- Traditional organizations usually have a single
purpose, to increase shareholder value.
But that's strategically limiting for many organizations.
Why?
If traditional shareholders are the core constituency
of a traditional organization
to the exclusion of all others,
they'll demand that the organization generates a profit.
And that's what the organization will do
even if it's at the cost of other constituents.
The former CEO general elect Jack Welsh
called this relentless push for shareholder value
at all costs the world's dumbest idea.
That's because if the only stakeholders who matter
are shareholders,
the organization actually has strong incentives
to put other stakeholders at a disadvantage.
That's strategically limiting because
it narrows the definition of success for the organization
and therefore, limits the range of positive outcomes
the organization can generate.
So let's imagine that the underlying purpose
of the organization is actually to meet the needs
of a range of stakeholders.
Including customers, employees, partners,
communities, and even the planet.
How would that change the strategic goals
of the organization
and make the organization more agile?
Let's say that instead of calling workers talent,
we thought of the workforce as a portfolio of people
with a wide range of unique skills and other attributes.
And suppose that we charge those people
with the task of each trying to determine
how to increase value to stakeholders,
including customers, partners, communities,
the planet, and yes, shareholders.
What would that mean in terms of strategic agility?
Now this isn't some theoretical exercise.
An increasing number of organizations are
expanding their charters
and incorporating a broader view
of the stakeholders of the organization.
Their mantra,
doing well and doing good.
Now I became involved in this movement
towards businesses that change the calculus of business
back in the early 2000s.
When I worked at a small partnership called
Collective Intelligence.
Our group went on to co-found a conference
we call SO CAB, which today is the premier gathering for
entrepreneurs, investors, and organizations
focused on doing well, and doing good.
That mantra is coming to infect the strategic thinking
of entrepreneurs, investors, and organizational leaders.
So let me give you an example.
Suppose a large technology company was about to
disintermediate a large group of workers by automation.
The tech company could simply accept this impact as
collateral damage.
What venture capitalists often call
negative externalities.
But rather than simply accepting that disruption
as an inevitable business consequence
what if the tech company actually fielded software
to help those workers learn the skills
the tech company itself was going to need in the future.
Not only would it be good business for the tech company,
they'd ensure they have a trained workforce for tomorrow.
And along the way they'd be helping to strengthen
the communities where those workers live.
What's the likely result?
Happy customers who want to support an organization
that's doing the right thing.
Happy employees who are contributing to achieving
a positive impact in the world.
Happy communities which will continue to have
citizens with good jobs.
And, happy shareholders
who will be invested in an organization
that's both doing well, and doing good.
So, probably the best reason to rethink
the nature of the organization
and to expand that range of stakeholders,
customers, employees, and shareholders,
they're all going to increasingly require it.
Millennials, the generation that will
soon run the world, are increasingly
voting with their purchasing dollars.
Buying from companies who's brands they believe
are a positive force.
They're coming to work for organizations
that have a purpose.
And before long, they'll be voting with their
investment assets, as well.
As literally trillions of dollars are passed down
from their baby boomer parents.
As we've come increasingly aware of the interconnected
nature of our organizations,
and the interdependency we all have in our business
ecosystems, we're going to inevitably rethink
the very purpose of the organization.
And begin to bake the needs of a range
of constituents in our strategic goals.
Why not start now?