Leading Forward: Soft power and a compelling purpose

Strathclyde visiting professor and non-executive director of the Royal Bank of Scotland Group, Dr Lena Wilson CBE recently gave the first talk in the Leading Forward series which has been made into a series of three blog posts. Today’s post introduces soft power and why businesses need a compelling purpose.

In a global career spanning 30 years both in the developed and developing world and in the public and private sector, I’ve learned a lot from being exposed to thousands of companies and a vast range of differing cultures. I also got to engage with and observe the wider ecosystem, such as universities, local and national government and I also got the chance over eight years to lead Scottish Enterprise and put into practice the things I deeply believed in.

Time and time again what I have found to be the major differentiator in sustainable successful organisations is ‘soft power’. I use that description because through my role at the World Bank working in some of the most challenging environments in the world, I was exposed to the importance of soft power as used in international relations and it very much influenced my own approach to leadership and leading organisational transformation.

My definition of soft power is “a persuasive approach to employee, customer and stakeholder engagement, involving the use of values-led influence” – the power of a healthy culture that you can feel, smell, and taste.

What I mean by persuasive is inspiring people through a relentlessly high bar of standards which give people energy. My notion of great leadership is based on morality, ethical behaviours, kindness and the belief that the person at the top is there to service as well as direct. More importantly, that the role of the leader is to create value, not just for their organisations, but for the greater good.

From my experience, there are three key pillars that really differentiate sustainably successful organisations:

• A compelling purpose
• Resonant leadership
• Authentic engagement

Together, these make up a high-performance culture where no one is in any doubt as to what they are supposed to be achieving and how that will be measured, recognised and rewarded.

What these organisations do sets them apart but what’s really important is how they go about that, which gets into the DNA of the place and becomes “how things are done around here” – this takes years and years and the setting of a very high bar on what is and isn’t acceptable. A colleague once told me, “This soft stuff is harder than it looks” and they were right. It has to be practiced every day, all of the time. That same person also couldn’t believe the results of this approach - a more motivated team, higher productivity, more innovation and creativity, better customer feedback and less absenteeism. This all culminates in kinder, happier and higher performing organisations.

Some countries know that this soft power approach works at the macro-economic level too. In Finland, a movement called “joy at work” emerged and became a national initiative involving the economic development agencies, the EU, universities and businesses. It was largely aimed at helping businesses pursue growth through creating an innovation-derived competitive edge and underpinning that by a healthier working culture. Hundreds of businesses took part with impressive results.

In my experience, soft power starts with purpose and an authentic and compelling telling of the story around that. I was first struck by the power of this when I worked for the World Bank, a large UN-affiliate multilateral organisation based in Washington DC. It didn’t always have the best of reputations, often in the media for being perceived as doing more harm than good. James Wolfensohn became the President of the World Bank just a few years before I arrived and he was the first leader I ever saw use the power of single compelling purpose to both engage employees and also to engage the stakeholders in the form of the donor countries such as the UK, and the customers – the government of the developing countries the bank was trying to help.

James made it clear that everything the Bank did was with the purpose of alleviating poverty. He took that message directly to the employees and asked us all to ask ourselves in everything we did just one question – was our work in some way directly or indirectly going to help alleviate poverty in our client countries? If yes, carry on, but if not just stop doing it – it really was that empowering. This also became a powerful tool to change the culture and allow managers in the middle of the organisation who may act as blockers to be challenged. This was followed up by culture change – new models of staff engagement, innovation competitions and so on – which energised thousands of staff.

I returned to Scotland with that influence of the power of purpose - the telling of the story and using that to engage - ringing heavily in my ears.

I came into post as CEO of Scottish Enterprise in what many people would call ‘uncertain’ times. It was 2009 just after the financial crash and the organisation had recently undergone a review which resulted in radical change with both budget and staff numbers halved. I believe that working in the world’s poorest countries allowed me to view more opportunities for the Scottish economy.

One of the reasons Scottish Enterprise was in a difficult environment was that it trying to be all things to all people. Using the notion of a ‘compelling purpose’ we set out a new purpose for Scottish Enterprise – Scotland’s global competitiveness. We set out that what we would do was not about pleasing people but doing the things that would most improve the Scottish economy. That meant a very conscious focus on, and investment in, certain types of companies, sectors and markets, making very tough choices and being accountable for that. The aim was to take the work of Scottish Enterprise out of the political and onto a higher plane of doing the right thing for the economy.

This thinking about purpose and performance is very much in vogue at the moment. Blackrock is the world’s largest investor and just two weeks ago in his annual letter to the Boards of FTSE 100 companies, the CEO Larry Fink wrote three pages on the inextricable link between purpose and profit.

EY research has found that those soft power intangible assets like culture account for, on average, 52% of the market value of organisations and in some sectors that rises to 90%. The pressure to elevate these themes to the Board Room is - quite rightly in my view – mounting, and the evidence for the return on investment makes it difficult to ignore. We’ve all seen the high profile cases where organisations focused too much on financials and hard measures, and the meltdowns which followed.

I know I’ve had the opportunity to work with and lead organisations whose mission is to change the world or a country in some way but I wholeheartedly believe that any organisation can think about purpose in this way and build everything else around it for better performance.

The Leading Forward lecture series is hosted by Strathclyde Business School in association with Royal Bank of Scotland. In the next blog based on her Leading Forward lecture Lena focuses on resonant leadership and emotional intelligence. For further information on the next Leading Forward lecture, please click here

About Lena Wilson

Dr Lena Wilson CBE is a Non-Executive Director, The Royal Bank of Scotland Group, former CEO of Scottish Enterprise, and visiting professor at Strathclyde Business School.