It used to be unusual for a leader to take a public stand on social issues. The concern was it might be bad for business, and that this is the responsibility of government, not companies.
However, the 2020 Edelman Trust Barometer reveals that government is seen as the “least competent and least trustworthy” of the four societal institutions measured.
As trust in government continues to erode, more and more leaders of purpose-driven companies are taking a public stand around issues that impact us as a society. And they have discovered that it doesn’t hurt their business. In fact, it is good for business. Research reported in the Harvard Business Review found that purpose-driven organizations “exhibit superior accounting and stock market performance.”
You don’t have to choose between profits and social good.
Marc Benioff, Salesforce CEO, wrote in the New York Times (Oct 2019) that business leaders can “no longer wash our hands of our responsibility for what people do with our products. Yes, profits are important, but so is society. And if our quest for greater profits leaves our world worse off than before, all we will have taught our children is the power of greed.”
More recently, at Davos 2020, he stated, “Stakeholder capitalism, or the idea that companies have a greater purpose besides just providing returns for shareholders, has hit a tipping point.” Benioff concludes that “suggesting that companies must choose between doing well and doing good is a false choice. Successful businesses can and must do both.”
Indeed, Benioff is describing a growing phenomenon.
In 2017, in response to the Trump administration’s move to sell millions of acres of national park land for uranium and coal mining, Patagonia changed the landing page of their website to this bold statement. And they immediately filed a suit to block Trump’s proclamation in Washington federal court. Despite Trump’s predictable vicious retaliatory attacks, they pressed forward. October, 2019, a federal judge turned down an attempt by the Trump administration to dismiss the legal challenge. Today the battle continues and they’re not backing down.
Why did Patagonia take this stand? It comes from being true to their mission to “build the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis.” As founder Yvon Chouinard explained on a CNN interview, “We’re losing this planet, and we have an evil government… and I’m not going to stand back and just let evil win.”
Patagonia is an inspiring example of a company that is both profitable and purpose-driven. In 2014 they were featured in a Fast Company article “How Patagonia’s New CEO Is Increasing Profits While Trying To Save The World.” Since the time Rose Marcario had joined Patagonia as CFO in 2008, Patagonia had doubled its scale of operations and tripled its profits. At the time she became CEO in 2014, they had about $600 million in revenues.
What makes a company purpose-driven?
Taking a stand is one aspect of being a purpose-driven company. To be truly purpose-driven, people must know what the values are, know what behaviors demonstrate the values, and must live them on a daily basis.
It doesn’t matter what size your company is – whether it’s a huge corporation or a small fire department. Purpose-driven companies live their values in all ways great and small, internally and publicly.
Starbucks, Southwest and Zappos are all highly profitable purpose-driven companies. Their values are prominently displayed on their website. More importantly, they hire for their values, communicate their values in everyday conversations, and use them to make decisions.
Furthermore, values are woven into the fabric of how work gets done. For example, Berrett-Koehler Publishers says, “We reject hierarchical relationships based on compulsion and force, and we seek to abolish class systems on every level.” This value is reflected in their salary structure where each level earns no more than 10% above the next – including the president and CEO! On his own time, Berrett-Koehler Publishers founder and senior editor Steve Piersanti recently took a public stand by penning an article about the ineffectiveness of Trump’s economic policies.
This impressive short video was created by the Bend Oregon Fire Department to show why their values are important and how they are lived. It is used to build relations with their community and is used internally for training new fire fighters, supporting rookies and reminding themselves about what is important.
What does this mean for leadership?
It is impossible to become a high performance organization – to sustain over the long-term high levels of profitability, employee satisfaction, and contribution to society – without also being purpose-driven.
Leaders build these organizations by creating conditions where:
1. Employees are clear about the values and what behavior demonstrates them.
2. Leaders model the values.
3. Values are used to guide how you make important decisions.
4. Goals are about more than profitability.
5. Concern is for the benefit of all stakeholders – employees, customers, shareholders, society.
These organizations require authenticity from their leaders. Being a purpose-driven leader means knowing when you need to speak your truth… and having the courage to take a stand for the greater good during times of moral crisis.
An excellent call to action with great tips for what we can do!
Last week US Senator Whitehouse from Rhode Island wrote in the Harvard Business Review, “Absent strong action in Washington, we are spinning toward catastrophe. The Bank of England says that “climate change will threaten financial resilience and longer term prosperity,” and the government-backed mortgage giant Freddie Mac has warned that rising sea levels will prompt a crash in coastal property values greater than the 2008 housing crash. With these predictions and others looming, it is time for corporate America to rise to the occasion and unite around real climate legislation — with or without the trade organizations.”
That’s an excellent article. He concludes it, “At the moment, the corporate political silence is deafening.”
Another thing you can do as a leader at any level, if you work in a company that this applies to, is to start an internal conversation about how your company could take a stand.
p.s. Here’s a link to the article for those who would like to read it: Is Your Trade Group Blocking Climate Action, January 31, 2020
With the decline of family and religion as major impactful cultural forces business organizations can be a major force for good, a place the embodies and teaches values. Thanks for the examples and reminders Jesse!
It makes sense, especially considering how much of their day people spend at work.
Your call to stir the corporate conscience is much needed and we should be enlisting more to do the same. I have a friend here, Jon Mertz, of Activate World who is in our camp with similar concerns. It’s a very sad time for me as I watch and hear our leaders in government taking us to a place that most of us worry about in so many ways. And it’s also pathetic that more corporate leaders aren’t weighing in publicly. Thank you for your continuing good work
PS I just finished reading Bob Iger’s “The Ride of a Lifetime” and if you haven’t seen it, do have a look.
Thanks for pointing out the good work that Jon Mertz and Activate World are doing, and also for the book rec. I think more and more leaders are starting to weigh in and that we will see more in the future, especially as we encourage them to do so.
Thank you, Gary! And, thank you, Jesse, for your thoughtful post. Many trends highlight why business leaders need to step up more, and there are wonderful examples. To gain further traction, it is now time for business leaders to put words into actions through a robust stakeholder model. Thanks again for guiding how leaders can (and should) step up. Thanks! Jon
Thanks, Jesse. An important post about doing well by doing good as they say. I appreciate it and that there are more and more business leaders out there who think this way.
I’m hoping that as business leaders read articles like this one, they will feel more support for taking a stand.
It’s critical that all major institutions in our society reflect values that support the continuation of our planet and the worth and dignity of everyone living on it. Corporations and government have as important role as do churches and nonprofits.
Well said, Betsy! Many thanks for sharing your insights.
Corporate leaders can no longer evade how their companies’ actions affect society at large. The risk is too great. We have reached the point of moral crisis.
Your examples of values driven companies give us much needed hope and guidance during a time when it is so important for all leaders to model and insist on strong moral values and a democracy of integrity, respect, caring, and competency.
That was my intention – to show the opportunities and possibilities. Thanks, Fay.
Jesse, this is preciesly where leadership must go, and for good reason. A recent example is the heightened US-Iran tensions that led to the Ukraine Airlines plane crash that killed 63 Canadians. Michael McCain, CEO of multi-billion Maple Leaf Foods couldn’t let that pass without taking a position – a courageous one given the backlash his company would get from Trumpers. I suggest your readers check out the link below and this question them: If you were Maple Leaf’s CEO would you have done that?
https://www.businessinsider.com/maple-leaf-foods-ceo-michael-mccai-blasted-trump-iran-plane-crash-2020-1.
Another excellent example of a business leader taking a stand. Thank you for sharing the article link!
And I appreciate your thoughts as former CEO of a large corporation. We need courageous leaders like you and Michael McCain.
I have never felt more strongly that organizations have a MORAL imperative to a triple bottom line: people, planet and profits. The first two are ALL about purpose. The state of corruption and self-service coming from our government is horrifying. Thank you for highlighting organizations and leaders who put their purpose where their hearts are. No wonder I buy Patagonia. BRAVO
I’ve become a big fan of Patagonia, too, and I am giving them my business.
Jesse, In looking at the Bend video and reading Steve Piersanti’s article I am struck by how many of these stories and articles are “out there.” Possibly a difficult conversation in some situations I know that my asking clients about their perspectives and plans about these issues of the world is an important part of the contracting I do before accepting a new partnership. Well said.
So glad you watched the Bend video and read Steve Piersanti’s article. There are many wonderful stories out there, and we need to highlight them to serve as a beacon for others.
You remind me that we consultants and coaches can help leaders in taking a stand by asking questions about their company purpose, concerns for related societal issues, and how they see their role.
Jesse, thank you for this clear and powerful message. I believe that our collective society must reflect on what values we wish to live by. Is it solely materialism or do we live for a higher purpose? What are our children learning from us? For business leaders there is risk [even if only imagined] to take such a stand. I have a great deal of respect for those who have the courage to do so.
Well said! I believe we have reached the point where it is riskier NOT to speak out.
So glad that you put together this useful and relevant post. This kind of thoughtful information and moral standing is sorely needed in today’s environment. Thanks.
Hello, Jesse –
Thank you for such a succinct and provocative, yet constructive post. I also appreciate knowing there are so many other leaders who are concerned and willing to take a stand based on conscience, especially given the systemic nature of many of our biggest challenges just now. (Sheldon Whitehouse has been amazingly diligent over the years in calling this out.)
One immediate area for action is to explore how companies’ public policy positions are contributing to gridlock, distorted markets and prices (eg on carbon), dangerously low levels of trust in all U.S. institutions (and many globally). Michael Porter, Katherine Gehl and colleagues have just produced a report with stunning conclusions in this area. https://www.hbs.edu/competitiveness/Documents/a-recovery-squandered.pdf. Here is a quote summarizing Chapter 3, “• A high portion of business leaders seem not
to be fully aware of how their companies are interacting with the political system. • While most business leaders deny that their own companies engage with politics in ways that undermine the public interest, most also believe that business as a whole engages in politics in ways that are bad for public trust in business and bad for America.”
Personally, I have begun engaging my colleagues around constructive, non-partisan reform. We have a Statement of Principle that is open to all business professionals. Some of your network may be interested, Jesse. https://www.americanpromise.net/bapsop
Thanks once again!
Elizabeth
I have such great respect for the work you and the folks at American Promise are doing, and am excited about the ground-swell of support and traction you are getting. It makes so much sense for business leaders to join together in a nonpartisan effort to solve the problem of big money in politics through a 28th Constitutional Amendment. I personally have signed the statement of principle and am including an additional link to the one you provided here for others to learn more: https://www.americanpromise.net
Thank you, Jesse! This is one area where Americans agree (over 76%, across the political spectrum); now we just need to insist that elected officials take action. American Promise just helped as New Hampshire became the 20th state calling for this reform!
FYI, Statement of Principle is at a private until our announcement Feb 12. Would very much welcome additional signatures from anyone who feels it is aligned: http://www.americanpromise.net/bapsop
It’s definitely interesting how the public almost views it as a necessity now for businesses to take stands on social issues. I’ve seen businesses lose customers because they did not speak out about something their community felt they should. I’m still not sure how I feel about this myself. But I do agree that less people than ever trust the government, so perhaps it is becoming more of a responsibility
I understand your concern and believe that any statement should be aligned with mission and values and come from a place of true conviction (not just lip service to retain customers). However, these are difficult times right now, and I believe there is an opportunity for business leaders to look at their responsibility to their community and see a larger picture than simply quarterly earnings. The challenge is to speak truth while hopefully not further contributing to the polarization.