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Lindsay Hooper of the University of Cambridge Institute for Sustainability Leadership introduces a new model to help companies embed purpose-driven leadership from top to bottom
No business leader wants to create more air pollution, lead more children to suffer health issues, or put more plastic in the ocean. For the most part, business leaders would like to be a force for good. Yet every day, the decisions and actions of business leaders across the world contribute to significant social and environmental challenges that put the future of our societies and economies at risk.
Businesses are increasingly waking up to the fact that risks and disruptions to the environment and society are bad for business, while society is recognising that current business models are a significant part of the problem and is ramping up the pressure on business to take ambitious action and be transparent about its impacts.
Not surprisingly, then, we are seeing business leaders, across different sectors and regions – from Paul Polman at Unilever to Larry Fink at Black Rock to Sunny Verghese at Olam – acknowledging the need for business to step up and address these challenges, to find ways of doing business that are good for society and the environment.
The leadership required is characterised by 'a willingness to put long-term needs ahead of short-term expedience'
Many companies have already found value in adopting a purpose beyond simple profit, often meeting needs left unfulfilled by government policy. Starbucks recently became the first British coffee chain to impose a levy on disposable cups, whilst Nestlé is offering premiums to dairy farmers to protect the environment and Britvic focused on sugar-free drinks ahead of the UK sugar tax. Companies are also taking action collectively through platforms such as the Prince of Wales's Corporate Leaders Group to accelerate progress towards a sustainable economy.
A host of blue chip companies such as GE, IKEA and Toyota are reaping the benefits of offering “green” products and services. Unilever has purpose-driven brands that are growing at twice the rate of the rest of their portfolio, while GE’s Ecomagination growth strategy would rank as a Fortune 100 company if it were a standalone business.
Dove, one of Unilever's purpose-driven brands. (Credit: monticello/Shutterstock)
According to Unilever’s Paul Polman the leadership required in the new business environment is characterised by “a willingness to put long-term needs ahead of short-term expedience and – above all – an ability to think systemically and to operate in new and collaborative ways”.
Yet few companies are currently proactive in developing this form of leadership. In our research with HR managers and learning and development experts from more than 20 multinational businesses, we found many board members and management teams did not have enough contact with their operations on the ground to understand the environmental and social impact of their business or why the public is expecting business to take action.
Now we realise the importance of adopting an inclusive culture where leadership development is tailored for all employees
Those same executives were also least likely to see themselves as needing to develop their insight or capabilities to respond to the new corporate climate.
Adopting this kind of leadership is no easy feat for a company. It requires investment in leadership capacity, across a whole organisation from the bottom to the top, so it is no longer the preserve of the heroic few.
“In the past, like many organisations, we reserved leadership development for select senior leaders who would return from their training, ready to implement what they had learnt. But the system was not ready for them,” said Desray Clarke, head of leadership development at Anglo American.
Desray Clarke, head of leadership development at Anglo American.
“Now we realise the importance of adopting an inclusive culture where leadership development is tailored for all employees. We realise that one size doesn’t fit all. If we want to deliver on our purpose, it is crucial that all of our 87,000 staff understand and value this purpose and, most importantly, are equipped to deliver the outcomes we need to thrive in the future.”
This is a leadership challenge. This is a people challenge. Human resources therefore has a critical role to play. Yet our research found that HR directors are often disconnected from the changing business context.
To redress this, there is a critical need for HR leaders to build their own insight into the dilemmas, challenges and opportunities that individuals across the organisation will face as they work to align profit and purpose. For example, the challenge of innovating to create new forms of value, to engage with diverse world views, to collaborate with others across complex systems, and to lead long-term transformation while delivering results in the short term.
HR directors must be prepared to highlight the need for leaders to be open to new insights and new ways of working.
There is also a need to take a fresh look at the leadership capabilities that will be needed in the future, rather than replicate those that were effective in the past, and to consider the fundamental values and mindsets required to enable the company to thrive, including the necessary drive, courage, humility and resilience.
In integrating this insight into the ways that they recruit, develop and reward leaders across the organisation, HR directors must be prepared to highlight the need for even an organisation’s most senior and experienced leaders to be open to new insights and new ways of working.
To support these potentially transformational approaches to leadership, CISL has developed the Cambridge Impact Leadership Model, building on CISL’s work with senior business executives over nearly three decades. It is designed to create leadership that is:
1. Guided by a purpose to align business success with the delivery of positive social and environmental outcomes.
2. Built on thinking, values and practice to deliver on this purpose.
3. Continually reflects and adapts and holds itself accountable to deliver the results required. It should ensure consistency and integrity, and be willing to unlearn legacy practices and to set the right level of ambition.
Faced with new tensions between current models of corporate practice, and social and environmental challenges, businesses need to change, and to change fast. And the most effective way to achieve meaningful and lasting change is to equip and empower people across the organisation to lead that change.
Lindsay Hooper is executive director, education for the University of Cambridge Institute for Sustainability Leadership