purpose; corporate revolution or corporate bandwagon?

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

[email protected]@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






Responsibility?

Conclusion

© Contexis 2016

Purpose

Introduction

What needs to 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






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






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






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






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






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






Responsibility?

Conclusion

It turns out it’s surprisingly commercial..

© Contexis 2016

Purpose

Introduction






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






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






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






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






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






Responsibility?

Conclusion

Great, so what’s stopping us? ?© Contexis 2016

Purpose

Introduction






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






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






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






Responsibility?

Conclusion

No-one is pretending this is easy..

© Contexis 2016

Purpose

Introduction






Responsibility?

Conclusion

© Contexis 2016

Purpose

Introduction






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






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






Responsibility?

Conclusion

© Contexis 2016

Purpose

Introduction






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






Responsibility?

Conclusion

© Contexis 2016

Purpose

Introduction






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






Responsibility?

Conclusion

?© Contexis 2016

Purpose

Introduction






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






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






Responsibility?

Conclusion

© Contexis 2016

Purpose

Introduction






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

““

© Contexis 2016

Purpose

Introduction






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






Responsibility?

Conclusion

© Contexis 2016

Purpose

Introduction






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






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






Responsibility?

Conclusion


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






Responsibility?

Conclusion


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






Responsibility?

Conclusion

So, what is required to genuinely implement a purpose-led strategy?

© Contexis 2016

Purpose

Introduction






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






Responsibility?

Conclusion


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






Responsibility?

Conclusion


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






Responsibility?

Conclusion

© Contexis 2016

‘Purpose gives you permission

to play in completely new,

massive markets in the future’.

Purpose

Introduction






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: [email protected]

Get inspired: www.contexis.com/insights

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mailto:[email protected]

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http://www.contexis.com/insights

© Contexis 2016

With grateful thanks to all our regular and occasional contributors

John Rosling Chief Executive

[email protected]@jrosling

purpose; corporate revolution or corporate bandwagon?

Leadership & Management