The Moral Framework for Your Business

In my last leadership post I published the Davos Compact which CEOs were asked to sign at their most recent conference in January.  I asked for your feedback on the Compact: Would you sign it?  Is it complete enough?  Is it clear?  What don’t you like?  

As a refresher, the underlying premise of the Compact is that both business and society are best served if they have aligned, long-term interests that serve the long-term goals of a community.  Short-term financial gain should not distract a CEO or board from the long-term economic prosperity and social welfare business can bring to their communities and the world at large. 

Simple enough?  Yes, but extremely complicated to execute.  If you’ve been a CEO you know how tough it is to think simultaneously about making money and making a better world.  The pressures are enormous to optimize the economic engine and quarterly financial reports.  Russ Eisenstat, the Executive Director of The Center for Higher Ambition Leadership, calls it “the simultaneous solve.”  It requires a grounded way of thinking, anchored in a moral framework.

I can summarize the feedback I received about the Compact in two points:   

1. Some CEOs are not fans of Davos.  It is perceived as a left-leaning, elitist group of business and political leaders who have an agenda to shape the world according to their interests. 

My response:  Perhaps so, but what they stand for I will evaluate on an item-by-item basis.  I have no argument with the assumption that the purpose of business is to create long-term value both for shareholders and for society at large.  I may not want to sign the actual Compact, but I certainly can say I stand with Davos in their intent to inspire a new way of thinking about business for the 21st century.  

2. A few CEOs said the Compact is a step in the right direction but does not make the link clearly to the need for a corporate purpose.  A clear purpose is the integrating principle that connects a return to shareholders, to employees, to customers, and to society at large.  How a company’s purpose is integrated with a company’s strategy, and how that purpose is realized in a community, must be fleshed out in practical ways or it is meaningless.  

My response:  I completely agree.  A purpose statement with no meat behind it is a platitude that may make business leaders feel better, but people will see the disconnect.  In the long run, the purpose will do more harm than good because people become cynical.  

I’d like to summarize by saying the greatest leaders I have ever worked with, including those who provided me feedback, are grounded in a moral sense of the world.  They know they are here for a purpose that is bigger than just making money.  They know they are stewards of what has been entrusted to them by shareholders, and they want to do what is right by all people who are engaged with them.  They think deeply about the company’s purpose and find ways to express that purpose with every stakeholder they touch.  These leaders are grounded in a deep conviction that by working for the long-term interests of all, they will in fact create lasting value.  It’s a moral mindset, cultivated over time. 

Whether you are willing to sign the Davos Compact is not the point.  The real question is: Do you, as a leader, want to look in the mirror every morning and know you are doing everything you can to not only create a high performing organization but also to create a better world?  

If the answer is yes, then let’s get to work!