Note: this article is part of The Transatlantic Debate Blog series, which forms a conversation between Dr. Katrin Muff and Dr. Kathy Miller Perkins on business sustainability.
Have you ever thought about how many formerly great companies are no longer around? For example, whatever happened to previously iconic companies like Compaq, Standard Oil, and Polaroid? And who can overlook the gradual demise of Blackberry? Of course it is difficult to say whether these failures could have been predicted much less prevented.
Yet as we look ahead at the demands and threats that signal our corporate futures, several obvious needs will include:
- the need for proficiency in innovation,
- the ability to attract and retain talent in a tight and changing labour pool and;
- the capability to identify and mitigate risks such as those arising from climate change.
The full list is much longer, however I would suggest that it is most critical to explore two related foundational issues that I believe will determine how we handle all of the many other challenges. These are: (1) defining our assumptions about company purpose, and (2) broadening our view of who counts.
- Our assumptions about the company’s purpose and role in the world.
An assumption is something that we accept as true without question or proof. Although often implicit, assumptions underlie much of how we function both individually and collectively within our companies. These assumptions inform our company identity. They determine the lens that we use when we make decisions. And assumptions, while sometimes hidden, impact how others view us, including our employees, our customers and society at large.
The most critical assumption upon which all others rest is why we are in business in the first place. My argument is that companies who assume a responsibility and purpose beyond merely making a profit are more likely to succeed in the future than their counterparts. Our increasingly transparent and activist world leads to higher expectations concerning our companies’ ethics and in how we serve the world.
In their recent article The End of the Beginning, Harvard Business School faculty Bob Eccles and Georg Kell state “in an interdependent world, long-term financial success goes hand-in-hand with social responsibility, environmental stewardship, and sound ethics.” [i]
- Our view of who counts: Stakeholders
Those groups that hold expectations for our companies and that can affect and be affected by us are often referred to as stakeholders. Over the past few decades, companies have limited their acknowledgement of stakeholders to a relatively small number, often including employees, customers and stockholders. However over the past few years, our awareness of the numbers of stakeholders who impact our outcomes has increased dramatically. Some argue that most companies have at least 20 impactful stakeholder groups, whether they know it or not.
Nowadays information about our company can be accessed by anyone interested in it. This easily accessible information provides stakeholders with the tools to exert pressure on our companies if they choose to use them. And greater numbers of stakeholders are electing to do so.
Here are three of the many groups of likely company stakeholders to illustrate how their expectations have increased:
- Activists. These groups, sometimes referred to as NGOs, are increasingly significant stakeholders. Many of them monitor the impact of business activities and legislation. Moreover, they work to increase awareness in the population at large of issues that could affect consumers and communities. Social change is often the outcome. Nike revamped its labour practices in the ‘90s largely due to a boycott campaign. Likewise, Walmart raised its base pay for employees at least partially as a result of information that activists provided to the public about employees relying on government assistance.
- Customers. In a similar vein, customer activism is also on the uptick. They are increasingly concerned about what goes into the products that they purchase. For example, consumers are looking more closely at the ingredients that go into foods and beverages. A study conducted in 2015 showed that 75% of global consumers believe that non-GMO foods are somewhat or a lot healthier.[ii] Likewise, consumers are beginning to show concern about the chemicals that go into cosmetics as well as household and personal care items. These issues do influence their buying choices.
- Investors. These stakeholders have always been influential in our publicly traded companies. Now many are asking for more information about the risk of climate change to the companies in their portfolios. A 2015 study by Mercer showed that the majority of asset managers now take climate change predictions and models into consideration in their risk assessments.[iii]
To summarize, our companies’ futures are likely to be affected by trends that we can already attend to if we choose. While many future challenges are predictable, how our companies choose to address them may boil down to two basic assumptions: Defining what our role and purpose in the world is and who counts. Companies must carefully examine their own assumptions related to these two issues in light of the many large global trends that will impact us all.
Author: Dr. Kathy Miller Perkins
Dr. Kathy Miller Perkins is a social psychologist and is the CEO and owner of Miller Consultants , a firm specializing in organizational development, executive coaching and change management. Her work involves helping companies create and sustain organizational cultures that are conducive to executing sustainable strategies. She has worked with companies such as Toyota, IBM, Kindred Health, Brown-Forman, Lexmark, Anthem, Ashland Chemical, the U.S. Military and BC Hydro.