Blog by Valerie Keller Executive Director, EY Global Markets and Global Lead, EY Beacon Institute.
Another Davos has blown by, and like many, I find myself reflecting on the conversations and revelations there. In light of everything happening in the world today, I keep going back to the pivotal question for our roundtable there: “Do uncertain times need certainty of purpose?”
The World Economic Forum annual meeting is a key moment for our Beacon Institute community — we give pioneering leaders safe space there, the chance to zoom out for the big picture and connect with peers wrestling with the purposeful transformation of business. This year was no different, as a packed house of CEOs, board members and other leaders braved the cold early morning for our executive roundtable. What was different was the palpable shift beyond business as usual. And the sense of urgency.
What I heard there convinced me of two things: purpose is more strategically important for companies than ever before, and leaders increasingly feel an urgency to turn rhetoric into reality.
Navigate with purpose, but not just any type of purpose …
As I heard one CEO put it: economic, social and geopolitical forces are making it more critical to live purpose. Operating in today’s volatile and disruptive environment is akin to being tossed on the high seas in a storm. Purpose becomes a guide and constant measure helping organizations navigate disruption. Meanwhile, there is a “pull” for purpose within organizations that crosses generations, as individuals judge the meaning of their own work and the impact that their organizations have on broader society, now and in the future.
But it’s not just any purpose. In today’s world, the notion that the purpose of business is profits is passé. That’s purpose with a “small p.” Businesses who live Purpose with a “Big P” — those committed to driving value for multiple stakeholders — unlock new market opportunities and drive sustained value over the longer term in addition to short-term gains.
So the conventional business model, a view of the world with companies acting solely for the benefit of shareholders, is losing ground to a more inclusive orientation. In a key finding of Beacon’s next research report, 68% of executives say their purpose has completely or almost completely changed as a result of the volatile and uncertain environment. And interestingly, more than half of those leaders have moved toward a purpose that creates value for multiple stakeholders. Many of the senior executives I met at Davos are seeing the same thing. They told me that acting in the interests of a wider set of stakeholders is simply smart business sense.
The clock is ticking for the purpose journey
There is a need for speed. Echoing Beacon’s research findings, business leaders said they understand that integrating “Big P” purpose starts at the top, but they know that they can’t rely on rhetoric alone. They need to “walk the talk” — and quickly. Just as politicians who fail to deliver on campaign promises face the wrath of voters, businesses failing to deliver on their stated purpose fast enough can lose the trust of their employees and customers, which can kill performance.
And so, one of the key messages to come from Davos is that the pace of purpose integration is critical. Day-to-day work and strategy must be connected, and incentives must create that connection.
Get the missing middle “on board”
While there was consensus that leaders need to be out front in the drive to integrate purpose, they cannot do it alone. Middle managers are vital enablers of change. In the day-to-day behaviors and strategic decisions they help live “Big P” purpose in a way that resonates with employees at all levels of the business. They can bridge the gap between enthusiastic young talent and senior leaders’ broader vision. But to make it happen, managers need empowerment, strategic resources and the incentives aligned with purpose and longer-term value creation.
I was inspired by Infosys CEO Dr. Vishal Sikka as he shared with the Beacon community specific strategic initiatives undertaken to reduce the risk of disconnect between Infosys purpose and the day-to-day work of its people. For example, he made 9,500 project managers “purpose owners.” As he put it, “the entire groundswell of purposeful growth, purposeful innovation starts from there.”
It was a telling example of what our research reveals: you need to make purpose real for people — and you need people to make purpose real.
Knowing where we stand
Over the year ahead, Beacon will continue working with our community of boards and C-suite leaders who are reimagining what it means to be a successful business in the 21st century.
Our new global research study, Navigating with Purpose (to be released this spring), provides an empirically based examination of how best-in-class companies live purpose to succeed in today’s volatile, disruptive environment.
What we’ve learned to date in all the research and roundtables tells us that we can’t afford to dawdle. In our volatile world, people are crying out for purposeful business, and the need to move from rhetoric to reality is pressing. We welcome your engagement in the movement.
More provocative insights from Davos and business leaders globally are available at www.ey.com/beacon.