Send them to the Amazon

It’s the age-old question - is it possible for a business to transform itself for the benefit of society and the planet without a visionary, forward-thinking leadership team?

Patagonia's Founder Yvon Chouinard
gets it - how can we help other leaders
see the light?

I recently listened to a Shared Value Initiative webinar, which featured representatives from Kemira and Barclays Bank talking about how their companies are Innovating for Shared Value. Kemira spotted the risks and opportunities inherent in the global water crisis and changed its competitive positioning from chemicals to water quality management, a move that seems to have been beneficial to its bottom line. Barclays Bank is taking a slightly less dramatic and more experimental, though still innovative, approach to shared value, investing £25 million in its Social Innovation Facility, through which it is developing commercial products that deliver social impact.

What do both these examples have in common? New leadership taking the reins and moving the companies in the direction of Shared Value.

Of course, there were other factors that inspired the smarter approach to business – for example, consumer trust in Barclays Bank was at an all-time low following Libor Gate – however, the change of leadership seems to have been the engine behind the transformation. As Valerie Bockstette, Managing Director, FSG, noted at the end of the Shared Value Initiative webinar, “visionary leadership is a key ingredient for creating shared value.”

In some cases, it is not so much a change of leadership, as a mind-set change among the existing leadership. Take former Walmart CEO, Lee Scott, whose trip to see the aftermath of Katrina led to “Walmart mobilizing its tremendous logistics infrastructure to aid disaster victims.” It also inspired him to launch “one of the biggest corporate sustainability initiatives in history.” Coca Cola’s CEO Muhtar Kent was also inspired to take a more sustainable approach to doing business after visiting the Arctic and seeing Polar Bears struggling to find food.

So should all CEOs be sent to the Amazon? Or to the slums in Mumbai? Or anywhere in the world where they can see first-hand the material impacts of the company they lead?

The answer is yes, according to Harvard Psychology Professor, Daniel Gilbert, “when we only learn from the experience of others, this is often insufficient to drive action and behavior change.” 

To add another layer of complexity to the challenge, however visionary and forward-thinking a CEO is, if his shareholders and investors don’t play ball then he’s not going to be able to radically transform the business anyway. Particularly, as many shareholders and investors are still blinded by short term wins. A 2013 McKinsey and Canada Pension Plan Investment Board (CPPIB) study of more than 1,000 board members and C-suite executives around the world, found that “79% felt especially pressured to demonstrate strong financial performance over a period of just two years or less.”

So it seems true purpose-driven companies must have all its leaders, shareholders, investors, employees and stakeholders unified behind a shared mission to deliver long-lasting, sustainable value to the business, society and the world.

But, in the absence of visionary leaders, there’s still progress that can be made. Jim Collins, author of Good to Great, spent 5 years studying companies that made the leap from good to great and then stayed there. He found that “the real path to greatness…requires simplicity and diligence. It requires clarity, not instant illumination. It demands each of us to focus on what is vital—and to eliminate all of the extraneous distractions.”

So his response, in answer to the question “But how do I persuade my CEO to get it?” is “don't worry about that. Focus instead on results…within your own span of responsibility.”

And this is the message we need to remember. The circumstances won’t always be perfect but those of us who get it need to keep educating and raising awareness of the long-term, global, shared benefits that can be achieved.

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