Purposeful Leadership: Will Corporations Reinvent Themselves For a Higher Purpose?
Working for a large public corporation my understanding of the company’s purpose was always one and the same: delivering value to its shareholders through profit. Indeed, major strategic decisions were made with shareholder’s interest being of utmost priority. This premise is so natural in a capitalist world that I always took it for granted. It was not until I heard a quote of Ed Freeman that I started to think differently.
“We need red blood cells to live (the same way a business needs profits to live), but the purpose of life is more than to make red blood cells (the same way the purpose of business is more than simply to generate profits).”
—Ed Freeman, University of Virginia professor and originator of the Stakeholder Management Theory
Indeed, survival is crucial and dying is the last thing everyone wants, but living for the sole purpose of survival, on the other hand, is simply dull and depressing. According to Mitchell Simon, Forbes Councils member, when individuals in their 80s and 90s are asked “What do you wish you would have done better, were you to live again?” the most popular response was, “I wish I would have lived more purposefully.” We all need to feel that we are a part of something bigger. We want to have a purpose to go to work every day and produce an impact on the world. John Mackey, founder and CEO of Whole Foods Market, in his best-selling book “Conscious Capitalism: Liberating the Heroic Spirit of Business” laid out a philosophy that businesses should be guided by the value and good they can contribute to the world, not solely the profits they generate. Those of you who are still committed to focusing on shareholders and profit might find the following statistic convincing. When several publicly traded companies that embody Conscious Capitalism® qualities were studied over a 15-year period, it was concluded that these companies outperformed the S&P 500 index by 10.5 times in terms of earnings per share (“Firms of Endearment: How World-Class Companies Profit from Purpose and Passion” by Rajendra Sisodia, John Wolfe, and Jagdeth Seth). You might be wondering “What are those qualities that help companies driven by Conscious Capitalism® to differentiate themselves?” We already discussed the importance of being led by Higher Purpose and will further examine the other three qualities.
Stakeholder Orientation
In contrast of solely focusing on shareholders, conscious businesses focus on a whole business ecosystem they operate in. They realize that stakeholder community is greatly interconnected. It is important to create value for all stakeholders as engaged stakeholders lead to sustainable business. Rajendra Sisodia, co-author of the books “Conscious Capitalism: Liberating the Heroic Spirit of Business” offers “S.P.I.C.E.” acronym to describe the composition of ecosystem stakeholders:
Society. Partners. Investors. Customers. Employees.
Conscious Leadership
Conscious Capitalism, Inc. highlights that the leader’s role is “to serve the purpose of the organization, to support the people within the organization, and to create value for all of the organization’s stakeholders.” Such leaders understand the importance of culture and deliberately cultivate a culture of trust and care.
Dr. Brown further recognizes the importance of both vertical and horizontal learning. This learning is a combination of deep connection, courageous action, vision, and self-transformation (vertical learning) with competencies and functional expertise (horizontal learning).
Conscious Culture
This culture can be defined as culture that “fosters love and care and builds trust between a company’s team members and its stakeholders.” (Conscious Capitalism, Inc.) Although, it is rare to hear about the importance of love in the business context, if you think of it, in the era of robotics and computers, what else can we, as humans, contribute to the business? The answer to that is our unique self and, in a result, corporate culture.
“If it’s not physical effort and it’s not even cognitive capacity that makes us unique as human beings, what do we have left?”
—Nicholas Pearce, an award-winning Clinical Professor of Management & Organizations at Northwestern University's Kellogg School of Management
During today’s uncertain time when corporations are challenged with survival and, therefore, are taking steps towards cost reduction and decreasing employee count, those companies that are able to look beyond immediate survival and mobilize their employees with a higher purpose are those that will not only survive but succeed long term.
If you have any questions about this article or would like to share your experience and thoughts, feel free to post a comment below or contact me directly at [email protected].
—Olga Minikh
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