Episode 129 - Economics of Higher Purpose with Anjan Thakor

An intriguing interview with a business school professor from Paul's alma mater, Anjan Thakor of the Washington University in St. Louis Olin Business School. The point of departure for this episode is Prof. Thakor's book of the same title written with Dr. Bob Quinn, and the book was launched as an analysis of why Dr. Quinn left a prestigious faculty position at the University of Michigan to go start a church in Australia. The book and our interview discuss what seems as if it should be common sense: people perform better when they believe what they're doing has a higher purpose than extracting paychecks and profit. Yet this common sense observation is now counter to decades of economic orthodoxy, both in the "practical" world and in academia, which focus on evaluating ways for employers to control and coerce employees using the tools of the market system. And it's not entirely surprising, since in many ways human nature is always poised to devolve into this style of interaction. Listen in and, if you're anywhere near as intrigued by this work as I was, read their book for more. Thakor co-authored The Economics of Higher Purpose: Eight Counterintuitive Steps for Creating a Purpose-Driven Organization with Robert Quinn, business professor emeritus at the University of Michigan. Thakor referred to a University of Michigan study of call-center workers. They came away with a higher sense of purpose—and effectiveness—after talking with students who had received scholarships based on fund-raising efforts in which the workers were participating. If you change a worker’s mental map for seeing their job, this affects their performance. Authenticity requires a business leader’s believable commitment to—and passion about—the organization’s higher purpose, Prof. Thakor said. He also referred to insights from Rabbi Jonathan Sacks about the importance of societal and organizational motivation stemming from a sense of covenant, not merely contract. Covenant entails a sense of shared purpose. Noted business executive Bob Chapman says 88 percent of American workers say they want a sense of higher purpose but don’t feel it is integrated in their work life. Thakor said his own research shows that employees whose companies have a sense of purpose are more likely to describe a sense of purpose in their lives—a spillover effect. The commitment to purpose must be top-down. Then, it cascades through the organization if you help employees learn and absorb what it means for them and their job, Thakor said. Harvard Business Review had a special issue on the importance of a sense of purpose.