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/grow: the CEO's Master Playbook for Coaching Value into Existence.">Sandy Ogg is Founder and CEO of CEO.works, and the author of /grow: the CEO's Master Playbook for Coaching Value into Existence.
It’s intriguing to watch the dust-up after the Business Roundtable’s latest statement on the new purpose of a corporation. Pundits on both sides of the “good” vs. “evil” corporate debate have jumped into the fray, creating quite a bit of buzz. I speak for myself when I say that I’m encouraged to hear 181 chief executive officers from major U.S. corporations, including Amazon’s Bezos, Apple’s Cook and GM’s Barra, sign a declaration outlining a “modern standard for corporate responsibility” that speaks of delivering value, especially when that declaration states their shared commitment is to “to all of our stakeholders” and not just to shareholders. These companies have now publicly committed to:
As my friend and former Baxter International CEO Harry Kraemer said, “This statement reflects what I tried to do at Baxter for 25 years, and what I think most companies do.”1 We only get to contribute to the common good by making enough profits to stay in business. So why make this statement now?
Perhaps it is a sign of our economically uncertain, politically demoralizing times that such an announcement is even newsworthy. After all, what these CEOs have declared as “modern standards” have been essential practices in the business world since before I can remember. What enterprise can succeed over the long term by only taking care of shareholders? OR only customers? OR only employees? OR suppliers? OR communities? That’s right: none. One of the companies I currently consult with is a case in point. It actually survived both of the twentieth century’s world wars by putting two things first: value, and all the people they touched with their enterprise.
It is only by considering the whole ecosystem in which our businesses operate that we endure.
When I think back on all the CEOs I have had the good fortune to have worked with in the last three decades, the winners have all learned—some the easy way, some the hard—that success is not an “either/or” game. They and their leadership teams play the ultimate “and” game: they succeed by connecting people to value.
They focus on delivering value to customers. And they show employees they are valued. And they share the value they create with suppliers. And they bring opportunities to create and receive value to people in the communities in which they operate. Then they share their success at doing all this by delivering decent returns to their company shareholders.
No one except the Roundtable members will know for certain what prompted them to make their statement. I only know from my own experience as a CHRO with Unilever and as a trusted advisor to CEOs of multinationals around the world that, as machine and artificial intelligences continue to infiltrate our lives at work, it’s absolutely imperative that we remember that business is, first and foremost, about people and value.
In their 2018 bestseller Talent Wins, co-authors Ram Charan, Dominic Barton, and Dennis Carey shone a spotlight on the importance of talent to improving a business’s ability to create value. For most of my 30-year career, I have been learning about how to make better connections between the talented individuals we have working in our organizations and the returns they generate for the company. And I have discovered that, more often than we would want to admit, those connections get broken because of some basic design flaws in our business practices. The CEO and CFO talk about the financial side of the business and concern themselves with cash flow and value creation; the CEO and the CHRO talk about the people side of the business and concern themselves with talent supply and assignments. Essentially, we have been talking about talent in conversations that are disconnected from our conversations about value.
That is why, along with my new business partners, Sumeet and Shefali Salwan, we have created a five-step Talent to Value process that brings those disconnected conversations about talent and about value together. That is why we have been working directly with clients over the past year using this new methodology to help them design a way forward that re-establishes the myriad connections between talent and value.
1. Joe Cahill, “What’s really behind CEOs’ common-good-over-profits pledge”, Chicago Business, August 20, 2019. https://www.chicagobusiness.com/joe-cahill-business/whats-really-behind-ceos-common-good-over-profits-pledge