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Purpose:Revolution or Bandwagon?
“This is fantastic stuff – I wish I could have been there” Academic
“Compelling” C Suite, Global Multinational
“Very useful and thought-provoking” Head, International Charity
“Fantastically insightful. A must read” Entrepreneur
purpose doesn’t exist in corporate organisations- it’s just a branding exercise; it’s a fad’
Purpose:Revolution or Bandwagon?
“ “Purpose gives you permission to play in completely new, massive markets in the future’
“ “‘No public business will willingly make a decision that means it will make less money ’
“ “
© Contexis 2016
Contexis House of St Barnabas Debates are a unique forum for Leaders of global corporates, financial institutions and international consultancy and advisory firms to meet with charity heads and inspiring entrepreneurs to discuss, under a strict Chatham House rule, the critical business issues of the day; to exchange knowledge, expertise and ideas from widely differing perspectives.
None of this would be possible without the contribution of a wide range of exceptional organisations and we are grateful for their time, candour and insight. A small number of Contributors were represented in the debate whose output you are about to read. Nothing that follows is attributable to any one organisation.
If you would like to join a Debate we are always open to interesting and challenging new Contributors. I’d welcome an email or tweet.
John Rosling Chief Executive
jrosling@contexis.com@jrosling
© Contexis 2016
to discuss this question…
Under a strict Chatham House rule, we brought together Leaders of• Some of the largest corporations on the planet
• Global Banks
• International Consultancies
• Leading Charities
• And top entrepreneurs
?“Purpose: corporate
revolution or corporate bandwagon?”
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
What they said was quite remarkable..
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
© Contexis 2016
Purpose
Introduction
What needs to change
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
Whether leading a global bank or an international charity, almost everyone recognised that the current model was serving neither companies nor society.
A shift to a more purpose-led model was the only way forward.
© Contexis 2016
Purpose
Introduction
What needs to change
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
But no-one was getting this right yet.
Purpose does exist but it is mainly forgotten.
90% of our senior directors don’t know what our purpose is
consultancy
“ “
© Contexis 2016
“A shift to a more purpose-led model was the only way forward..”
So what’s driving this remarkable idea? Bankers, global corporations and charities agreed that the world has got somewhat out of balance.
We just couldn’t agree how much..
Purpose
Introduction
What needs to change
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
The Charity View
© Contexis 2016
““Since 1970 the percentage of
profits that go as dividends
has gone from 10% to 70%.
Where is the equity in that?
““Public companies only seem to have one constituency and that is investors. We have lost sight of the interests of other stakeholders. Investor greed is damaging to broader society. We are driving off a cliff
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
The Banking View
© Contexis 2016
““When we lose sight of
purpose bad things happen. Banks made poor decisions because there was no purpose bigger than the narrow current interests of the organisation.
“Banks serve society; without them we are all subsistence farmers. Yet banks lost their sense of purpose and that had a dramatic, long-term impact on their asset value. Share prices are still 20% of what they were
““I think we need to change the parameters. It is no longer fair. It is not sustainable. We need to create a society that has better values. The challenge is how
“
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
The Corporate View
© Contexis 2016
““Business is an organ of society; therefore it has to be cognizant of its impact on society
“Companies do evil
things when they focus
on their own
immediate interests.
Then they die. ““‘There has been a mood to change away
from just making money. In the last century it was all about scale; we made stuff and that made money. Now the whole thing has flipped; the customer is the most important aspect of the mix. That is why purpose has come up on the agenda’.
“Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
So, this group of business and third sector leaders agree that the primary purpose of business cannot just be to maximize profit. All businesses must become purpose-led.
What’s the return from being genuinely purpose-led?
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
It turns out it’s surprisingly commercial..
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
Purpose saves a lot of time in organisations..
© Contexis 2016
‘Clarity of purpose saves me a lot of time; it
allows me to focus on context - the content looks
after itself. I run all my businesses on purpose; if
I’m not running each business in four hours a
week I’m not doing good job’.
entrepreneur
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
Purpose creates management clarity and velocity..
© Contexis 2016
‘When I start a new business, the first thing to sort out is the purpose because it creates clarity and engagement for the whole organisation’ entrepreneur
‘We still talk about corporate responsibility. Purpose is far more fundamental than that. It’s the basis of all decision making’.
‘I have hundreds of people in my team.
How do I know that the decisions people
are making are aligned and productive? In
my experience, purpose creates the context
to drive the right decisions otherwise
people will make decisions that work for
them but not for the wider good’.
banker
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
Purpose drives financial performance..
© Contexis 2016
‘There is an absolute correlation
between purpose and financial
performance; clarity of purpose
maps financial results’.
corporate
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
..and sustains growth..
© Contexis 2016
‘Purpose transcends product and
allows for growth in a volatile
and unpredictable market. If you
define yourself on today’s
product you die’
To quote Plan A’s Mike Barry
‘Purpose gives you permission to
play in completely new, massive
markets in the future’.
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
Purpose creates engagement..
© Contexis 2016
‘Purpose drives a discretionary effort. Happy workers are always more productive consultancy
‘There are no short-term answers. But there
are long-term, generational benefits in
getting this right. Look at John Lewis; the
culture hits you like a freight train and yet it is
never stated. It just is. It just lives. The same
can be said for Patagonia. Perhaps the same
will be said for Unilever in the future’.
corporate
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
Great, so what’s stopping us? ?© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
‘Purpose must be integral to
strategy; 90% of CEOs believe their
business does best when purpose
comes before profit. Only 37% of
them consider purpose as core to
strategy’
consultancy
‘Purpose isn’t abstract. It must be embedded in the strategy of
the organization’ consultancy““
““
© Contexis 2016
what’s stopping us? Our Strategy..
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
‘The big difference is authenticity.
As a leader you have a duty to be
authentic; to believe it. If it’s a
box-ticking exercise it won’t create
value or sustainable change.
corporate
‘This is about Leadership and the
key to that is• authenticity and the courage to sustain it under pressure
• self awareness• focus and clarity’ banker
““
““
© Contexis 2016
what’s stopping us? Our leadership..
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
‘Most organisations don’t understand the effort
required to sustain purpose. One of my companies is
only 58 people and it took a year to drive purpose
through’
entrepreneur‘We are too willing to make trade-offs when it gets tough. You need to have the courage to stick are your principles’ banker
“ ““ “
© Contexis 2016
what’s stopping us? Our commitment to change..
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
No-one is pretending this is easy..
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
balance
‘There is a dishonesty here. It’s all very well for a business in the sweet spot where social good doesn’t adversely affect the bottom line. Businesses don’t go beyond that sweet spot and that’s not good enough’. charity
““
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
balance
We have a license from society but it’s challenging to strike a balance between short-term performance and long-term sustainability’corporate
“ “
So let’s be specific. How should organisations change?
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
How should organisations change?
‘You have to view profit as the outcome of getting other things right’.
‘It’s not about P&L; it’s about the balance sheet; building the assets of the business, not short-term profit’
““
‘The primary purpose of a public business is to make money; private business has more choice. But in either case, the question is what we mean by money; short-term profit or long-term value? That is where the ambiguity can lie’..
““
and if we don’t..?
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion ‘So many old corporate organisations have no clearly defined purpose or reason to exist. Inevitably they go bust’ banker
and if we don’t?
“
“‘What is possible can be radically different. If we fixate on the public company model you get a skewed view; this is the old model. The life expectancy of plc is only 15 years now. There are so many new kinds of model emerging.’ charity
““
‘There are clues out there; we are at the start of a genuine shift in the way capital works’banker
“ “
so, whose responsibility is this…?
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
?© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
‘Owners need to drive the
purpose agenda. That’s easier to
see in a private business. We
haven’t worked out how to do this
in a shareholder model yet but
increasingly we are seeing
shareholders making a value based
decisions’ consultancy
“responsibility
‘Government has a role; you can
have a preferential fiscal, regulatory,
or tax treatment of different kinds of
organisations based on their societal
value’ corporate
“
“‘The Board must take responsibility for purpose. The Board as an entity has a tenure far longer than individual members and much longer than the tenure of the C suite’ banker
“ “
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
perception
‘The stakeholder group that
does have the power to
change corporate behavior is
the customer. Yet most
customers are driven by what
is cheapest. How do you
change that?’
consultancy
“
“
The perception of all the Leaders was that their consumers would not take responsibility for change.
And yet, 58% of consumers will make purchase decisions on the broader social good.
And this percentage is even higher in developing and ‘newer’ economies
and what of the role of investors…?
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
responsibility‘Investors would be happy to invest in
pushing drugs if it made then short-
term money’ entrepreneur
“ “
The critical role of investors was acknowledged. The beliefs around investor motivation varied widely..
‘Are institutional investors changing? There is plenty of evidence of investors making more value-based and longer term decisions’ charity
“ “‘There are clues out there; we are at the start of a genuine shift in the way capital works’banker
““
how far are incentives aligned with purpose …?
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
incentives
Short-termism was acknowledged as the killer problem
You need to remove this year’s money as the primary motivator’
“
“‘For individuals, we really need to reframe what we mean by ‘reward’; rewards can be doing the right thing, a sense of pride in where you work, looking your kids in the eye. It’s not just money.’
“ “
And how important is having a clear sense of personal purpose for leaders…?
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
personal purpose‘Having a clarity of personal purpose
acts as both a guiding star for the day-
to-day decisions and creates fulfillment
which gives you the energy to carry on
as CEO no matter what’.
“ “The collective view: “Critical..”
‘If you have a leader who doesn’t
understand their own purpose they are
unlikely to be able to lead a purpose led
company. Yet how many of our CEOs
spend time on their own purpose’.
’
“ “‘Do you know what your personal
purpose is? If you don’t how can you
possibly bring to life the purpose of your
company?’ “ ‘You can only be effective if you know why you are doing something’“ “
“
So in summary, what have we heard from this wildly different group of corporate leaders, top bankers, entrepreneurs and charity heads?
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
summary© Contexis 2016
Societal changes means that business must change to survive. Only genuinely purpose-led are likely to survive – and certainly thrive in the future.
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
summary© Contexis 2016
When business loses sight of purpose bad things happen- and in a transparent world that’s fatal. There is a multiplicity of emerging business models; the old corporate is an endangered breed.
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
summary© Contexis 2016
Purpose isn’t just about social responsibility; it drives clarity, velocity, engagement and growth in a volatile and ambiguous world.
Purpose is survival.
If it’s a bandwagon it will be a short ride!
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
So, what is required to genuinely implement a purpose-led strategy?
© Contexis 2016
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
checklist© Contexis 2016
1. Absolute authenticity; green-wash won’t wash
2. Sustained and courageous leadership from Boards in support of C-Suite
3. Absolute integration into strategy – or forget it
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
checklist© Contexis 2016
4. A more holistic view of corporate return than short-term profit.
5. Individual managers need a broader understanding of ‘reward’ to include self worth 6. Business must find a way to benefit a broader range of stakeholders; the rewards must be more equitably shared.
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
checklist© Contexis 2016
7. Business Leaders, government & investors share a responsibility.
8. Businesses shouldn’t assume their customers are as narrowly self-interested as they think they are.
9. And, most uncomfortably, a far deeper personal awareness amongst leaders
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
© Contexis 2016
‘Purpose gives you permission
to play in completely new,
massive markets in the future’.
Purpose
Introduction
What needs to change?
What’s driving the need?
Purpose: commercial return
What’s stopping us?
How should we change?
Responsibility?
Conclusion
Join in?“As human beings we are hard-wired to seek a bigger purpose in organisations we choose to spend time in”.
Twitter: @contexis
Linkedin: Join the Purpose in Business Movement
Attend our next Roundtable: hello@contexis.com
Get inspired: www.contexis.com/insights
© Contexis 2016
With grateful thanks to all our regular and occasional contributors
John Rosling Chief Executive
jrosling@contexis.com@jrosling
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