2019 is rumbling with “purpose.”
The January letter from Larry Fink, Chairman and CEO of Blackrock Investment, called for businesses to power their profits with purpose. It reverberated throughout the business media with countless responses calling for a Capitalism Revolution and cited 21st century’s initial efforts to reform business for good.
It’s 2019 and the world is in a precipitous state. It’s clear that more substantive change is needed — now. Governments have been side-tracked from progress on major structural issues and study after study tells us that citizens are fed up and believe corporations need to step in to lead real action for societal change.
What are businesses doing at the Board and C-level to drive change in the way they do business?
Anand Giridharadas offers in his 2018 book Winners Take All that “A successful society is a progress machine.” Current innovation builds on advancing technologies yet completely overlooks the root cause of inequity. ‘Progress’ needs to be redefined beyond the next SMART phone features and functions. Long-term thinking needs to address the increasingly reduced per capita ability of the lower and middle-income consumer to purchase real estate, products and services.
Larry Fink’s letter is entitled “Dear CEO”. How will we know they are listening?
Impact investors have been leading the charge for structural change since the start of the millennium. Systems change efforts are emerging to complement these actions in order to affect these deeply integrated issues of climate and community. But these efforts only address the by-products of outdated commercial thinking.
What will it take for CEOs to realize that their businesses have the potential to impact change directly through their products, services and business models?
The C-suite needs to actualize and ‘manage up’ the urgency of a longer-term mindset for shareholder value and operational efficiency. Shareholders should be demanding it based on financial and resilience metrics alone.
Businesses have consumer and employee attention and as a consequence they are role models for the systems and cultures that shape society. Substantial strategic action is needed. More companies need to be working together on the pieces of the problems that are contributing to obesity, illiteracy, skills training and access to healthcare.
There are role models out there. Companies like Patagonia, Unilever, and Interface each took unique approaches based on their vision, culture and categorical opportunity. ‘Enlightened’ Boards are needed to speak up and educate their peers.
We need to ensure that ‘Purpose’ is not co-opted by well-meaning thought leaders, consultancies or CEOs pushing projects that reinforce the status quo.
Companies need to do more. It will require innovation at the core of their business.
This article was originally posted on Medium.com on February 21, 2019