It is important to focus on defining the organization’s purpose, as this is what will lead the group to fulfilling its main goal. If a small company has too broad a purpose, it will just waste its resources. If instead the purpose is more narrowly defined, the company will concentrate its resources toward its main goal. Take, for example, a furniture manufacturer that defines as its main goal “creating comfort in life,” and its purpose as “to design, manufacture, and sell modern, well-designed furniture made available to a wide range of customers.” The intent is very well defined. Clearly, the manufacturer will not produce luxury furniture and will not use high-grade natural wood. A well-defined purpose determines which market a company will serve, who its customers will be, its distribution process, and which resources and equipment it will use.
In 2003, my business partner and I formulated one of the purposes of the Geroldmaster Company—namely, “to produce medals that perfectly match their designers’ creative ideas while prioritizing quality over the manufacturing process.” It may seem a strange purpose for a manufacturing company, but that is how it was stated at the outset. The fact is, the company started with just a small office specializing in medal design. It was founded by designers who had a pretty good but, as it later turned out, naïve idea. They saw the medals that Ukraine received from the USSR and decided to design more inspiring ones. The underlying idea was “to design and fulfill manufacturing orders using already existing facilities,” but the idea contained the above-mentioned purpose. When the first orders of Jubilee Awards for the State Corporation for the Production of Armaments and the Emeritus Employee of the Tax Service medals were designed and manufactured, two things became clear. First, the existing manufacturing facilities could only produce products at the prior level of quality, rather than improved, value-added quality. Second, these manufacturing facilities could only produce the products they had been producing for years, since the idea of making the processes faster and cheaper had been the most important standards to follow. It was impossible to implement Geroldmaster’s purpose with this approach. That was the reason that, over time, the design office eventually turned into a manufacturing facility with a unique production cycle of models and molds for manufacturing medals. The unique part was that when the customer approved a medal design, special software allowed all of the geometrically correct elements of the medal to be modeled, directly based on the approved design. If the medal contained a wreath, figures, or any reliefs, their prototypes were hand-sculpted first. Next, a 3-D scan was performed, the model was finished on the computer, and special equipment transferred the computer model into a metal one. As far as I know, to this day it is the only facility with such fast and perfect manufacturing tooling technology. The creation of such a process was not just the owners’ whim. All we wanted to do was accomplish the main purpose: to make sure the manufactured medals matched the intended design. It was simple, made sense, and proved to be commercially successful. Despite fairly high prices, our customers came back to us time and again. None of our competitors could match the same level of quality, and with regard to medals, people were not willing to compromise quality in order to save money. I am not saying there were no customers who prioritized price; they just weren’t Geroldmaster’s customers. This is neither good nor bad, as it is impossible to satisfy everybody’s needs: those who want well made products and those who want cheap ones. That is why companies with different purposes are needed. In the end, there will always be a Mercedes and there will always be a KIA. Such companies have different purposes and, accordingly, different customers.
Incidentally, when a business is just getting started, there is always some new purpose being formed—for example, “We repair used Japanese cars,” or “We bake confectionary products according to local customers’ tastes.” These are not the most ideal purpose statements. The more specific a purpose is, the stronger it is. One could say that, ideally, the intent should have some unique element that provides a competitive advantage.
Preserving the purpose and making sure the company does not deviate from it is not an easy job. In Visotsky Consulting’s company, our customers, consultants, and business owners promote some new idea every month. Our purpose was precisely formulated for such a reason. Before this actively expanding company was started, I had the usual consulting projects. I found companies and then worked with the owners or managers under contract. I, along with some assistants, implemented the management tools and left when the job was done. However, I found this was not a good approach, for two reasons. First, during such projects, you cannot pay enough attention to improving the competence of the owner. His 100 percent understanding of how the management tools work determines whether these tools will really be applied in the company. Second, when the consultant turns the company around, he, in fact, takes on the authority, becoming the employees’ boss. But this completely contradicts the idea that is the main goal of our company, which is to help business owners become stronger. I was able to turn the situation around when I came up with a way to implement the management tools with the owners' own hands. In essence, this is the purpose of our company. And it looks like we are the only ones who do not do the owners’ job for them, but instead help them to do it themselves. That is why proposals to teach the clients' personnel instead of directly focusing on the business owners go against the purpose of our company. Such ideas will never be implemented. On the other hand, any proposals that contribute to our main purpose and help business owners become stronger, I will consider with interest. And if I see that they truly align with our main purpose, I will gladly implement them.
Between the years 1990 and 2000, there were many Ukrainian companies that are examples of companies without a clear purpose. Their sole purpose was to make money, and this, in fact, is simply a lack of clear purpose. Naturally, such companies jumped on every opportunity to make money and introduced a variety of services. In remote areas, there are still companies that do general wholesale, retail, catering, et cetera. And now when narrowly specialized companies come into these areas and start operating, they successfully push the locals out of business. How should the local companies deal with these specialized companies? They first need to realize that a multioperational company is, essentially, a set of groups—a complex of companies within itself, every one of which has its own main goal and purpose. Managing these subsidiaries means managing every single company separately, as they indeed are separate businesses. I will discuss this further in my next book about business structure and functions.
If you read the mission statements of different companies and analyze their operations, you will find that every strong business has a distinct purpose. Very often, that purpose involves some know-how. To John D. Rockefeller, the purpose was merging small oil-producing and refining companies through stock purchases in exchange for shares in the merged Standard Oil Company. This purpose very quickly led to his control of the entire industry. Moreover, he gained total control of the transportation of oil from the wellhead to the refinery and distribution beyond, thereby enabling himself to set prices that forced producers either to be absorbed by Standard Oil or to go out of business.
While highly successful in this goal, his monopoly of the process from production through transport and refining to retail sale led to the antitrust breakup of Standard Oil. Note that there are no absolute decisions, one being the best over all others. Any purpose is successful to some degree, and to some degree it creates a weakness. For example, Steve Jobs’s refusal to sell licenses for Apple’s operating system resulted in Microsoft’s complete domination of the operating systems market. Every personal computer manufacturer used the Windows operating system and more than a few software developers produced versions compatible only with the Microsoft system. On the other hand, this same purpose by Apple helped create the most convenient computer platform, which is just a pleasure to work with. Those who have used Apple computers do not usually switch to Windows unless they are forced to by some specific circumstance. The almost cultlike loyalty of Apple computer users provided a critical base of early adopters of the iPod, the iPod touch, and all the subsequent products—users who spread word-of-mouth testimony and enthusiasm that supercharged Apple’s launches