Path Bending Leadership and Evolving Measures of Value

13 Oct 2011 – Koann Skrzyniarz

I’ve just returned from a visit to Philadelphia and New York last week where I had the opportunity for in-depth conversation with students and faculty at Wharton Graduate School of Business, as well as business and thought leaders from Coca-Cola, Johnson & Johnson, SAP, Unilever, Interbrand, Ogilvy, GRI, Corporate Responsibility, SustainAbility, The Economist and many others. All of these conversations touched on how we are unfolding our thinking about, and finding ways to measure, new forms of value that business might deliver to its customers and other stakeholders in the future. Underpinning these rich and varied conversations was the growing drumbeat, launched in New York, of #occupywallstreet. This growing movement is yet another indicator of the pressure on business to demonstrate its ability to extend its focus beyond profit to other forms of value creation for broader swaths of society.

The fact that the focus of #occupywallstreet seems to center on “corporate greed” as the target of its aggregated angst is just one sign of disconnect between business and the stakeholders to whom business is supposed to be delivering value. But from where we sit, pointing to corporate greed as the reason for our increasingly broken economy is at least one step removed from the real issue. Isn’t it more powerful to look at the root cause of the behavior we disdain, to acknowledge that corporations today have been forced (or at least directed) by the metrics against which they are measured, to behave in unhealthy ways or risk failure? The truth, even for businesses that would rather focus first on how they might deliver shared value to the variety of stakeholders they impact, corporations are beholden to serve the relative few who hold ultimate sway over them – investors who insist that the mandate of capitalism is to allow those who can to manipulate markets through speculation, to their benefit, and too often without any interest in the true measure of the value being generated by the businesses in which they trade.

In fairness, until relatively recently, most business leaders were largely unaware of the long term implications of submitting to this game. And granted, most have played the game willingly – some out of duty, some for the challenge, and yes, also for the financial reward. After all, weren’t we all taught growing up that life is a zero sum game, that playing to win is the only respectable goal? But the good news is that this is changing, as more and more business leaders become aware of the extent of their often unintended impact. We at Sustainable Life Media have the great good fortune to work with countless bright, talented, driven business leaders in our Sustainable Brands community – each in positions of significant influence – who do understand that businesses impact much more than just their shareholders. Many of them sit inside a wide range of today’s leading corporations, and all of them recognize the limits of our current one-dimensional measures of success and are working overtime to change the game. They recognize the increasing demand to migrate toward an economy that looks beyond growth and GDP as measures of business success and economic health, to what some call a “wellbeing economy” – one that is undergirded by measures of success that would serve to support and encourage business innovation that generates broader societal benefit and the creation of shared value rather than impede it.

Many in our community are finding ways to grow revenues from sustainable activities that decouple growth from impact and deliver shared benefit to society in all sorts of creative ways – by reselling existing goods, such as in the case of eBay and partner Patagonia; by facilitating sharing, as in the case of Daimler AG’s Car2Go or by finding ways to provide much needed support to the bottom of the pyramid such as the work SC Johnson is doing in Kenya, Rwanda and Ghana for example. Where clear revenue growth and profit can be found, there is a chance of continued investment – though currently these activities cannot largely compete with other more ‘profitable’ shorter term uses of cash. But much of the activity that needs investing in in order to replenish and sustain our natural resources, support the economic stability of local economies or encourage the health and wellness of society delivers less immediate, less tangible forms of value that somehow needs to be universally valued and accounted for.

It is against this backdrop that we are convening a unique and highly critical conversation at the Wharton School at University of Pennsylvania this month to explore work being done in this arena. If pursuit of revenue and growth as the ultimate answer to our economic woes is increasingly recognized as limited, we need either to reregulate our capital market structures so that investors are restricted from rewarding behavior that is detrimental to the long term health of the whole; or we need to find new ways to measure and attach financial value to intangible contributions to society such as poverty elimination, collaboration, and environmental restoration and maintenance, so that companies can be properly rewarded, or docked in financial terms for those contributions (and withdrawals) they make to/from society’s assets. Likely we need to do both.

At Sustainable Life Media, our commitment is to help reconstruct a healthy business/consumer relationship – to help find a path back to a virtuous circle of healthy commerce, where skills and needs shared in healthy ways contribute to a flourishing society rather than a depleting one. Of course redesigning the way we make things, and engaging society (including customers, suppliers and other stakeholders) as partners in the redesign of our economy are both central to this effort. However in order to successfully transform our economy for the future, we need “Path Bending Leaders” to help us craft ways to define, measure and reward new forms of value that can be successfully delivered by business.

This is the conversation we look forward to convening at Wharton on October 24th, where we will bring together a commanding group of path bending leaders to discuss both work currently being done, and that needing doing around the New Metrics of Sustainable Business as we seek to equip sustainable brands to profitably contribute to a healthier economy for our future.

We know members of the SustainAbility community are aligned in this goal. We welcome you to the conversation and are happy to offer a 20% registration discount for those who would like to join. To register at a discount, visit: SBIIF.COM, and use the code: SPKSBM. We look forward to engaging with you there!

KoAnn Vikoren Skrzyniarz is Founder & CEO of Sustainable Life Media. Another version of this post appears on SLM’s site, here.