How to Live Up to the Modern Purpose of the Corporation
Last week came a message from American business leaders that was nothing short of revolutionary: The corporation now has a broader purpose than making money for shareholders.
The Business Roundtable – a group representing the nation’s most powerful chief executives – released an updated Statement on the Purpose of the Corporation. For the first time in decades, the statement focused on something beyond shareholder value. It set a modern standard for corporate responsibility, one committed to benefitting all shareholders including customers, employees, suppliers, communities and shareholders.
“Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity,” said the statement from the organization, which is chaired by JPMorgan Chase CEO Jamie Dimon. “We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”
This is not a hope or a recommendation from a committee of mid-level managers that their company should do more than just make money. These are the nation’s most powerful chief executives saying that running a successful enterprise is about more than driving revenue and profit growth. This has the potential to CHANGE THE CULTURE OF THE CORPORATION.
Why did the Business Roundtable do this now? Our experience is that large, legacy brands are suffering at the hands of brands that speak to their audiences in a human-to-human way, rather than as corporation to consumer. Every year, we listen to thousands of people who buy products in a wide range of categories. Over the last few years, we’ve heard an almost universal cry that big corporations are greedy and that smaller, more personal brands care more about people as human beings.
What’s interesting is that humanizing business strategy isn’t just a “feel-good” endeavor. It makes good business sense. The small companies that do this have been steadily eroding the market share of large, legacy brands for years. Their empathic cultures allow them to be more creative, agile and inspired. Their employees are motivated because they have a sense of shared mission that goes beyond net profit. And they have customers who are more loyal because they believe these brands “get them” in meaningful ways.
Whatever the motivations of these chief executives, shaping their companies into more empathic, genuinely caring organizations has the potential to make them play a more meaningful role in the lives of the people they serve. Yes, I said serve. Not sell to. It has the potential to change the way they treat their employees, how they source their products and how they provide a greater benefit to their communities. It has the potential for them to create a more person-to-person relationship with the people who buy their brands.
Within hours of the Business Roundtable releasing its statement, critics pounced saying that without action, the words are meaningless. Some dismissed the statement as “symbolic.” But it doesn’t have to be. We’ve seen a few large corporations begin to humanize their business strategy in meaningful ways.
If you are in a corporate leadership position, and you want your organization to live up to the Modern Purpose of the Corporation, here are three keys to making this happen.
- Lead by example: Our experience in helping companies become more empathic and human is that top management needs to be fully committed to the program. If not, empathy will go the way of a nice-to-do thing instead of realizing its full potential to change the culture within an organization in a way that that makes that organization stronger.
- Create a culture of empathy: Many corporations have grown tone deaf to the people they serve. They listen selectively. They listen to confirm their own agenda. They listen with prejudice and judgment. When was the last time you and your team had a human-to-human conversation with a customer, supplier or community member that wasn’t mediated by a research company?
Empathic Listening is a skill we all can learn. Training people throughout your organization to listen empathically can transform how you understand and connect with stakeholders. Give your teams opportunities to have meaningful, human connections with the people they serve and you’ll find they will become more inspired, innovative and agile.
- Translate empathy to action: Having an empathic culture means nothing unless you have people who can translate that empathy into action. The insights you and your teams gain through empathy can inspire new product innovation and messaging that actually helps people, not just sells to them. But to do this, your teams have to learn to think creatively and conceptually to translate the empathic connections they make into products, marketing and community service initiatives that serve the broader audiences the Business Roundtable described.
In a statement released by the Business Roundtable, Tricia Griffith, President and CEO of Progressive Corporation said “the best-run companies do more” than return value to shareholders. “They put the customer first and invest in their employees and communities. In the end, it’s the most promising way to build long-term value.”
We agree with the vision wholeheartedly and have seen it done at some large corporations. We’ve helped some of our major clients either get on this path or helped them further down this path if they’re already on it. Smart leaders have to be intentional about making it happen by changing the cultures of their organizations. It starts with getting your company to act a little more human. To listen empathically and act with a purpose that connects you in new and more meaningful ways to the people you serve.