The Golden Faucet: A miracle of the management of purpose

Author Professor Jeongkoo Yoon (jkyoon@ewha.ac.kr)

This book investigates the secret of companies creating a phenomenal performance in the L-shape recession. Despite the brutal reality that ordinary companies fail by more than 50 percent in the new business, what principles guide most successful contemporary companies like SAS, Google, Zappos, Amazon, and Netflix? The book proposes management by purpose (MBO) as their fundamental principles. MBO is a new strategy to align all the resources of the company to its purpose. The most successful companies embed their purpose to the services and goods and thereby sell the experiences of purpose embodied in the services and goods. Purpose-driven companies also design their workplaces as an ‘expert playground’ in which purpose acts as a fence for professional playgrounds; employees are professionals to realize their companies’ purposes through their products and services. The fence provides a psychological safety space for its members. Within this psychological safety zone, employees grow themselves into professionals through experiments and learning.

Leading contemporary companies is like navigating in a desert with multiple sandstorms; the landscape ever changes after each sandstorm. Whenever one wakes up, the previous map has become useless. Nonetheless, the mission of the leader as a captain is to draw up new maps to the right destination in the new terrain. The purpose works as a compass in that situation. A leader can agilely create a new map without difficulty because the purpose becomes a compass and pinpoint the latitude and longitude the leader is standing in.

This book also asks leaders if they have the golden faucet. Many company leaders believe that they have a real golden faucet even if the faucet is not a real one but a plated golden one. The book uses a metaphor of the golden faucet to satirize the practice of management that ignores causes and seek only results: A Viking found a golden faucet in the civilized city. He had never seen such things, which has a tap that spills water when turned on. In his village, the Vikings had to walk more than 10 km with buckets if they need water. The Viking stole a golden faucet at the risk of life and death and took it home safely. He proudly wrapped it up as a gift to his wife. The wife neither had no idea of what the strange thing was for and asked her husband what it is. The Viking husband started to play it up in high spirits. The water did not come out no matter how he turned the tap around. The Viking was puzzled and frustrated because when he stole it, he witnessed clearly with his own eyes that the water poured out by turning the tap.

The golden faucet symbolizes the conventional belief that once people acquire it, they can solve all the problems in the world. The golden faucet could be power, status, and money because people consider them a magic wand with which they solve the most problems. If this belief traps them, they pass the endeavor of discovering the source of water and connecting pipelines to the faucet. There are many faked golden faucets in the company. For example, male executives lament that they do not have any female talent promoted to executives. However, the reality is that the company does have neither a pipeline to develop female talent to managers nor the talent pool of females at the entry-level. Nevertheless, executives still believe that once they turn on the tap, they would find plenty of female executives.

The book presents a different view on how to make a golden faucet that pumps out sustainable performance for companies in the hyper-connected business era. The principle of management by purpose indicates that every sustainable performance requires three critical components to be tightly connected. The first one is the water source. The second one in the pipeline to pump the water to the faucet. The third one is the faucet connected to both pipelines and water sources. In business, the water source is the company’s purpose of making goods and delivering services. The purpose answers the question of why the customers entitle the company to provide the goods and the services over their competitors. The pipeline indicates innovative business processes embedding purpose into goods and services. The golden faucet implies that the corporate channel makes customers experience the purpose by consuming the services and the goods the company provides. Purpose is the cause, pipeline the innovation, and faucet the experience of purpose. The key to the successful company is to tightly couple the three components. A decoupling company that focuses on the outcomes but does not pay attention to the causes and the processes ends up derailing from sustainability.

Part 1 examines the conventional strategy of the neo-liberalistic economy that emphasizes winning the market by building competitive edges and the advance of the purpose economy with the change of environment into the hyper-connected digital society. Specifically, Part 1 examines transaction costs, iron cage of institutionalization, and platforms as an eco-system. Part 2 advances the principles of management by purpose. It differentiates purpose from a mission, calling, vision, and purpose aligned performance. The chapters in Part2 introduces Zappos, SAS, Amazon, Pepsi, and Netflix as an excellent model of management by purpose. Part 3 elaborates on the principles of management by purpose from the viewpoint of deep change and innovation. The chapters discuss dynamic capability with ambidexterity, optimization strategy, a difference of deep change from innovation, and a false causal relation between purpose and performance. The conclusion illustrates a tempered radical as the strategy to implement deep change.

The book received Sejong Korean Book Award in 2019. Collaborating with Professor Edward J. Lawler at Cornell University and Professor Shane R. Thye at University of South Carolina, he has published related research in American Sociological Review (1993, 1996, 1998, 2008), American Journal of Sociology (2000), Social Forces (2011), Social Psychological Quarterly (2001, 2006, 2011, 2019) and Human Relations (1994, 1999).

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