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.

The World Economic Forum in Davos just completed their winter conference.  One hundred leading businesses signed a compact as a framework for the role of their business in society.  The Forum’s International Business Council will now work on a way to measure long term progress.

I’m greatly encouraged about the positive vision these companies are embracing for the future.  CEOs are investing in meaningful ways to not have government be the answer to some of our greatest challenges.  Instead, business must take the lead in partnership with many stakeholders, including government. I believe it’s the only way we can adapt to the dramatic changes ahead.

Every CEO wants to produce good returns for their shareholders.  The danger is when good returns focused on growth creates a high performance pressure cooker that drives bad decisions.  

VW, for instance, is a brand that people trusted and captured the zeitgeist of freedom, love, and happiness.  Did the CEO know software engineers were designing a defeat mechanism to deceive EPA standards in the U.S?  We will probably never know the answer to that question.  We do know one answer for sure.  The engineers failed to consider the reputational risks of their thinking.  They failed to consider how their decisions were in direct violation of the companies written policy statements.