How Do CEOs Make the Purpose Shift? Three First Steps

More and more CEOs are committing to long-term performance and a clear purpose for their company that has both an economic and social impact. But it is not easy.  

Unilever CEO Paul Polman recently put his shareholders on notice that he is taking the long view for sustainable growth and profitability. He’s anchored this in a clear purpose of “the highest standards of corporate behavior toward everyone we work with, the communities we touch, and the environment on which we have an impact.” Polman declared he is no longer going to be a slave to quarterly earnings and quarterly guidance.  Instead, he is investing in all stakeholders to build a long-term, highly-profitable future.  

That is a bold move. And not every CEO will feel comfortable taking this stance. It’s one thing to say you are going to take your company in this direction, but it’s quite another to do it – and keep doing it – over time. CEOs are under pressure from shareholders to deliver earnings growth, facing new competitive threats from unexpected fronts, and being scrutinized by their customers and the industry on social media. When the pressure is on, even the most well-intentioned may falter. 

Through my work with clients and the CEO members of the Center for Higher Ambition Leadership, I’ve observed the bumps companies face and how they get through them. Here are three strategies CEOs can employ as you start this journey to ensure everyone stays on track.

1)    Make the business case to your Board and your investors.

Explain why this is a smart business decision.  Cite research and anecdotal examples to show how this decision will pay off – in customer loyalty, employee retention, community support, and with the bottom line.  A CEO must use good judgement here.  If you know you have a supportive board, go in early.  If you have a couple of skeptics on the board, then work to get early results that demonstrate performance improvement.  The skeptics can be changed.    

As far as investors, the statement, "You get the investors you deserve," is a truism.  Hold fast to your convictions.  Some investors may bail on you, but over the longer term, as you demonstrate results, the right investors will find you.  

Rebecca Henderson from Harvard Business School is leading a long-term research study on various approaches to business. The evidence is compelling --companies that invest for the long term with a clear purpose and a multi-stakeholder approach produce superior financial returns.

2)    Engage employees to help shape your vision – and keep them involved.

A clear purpose defines the “why” for a corporate existence.  It gives the employees something that goes beyond earnings per share—a more noble cause that meaningfully inspires belief in the work people are doing. A recent Deloitte Study (The Deloitte Core Beliefs & Culture Survey) found that 73% of employees at purpose-driven companies are highly engaged, compared with only 23% at companies without a clear purpose!

Satya Nadella from Microsoft has made purpose a core focus in his new role as CEO.  Instead of the narrow “sell more” philosophy of Steve Ballmer, Nadella is shifting back to the roots of why most people work at Microsoft in the first place.  According to Nadella, Microsoft’s purpose is “to empower people to do amazing things through technology.”  This is not just a slogan.  It is talked about every day.    The motivation for employees is that they know they are changing people’s lives.  Nadella is investing in select new product offerings for long-term growth – in line with this higher level purpose - to change for the better, the way we live.   

3)    Think about all of your stakeholders and the part they will play in realizing your shared purpose.  

Michael Porter and Mark Kramer talk about the term shared value.  This is where you take on a social problem and figure out a creative solution that does not harm the environment, engages employees in a healthy way, has the support of the public, and makes money.  Frankly, values based companies do this all the time because it’s just good business.  The more conscious we are of our values and philosophy of leadership, the more effective we will be in creating shared value with a multi stakeholder win.  For instance, I work with a large land developer, Stonebridge, in Sacramento, whose entire strategy is anchored in their purpose statement, “We create community inspired places.”  

Stonebridge starts first with the needs of the community and then works hard to design a long term, beautiful, sustainable, and profitable community plan.  Recently the Sacramento City Planning Commission took time out before their unanimous vote of approval for a 3000 acre project to thank the company for their unusual and thoughtful commitment to the city.  A resident of Sacramento who was being impacted by the development said Stonebridge took the time to understand her needs and worked toward a win for both the existing residents and the future residents.  She could not have been more complimentary.   

So involve the board, engage broadly your associates, and build a win for each critical stakeholder.  Make these three “to dos” a measurable priority and the shift to purpose will be  more sustainable and profitable.