5 March 2018 – Lindsay Hooper, CISL’s Executive Director, Education, reflects on the need for businesses to make social value the benchmark for performance. In order for companies to respond to increasing existential challenges and economic shifts driven by the 'Fourth Industrial Revolution', Lindsay makes the case for purpose-driven leadership to deliver the ambitious transformation we need if our global economy – and planet – are to survive and thrive.
A process of transformational change
In an ever more polarised and divided world, a rare consensus is forming among business leaders. Influential figureheads – from BlackRock’s Larry Fink to Unilever’s Paul Polman and even the Governor of the Bank of England – increasingly agree: businesses need to move beyond traditional measures of commercial success and make social value the benchmark for performance.
These voices are multiplying as we see growing acceptance that many of the existential threats to society – such as climate change, pollution, resource scarcity, and social instability – have been created as by-products of commercial activity, and that business has the potential to deliver solutions.
And as business leaders contemplate how to respond to these challenges and to evolving expectations of business performance and responsibility, they do so while facing profound social and economic shifts driven by the Fourth Industrial Revolution.
Whether from advances in AI, 3D printing, blockchain and cryptocurrencies, or the exponential growth of knowledge platforms that enable the circular economy and social media, we are already in the process of transformational change.
The potential to deliver benefits
This change, driven by business innovation, has the potential to deliver huge benefits to society and the environment on which we depend, and to secure the future of whole populations.
But it also has the potential to increase inequality, concentrating power and resources in the hands of the few at the expense of the many, undermining social stability and leading to further fractures in a system that is already under stress.
Change is inevitable, but the outcome of that change is in our hands. And if there is one factor that will determine whether the transition will ultimately prove positive or negative, it is the leadership we create to drive and shape it.
The need for leadership
As Polman, Fink and others are highlighting, we need a new, purpose-driven leadership. And beyond the need for clarity of purpose, there is also a growing recognition that new capabilities will be required: the ability to collaborate, innovate and adapt, as well as the courage to navigate tough challenges and the humility to listen and learn lessons.
But simply acknowledging the need for a new kind of leadership is not sufficient. Although a growing number of businesses acknowledge the need for a new kind of leadership, few are proactive in developing it.
In many cases this is down to a failure of the leadership development industry to focus on developing the kind of leadership we need for the future rather than the kind that was valued in the past. In other cases, it may simply be inertia as the status quo is still too comfortable.
But it is also because we have collectively hung our hopes on breakthrough technologies, or global agreements, to deliver the change we need. Even leading businesses are slowly waking up to the fact that the challenge we face is not a technology challenge but a leadership challenge. And this is not just a challenge of identifying heroic leaders to inspire us from their pedestals, but a challenge of building leadership capacity right across organisations to navigate tough dilemmas, to build the necessary collaborations, to innovate and to act with courage, resilience and humility to shape the future we need. As Mark Carney highlighted in a speech at Regent University last week, the single most important leadership action is identifying and developing the right people.
Our work in equipping leaders
Our work at the University of Cambridge Institute for Sustainability Leadership (CISL) with leading international businesses over the last 30 years has given us significant insight into the challenges inherent in developing and delivering purposeful leadership.
The Cambridge Impact Leadership model, outlined in a new report, offers a roadmap for the kind of ambitious transformation we need if our global economy – and planet – is to survive and thrive.
As more and more businesses acknowledge their responsibilities beyond commercial success, now is the time to develop ways of shaping the leadership required to deliver this.
By equipping leaders across organisations with the ability to nurture innovation and manage risk, as well as shape their commercial contexts and systems to align commercial and social value, we can hope to deliver on broader societal goals.
