New CEO Study from Leaders On Purpose Reinforces The Role Corporate Purpose Plays In Reimagining Capitalism

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In-depth conversations with the CEOs of BMW, PayPal, Siemens and many others uncover new insights into how they are transforming business-as-usual in the “new business logic.”

Leaders On Purpose 2019 Study

The role of traditional capitalism is being questioned as never before. An economic system borne of the industrial age is currently threatening the extinction of life on earth, creating massive wealth disparities, and contributing to social injustice on a global scale.

The 2019 Leaders on Purpose CEO study provides fresh insight into the changing role of business in society and suggests some productive best practices for transforming capitalism. The report features interviews with CEOs from BMW, PayPal, Mastercard, Siemens, Kohler and many other businesses that are no longer treating social responsibility as an add-on. Instead, they are building purpose into the core of their business strategies. Building off our 2018 study, this new report delves deep into many issues including systems thinking, new models for cross-sectoral partnering, harnessing the unexpected and how new organizational models are unleashing employee engagement.

“All 30 CEOs talk about the tremendous leverage effect they’ve experienced by aligning their business growth objectives with the goal of promoting global wellbeing,” says Christa Gyori, CEO of Leaders on Purpose. “By recognizing the world as a holistic system of interrelated issues, these companies have been able to evolve faster, innovate more effectively and create and sustain long-term relationships with their employees, customers and partners.”

The five findings from the 2019 study are:

1. Companies with an established and embedded corporate purpose have a more comprehensive perspective of today’s challenges, allowing for clearer decisions and stronger future fitness. Today’s businesses operate amid expected and unexpected evolutionary pressures: collapsing industries, distrust of institutions, automation, artificial intelligence, rising inequality, demographic shifts, climate change, resource depletion and more. Not surprisingly, many leaders and organizations find it difficult to respond to this unprecedented rate of change. However, those that embrace the issues they can positively impact, find themselves better equipped to predict challenges and to pivot their businesses to capture opportunities, foster innovation and bolster their resilience.

For example, Turkish telecom giant, TurkCell saw the headwinds of the regional refugee crisis: overloaded cellular systems caused by displaced people desperate to connect with friends and family. The company quickly adjusted its network, provided free phones to people in need and reduced tensions in camps across the country. Their fast, forward-thinking action resulted in an expansion of their customer base, increased loyalty and an uptake in sales.

2. CEOs with a purpose agenda are entrepreneurial, push boundaries of short termism and aspire to transform industries, not just markets. Corporate leaders that embrace a globally anchored purpose understand the significance of an institutionalized long-term growth perspective. In fact, they come to view this as a necessity for both organizational competitiveness and transformation in the digital era. These CEOs lead by example, maintaining an operationally anchored leadership mindset and a consistent purpose-driven approach. What’s more, they understand that employee empowerment is more than a trigger for employee satisfaction; it is an effective way to unleash capabilities for market-leading and pioneering innovation.

Interface CEO, Jay Gould, demonstrates these traits as he continues to implement the same approach to business pioneered when the company first embraced purpose almost 25 years ago. A recent example of this is Interface’s global distribution of innovative carbon-negative products that actually capture more carbon than they use.

3. Corporate purpose agendas require new kinds of cross-sectoral partnerships to support bold goals, tackle big challenges and scale innovation faster. Alignment around a comprehensive approach to purpose allows companies to transform stakeholders into powerful long-term partners while fostering pre-competitive, non-traditional partnerships. While traditional businesses struggle with incremental improvements rather than incubating the next big thing, purpose-led companies set more ambitious long-term goals. These big picture initiatives present opportunities for new types of partnership, cross-sectoral collaboration and innovation. The CEOs in our 2019 study believe getting to scale with speed is an imperfect process. Instead, they foster a ‘test and learn’ environment and seek non-traditional partners and open-source capabilities to generate better ideas.

Paypal CEO, Dan Schulman, believes constant learning is critical, and that failure can lead to discovery. The company’s acceptance that things won’t always go to plan is critical to its ability to innovate and grow as a business, while its purpose-led agenda fosters a problem-solving approach.

4. Purpose-led CEOs embrace the essential role of the unexpected. The CEOs in our 2019 study recognize that the unexpected is often an opportunity rather than a threat. Hubert Joly, Chairman of Best Buy, remarks, “Dealing with the unexpected and seizing those as moments of truth is a very powerful idea. It is in those [unexpected] moments that you can really make a difference.” In Best Buy’s case, one such unexpected event was Hurricane Maria. The company responded to this crisis by organizing private planes, flying in food and water, and offering to evacuate employees. This approach spoke volumes about their values and the resulting increase in customer and employee loyalty has, in turn, increased Best Buy’s revenues.

5. Organizational agility empowers employees, enables a greater flow of ideas and supports innovation. Most of the CEOs featured in our 2019 study consider organizational agility the most important characteristic of a successful, purpose-driven organization. As such, many of them are taking steps to drastically reduce corporate hierarchy in an effort to boost agility. Most have already introduced a flatter structure to become more adaptive. All 30 CEOs were intensely focused on the motivation, engagement and collective intelligence of their employees.

David Kohler, CEO of Kohler, explains, “We look at measurements overall as a company, and regionally, and by business, but the greatest success is when the associates in an organization are driving the agenda on a self-directed passionate basis… We've learned a lot about organizational change, and you can't mandate this. The power is in the passion of the enterprise. People genuinely want to do good things.” Organizational structures that reduce resistance to change empower and incent employees to fully engage with the driving purpose of their business.

Participating CEOs include:
CEO    Carlos Brito    AB InBev
CEO    Brian Duperreault    AIG
CEO    Hubert Joly    Best Buy
CEO    Herald Kruger    BMW
CEO    Tom Linebarger    Cummins
CEO    Emmanuel Faber    Danone
CEO    Remi Eriksen    DNV-GL
CEO    Feike Sijbesma    DSM
CEO    Zhang Ruimin    Haier
CEO    Peter Agnefjall    IKEA
CEO    Pablo Isla    Inditex
CEO    Jay Gould    Interface
CEO    Barry Rafferty    Ketchum
CEO    David Kohler    Kohler
BoD    Laura Kohler    Kohler
CEO    Jean Paul Agon    Loreal
CEO    Anand Mahindra    Mahindra & Mahindra
CEO    Grant Reid    Mars
CEO    Ajay Banga    Mastercard
CEO    Lars Sorensen    Novo Nordisk
CEO    David Taylor    Proctor & Gamble
CEO    Dan Schulman    PayPal
CEO    John Fallon    Pearson
CEO    Frans van Houten    Philips
CEO    Johan Torgeby    SEB
CEO    Joe Kaeser    Siemens
CEO    Denis Machuel    Sodexo Global
CEO    Lorna Donatone    Sodexo North America
CEO    Kaan Terzioğlu    Turkcell

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Find the full study here: Leaders on Purpose 2019 CEO Study.
For more information contact Monica Marshall at monica.marshall@ruderfinn.com.

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Monica Marshall
Ruder Finn
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