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For More Than Profit

How Great Leaders Create Both Economic and Social Value

By: Michael Beer
Last updated 12/6/2011

Over the past two decades, millions of people around the world have lost faith in businesses and business leaders. Waves of layoffs, outsourcing, and wage freezes, coupled with high-profile scandals, the demise of once-great companies, and stunning increases in CEO compensation, have cost corporate America much of its credibility and legitimacy. Is it any wonder then that business leaders are often perceived as cold-hearted capitalists who care only about maximizing profits?

Amid the headlines about CEOs and companies that have gone astray, it’s all too easy to overlook those that have chosen to follow a different path. Over the past few years, Russ Eisenstat, Nathaniel Foote, Tobias Fredberg and Flemming Norrgren, and I studied 36 CEOs who defy the conventional wisdom and run their businesses with the goal of creating both economic and social value.

In addition to delivering quarterly earnings, these CEOs create workplaces where employees can thrive and feel fulfilled because they have a higher purpose beyond profit-making—helping all people live healthy lives at Becton Dickinson, for example, or caring for people at Southwest Airlines. They strive to build trust with their customers, suppliers, and communities, by taking the long-term view rather than making decisions based only on immediate price/cost relationships.

Consider Becton Dickinson, a company that has made a quarter-century commitment to health worker safety, and has been working for over a decade to significantly improve healthcare outcomes in the developing worlds. In each case, BD went well beyond just providing product to build strong trust-based partnerships with governments and NGOs aimed at addressing a fundamental social issue.

We call this higher-ambition leadership. Higher-ambition leaders believe that their companies have the duty to do both well and good. But what does it take to become a higher-ambition leader?

The 5 Disciplines of Higher-Ambition Leadership
Higher-ambition leaders distinguish themselves by what they do. While they hold distinct values and perspectives about both the nature of business and their individual companies, it is not their beliefs that separate them. It is their actions. By forging beliefs and values into organizational policies and practices, higher-ambition leaders are able to achieve both economic and social value.

Through our extensive study of CEOs around the world, my colleagues and I identified five consistent patterns of behavior among higher-ambition leaders:

1. Forging Strategic Identity. When most leaders craft a strategy, they look outside their organization, and they ask themselves: What is our market? Where are our opportunities? Who are our competitors? Higher-ambition leaders, on the other hand, look inside their organization first, and ask: Who are we as a firm? It is a critical, essential difference, because by looking inside the firm they can assess the unique character and strengths of the institution and the ambitions, passions, and capabilities of their workforce. They then select the best path by finding the intersection between their passions and capabilities and market opportunities.

2. Building a Shared Community to Excel. Higher-ambition leaders set ambitious performance goals. What enables them to develop commitment to these goals is their ability to connect them to a higher purpose that goes well beyond profits. By communicating this larger purpose to the entire organizations they develop commitment to excel. And commitment to a larger purpose and the development of trusted relationships with stakeholders often causes employees to find new business opportunities that otherwise would not have been identified.

3. Creating Community from Diversity. Community—the glue of higher-ambition companies—is built by celebrating diversity. Standard Chartered creates bank-wide celebrations of diverse holidays such as Diwali, the Indian festival of lights, and Chinese New Year. Acquisitions are integrated by sending ambassadors from the acquired company to each of its worldwide bank subsidiaries to introduce the new company and its traditions. And the bank created a “Dance Idol” competition in which teams across the globe compete on the quality of a dance—tied to SBC’s strategy—that they devise and perform.

4. Leading with Sisu. In the Finnish language, the word sisu refers to courage, will, perseverance, and endurance. Yet it’s not a characteristic—as these words suggest—as much as it is a virtue. And, more important, it’s a central tenet of higher-ambition leaders, because it is what pushes them to endure difficulties as they pursue challenging, unconventional goals. As Peter Dunn, former CEO at Steak ’n Shake, told us, “When I am sure of who I am and what my beliefs are I can inspire anyone.” When CEOs and others lead with sisu, they engender confidence and daring throughout the organization. Sisu is contagious: as it trickles through the organization it “infects” suppliers, partners, and other stakeholders.

5. Committing to Collective Action. While higher-ambition leaders are proud and confident, they are not driven by ego. They see leadership as a collective process, at all levels of the organization. They engage and align people around strategy and values, and they welcome input and feedback from colleagues at all levels. Higher-ambition leaders have transparent management styles, and they do not try to fulfill some mythic vision of heroic leadership.
Consider CEO Val Gooding at BUPA, who shared her 360-degree feedback with thousands of employee groups she talked to in the company. Or CEO Ed Ludwig at Becton Dickinson, whose first act when taking charge was to enable “truth to speak to power.” He commissioned a task force of managers to interview people throughout the organization about barriers to the company’s success and when one of them was the failure of a project he led, he owned up to it publicly and fixed it.

About the Author(s)

Michael Beer

is chairman of TruePoint Partners, the Cahners-Rabb Professor of Business Administration Emeritus at Harvard Business School, and author or coauthor of 11 books, including Higher Ambition: How Great Leaders Create Economic and Social Value. His previous book, High Commitment, High Performance: How to Build a Resilient Organization for Sustained Advantage, provides higher-ambition leaders with practical tools and frameworks they need to succeed.  For more information, visit www.higherambition.org