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to your show. Of course, seeking to make a profit. Leaders of charities and social enterprises seeking to create social change. And as it happens, I do have quite a background working with leaders in the field of disasters and emergency seeking to ensure safety, survival, and recovery.
And what I found in recent years is that those worlds are not very separate, after all. You know, business leaders are recognizing that they're having to take responsibility for a dizzying array of issues that they hadn't necessarily signed up for when they started their careers.
Leaders of charities and social enterprises are often having to be very business savvy, as well as very oriented towards work through partnerships. Because resources are scarce, donations are difficult to come by. And because of the scale of the problems they face.
And of course, in the world of disasters and emergencies, I think all organizations working in that domain recognize that the scale of those problems mean that they need to work with and through whole of society approaches to solving those problems. Because nobody is big enough to come and solve those problems on their own.
So I think there is a fundamental recognition. You know, in a sense, I think with collaborative advantage, we were already seeing the interconnectedness of the world and our shared opportunities. In the last years, we've also become very tangibly aware of the interdependencies of the world and how our risks and our problems are so connected to each other as well.
Which is why, you know, for so many of us and for so many businesses, the problems that most come to determine our success or impinge on us may be what economists call exogenous variables. They're things that come from outside our prior scope of reference that were not in the plan and that we were not expecting, but end up being, you know, the biggest driver of change.
Brian Ardinger: So how does the concept of a purpose upgrade kind of relate to other areas that are obviously top of mind for a lot of companies in that E S G, stakeholder capitalism, things like that.
Paul Skinner: Yeah, so I guess there's a whole range of ways of currently thinking about purpose. You know, the, the first one was of course, shareholder value maximization. Which you might expect me to be very critical of, and I, I am in many ways.
But it was a smart idea. The idea of shareholder value maximization was, you know, businesses were becoming more global. How do you align the interests of investors and the leaders of companies when those groups were no longer visible to each other, or not very visible to each other.
So, it was a great idea, but the problem is great ideas have their shadow, and because so many businesses took it on rather than a few businesses taking it on so we could learn from it, we've suffered the consequences of the fact that it overlooks externalities, that it doesn't serve to include everyone in the benefits of capitalism. And so, leads ultimately, You know, dizzying inequalities. And so, in some ways I'm operating in the shadow of shareholder maxim value maximization, looking to repurpose.
The other ideas that you mentioned, I think are already doing that, but have fundamental limitations, even if they're important. So E S G, very important that our businesses are sustainable, but that doesn't guarantee we're solving important problems.
And you get anomalies like British American Tobacco being ranked as third best ESG stock in the world. CSR important, worthwhile, but it's not changing the fundamental business model. It doesn't change your business model when you have a good corporate social responsibility program.
Now, brand purpose is great and can be at the leading edge of social change. Brands have an important voice, but that doesn't mean anything if the organizational purpose is somehow at odds or not reinforcing that brand purpose. Stakeholder capitalism, very important and it's important principles of fairness, but it doesn't actually necessarily give you a sense of what kind of generative purpose to pursue in the first place.
So, it can boil down to being a balancing act, like the idea of work life balance, which may be important and may improve the quality of your work and the quality of your life outside of work, but it doesn't necessarily change what you're doing in the office. So similarly, with, I think a lot of these concepts, the problem is they're about purpose.
But they don't give you as a lead, a way of deciding what fundamental purpose to pursue in the first place. And we often think that purpose is fixed, something you don't question, something you don't challenge that we already know what our purpose is. But in the purpose upgrade, I argue that, you know, purpose is as susceptible to improvement as innovation or transformation, for example.
And so we have to be thinking creatively about purpose in today's environment because the nature of change is so deep that fundamentally questioning and revisiting our purpose and renewing our purpose is often the biggest and most important business opportunity, or indeed just human opportunity available to us.
Brian Ardinger: That's an interesting point because as the world changes and that, I think we're seeing it from a business perspective where the job or the business model that a company was doing for 20, 30, 40 years is changing because technology is improving, or access to markets or all these things that are dynamically changing how they serve their customers.
This is just almost another layer over top of that. Holistic layer to look at everything from their employees to the environment to things around that. So talk to me a little bit about what the book outlines and some of the methodologies and case studies that you've outlined there.
Paul Skinner: So I guess I present purposes, first of all, our most adaptive capacity as a species. And so I do think it's important because human purpose is a,
it's a human concept, purpose. You know, we can't say that maths has a purpose. Science cannot tell us, you know, what the meaning of life is, but you know, we have language, and language is the map of meaning that we use to understand our world and to know what better looks like.
And it's why, unlike other species, we've been able, not just to evolve, but to develop from generation to generation, really change and build the lifestyles that we've come accustomed to. So, I take a bit of a dive into purpose as an adaptive capacity for humans. Because I think we all need to better understand that if we're not going to fall victim of some of the mistakes that I think that we've made up till now in business.
I look at purpose and of course, as the potentially most renewable resource for business, you know, one of the most senior and most inspiring executives that I interviewed for the book, Fica Sebisma, had a background as a biologist, and I remember him telling me he knew from the start of his career, it wasn't the biggest or the most powerful who survived, but the most adaptive.
And so fundamentally being able to adapt, not just in innovation and transformation, but at the level of purpose can be key to our ability to renew, to sustains, to survive, and to thrive. And then of course, I introduce the concept of a purpose upgrade. As an always available event for any organization of any size in any sector.
And I think just that already, the observation that purpose is something through which we can gain advantage by redefining it and by having a better, more interesting more engaging purpose to pursue is a contribution. But then I look at, you know, how we can achieve a purpose upgrade by finding more valuable problems to solve.
By building solutions that enroll our stakeholders in a more meaningful journey of change, or by reaching outcomes that are more inclusive and that better reward our stakeholders for taking those journeys with us, as well as of course remembering that you know, no purpose upgrade is the final word on purpose, and that we always have to leave space and a capacity for renewal because the world around us is not going to stop changing.
Brian Ardinger: So, one of the questions I have, you know, a lot of folks, the idea of a purpose upgrade for a whole organization seems to be a top down type of approach, like the CEO has to help drive that or be on board with that. How can individuals within an organization start adopting or thinking about purpose and upgrading the purpose as a means to driving the business?
Paul Skinner: That's fundamental and, and I'd say that in, in a sense, you need both top down and bottom up to be right on them. Similarly, for humans, by the way, when we think about purpose, for us as individuals, purpose is a mix of our top-down executive functioning. You know, our thinking, our conscious ability to plan and to decide and to commit to ourselves, but it's also about the bottom-up processing of our sensory systems.
You know, when the smoke starts to enter the room and you realize that maybe getting out rather than continuing with what you were doing was the right idea, and say similarly with organizations, you do need leadership because that sets a direction. It enables cooperation, it enables trust. It enables efficiency. It enables focus.
But you also need the bottom-up approaches because that's where you cultivate relationships. You have a space for renewal. New ideas can emerge. I mean, the philosopher Hannah Arendt argues that fundamentally the final advantage that democracy has over dictatorship is a greater capacity for renewal, and that's why democracy will ultimately give better results.
For individuals at any level of an organization, you can achieve a purpose upgrade in your own activity. I would say by asking yourself three questions. You know what is needed here without your organizational hat. What is the best approach to that need being fulfilled? And then only then put your organizational hat back on and think, okay, well what can I do in this circumstance?
And I want to give one example of an organization that is very good at enabling little purpose upgrades at the level of even the, the most junior staff member, which was a sustainability tourist destination called the Eden Project. And when they opened, they knew that there would be unanticipated problems and so the very charismatic founder said to his staff, including the customer facing staff who just arrived and were the most junior in the organization.
He said, look, if you're dealing with a customer and a problem comes up that you hadn't anticipated, and you don't have a line manager available to talk to, if you deal with that problem and you actually choose something that with hindsight, we say was probably not the right solution, we will support you all the way.
But if you just skip the problem or sideline it or pretend not to notice, then we are not going to support that. And what that means is that it gives people the chance to lean into the context that they're operating in. Not adopt a computer, says no mindset, but think, okay, what is actually needed here and, and how do I respond? So, I think that's an excellent principle for cultivating little purpose upgrades for every single member of staff.
Brian Ardinger: What do you think are some of the biggest challenges or roadblocks for companies or individuals to adopt or, or think this way?
Paul Skinner: The biggest roadblocks are often psychological. You know, when you have a, it's the prior purpose and its legacy because purpose gives us a lens to which the channel, our actions. But then if the world changes, that valuable lens can become a dangerous set of blinkers.
You know, it's why in an emergency, like the Twin Towers for example, there were more excess fatalities from people going too slowly down the stairs rather than panicking and fleeing. And that's not an uncommon phenomenon in a
disaster or emergency because people just don't fully process the urgency.
And actually, I think this explains how even very successful organizations can actually turn out to be quite fragile in the face of the psychological effects of their sunk costs. The plan, continuation biases of their leaders and the progress traps where it's the very purpose that gave rise to today's success. That is the cause of tomorrow's failure.
And I think sadly, this is something that faces us as human civilization. You know, we've seen whole human civilizations fall in the past when faced with a new environmental stressor that sort of comes from left field. And if we look at the world today, you know, the climate emergency for most of us up until relatively recently, the impacts of it were not very visible.
It was an abstract thing. You know, if we look at the inequalities in the world, the biggest inequalities are not within our social group. They're between our in groups and our outgroups. And so, we don't pay enough, as much attention to them as if it was visible and tangible to us. So, I think it's really the legacy of prior purpose.
If we don't question it or challenge it, holds us back from formulating and adapting at the level of purpose. And some of our analogies, like the analogy of the North Star. A lot of people, I should say, think of their purpose as they're North Star, and there's some good to that, but also North Star is an inanimate object, whereas the nature of our problems is that they're always changing. So North Star can be good for a period, but if you don't have a space for renewal, conscious renewal, then you can get caught in its shadow.
Brian Ardinger: Can you give us any examples of companies that are doing this well and or companies that have maybe fallen off the wagon and are ones you definitely don't want to emulate.
Paul Skinner: Yeah. And in terms of good examples, by the way, because this is so much about renewal, I never want to cite an example as that's what success is. Because we all have to continue this process all the time. But I want to give one example because it's very easy. You know, you can pick out a social enterprise, a B corp, a Walmart, a Patagonia. What about a coal mining business?
So, one of my favorite case studies in the book is a coal mining business that managed to become a sustainable food business. Now that was called DSM or it's originally stood for Dutch State Mines. It was born from digging coal out to the ground and delivering it to people's homes for heating and illumination.
The coal mines are now of course closed and in making the transition from what was once a really respectable and needed endeavor, which of course from today's perspective we know is deeply problematic. To becoming a real champion of important sustainable development goals. A champion of solving the problem of the livelihoods of smallholder farmers. Nutrient deficiency, micronutrient deficiency in different parts of the world, obesity, the fragility of the food system to climate change, and the fact that the food system is driving climate change and building solutions to these kinds of problems.
I'd say DSM is a powerful metaphor of the kinds of purpose upgrade that we need right across the economy. Where today what we are doing is wrong, which doesn't mean it was wrong in terms of its original intention, but we do now need to put it right. And I think some of the pitfalls, it's often a little bit of success is the enemy of a greater level of success. You know whether it's, you know, Kodak for example, invented digital photography.
The problem was that they didn't repurpose around the new opportunity or BrewDog a carbon negative beer, fantastic on the environment, but overlooked the needs of its own workforce and had some real reputational damage when its staff complained that its work environment was aggressive and unfair and was not respectful enough of colleagues in the business.
For More Information
Brian Ardinger: Paul, it's a fascinating and such an important topic, and if people want to find out more about the book or yourself, what's the best way to do that?
Paul Skinner: Well, they can visit purposeupgrade.com. I would absolutely love people to read the book. They can also follow me on LinkedIn. There is an audio book available for people who prefer to listen rather than read. It's just come out in North America, so you can be among the first to read it or to listen. Can also hear a bit more from me, as well as my consulting work at the Agency of the Future. I run a nonprofit called Marketing Kind, where we have some fascinating discussions on adjacent topics that people can find out at marketingkind.org. As well.
Brian Ardinger: Well, Paul, thank you for coming back on Inside Outside Innovation. Always a pleasure to hear your insights of what's going on, and like I said, it's a very important topic and so fundamental, the changes that are happening in the world. So appreciate all your insights and, and thank you for coming on the show.
Paul Skinner: Thank you so much, Brian. I've loved it.
Brian Ardinger: That's it for another episode of Inside Outside Innovation. If you want to learn more about our team, our content, our services, check out InsideOutside.io or follow us on Twitter @theIOpodcast or @Ardinger. Until next time, go out and innovate.
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