Susan Bird, CEO of wf360, is impassioned about the value of conversation. “As we get more electronic, conversation is the new luxury”. Her Inner Circle luncheons bring together eclectic groups for a free-ranging discussion around a particular topic. The recent lunch in LA focused on purpose. (The meeting was hosted by Laurie Coots, Chief Marketing Officer of TBWA Worldwide, in their marvellously quirky offices, with the conference room table make of surfboards, and the bastetball court in the middle of the office).
Many corporations see maximizing shareholder value as their sole purpose. The burning question was ‘is that a sufficient purpose for an organization?” Most people said no. Everyone agreed that a purpose, whether it be as lofty as changing the world, or as down-to-earth as serving their customers, was more engaging for employees. People may pay lip service to caring about all their stakeholders, but as Linda Lore, CEO of Frederick’s of Hollywood put it, most corporations manage their behaviour to satisfy only one stakeholder – the shareholder.
What happens when an opportunity offers an immediate financial windfall, but undermines the company’s purpose? Tena Clark, founder and CEO of private DMI Music and Media Solutions, described a situation where she’d turned down a significant piece of business in order to remain true to her purpose. Being private is a huge buffer from the financial markets which demand short term returns; Tena’s decision may only pay off years in the future. My question "What would happen if all shareholders had to hold stock for a minimum of two years" generated considerable discussion about whether that would put a damper on market drivers for short-term results.
Western companies who think in the long term, usually justify such decisions in terms of the ‘protecting the brand’. Jose Rueda, a Canadian now teaching business in a university in Hong Kong, argued that Chinese do not place much value on brand. They are more purely money-driven than Western companies, feeling that the relationships had to endure, but not necessarily the brand. Taking a short-term profit and exiting a business was more acceptable in that culture than in the West. (To me, this is akin to day traders rather than value investors). He argued that this cultural difference was a key source of misunderstandings and misperceptions of the Chinese by the West.
Another discussion emerged around how you could evolve purpose over time? PRI’s CEO Alisa Miller described Public Radio International’s need to establish its purpose as connecting people with their interconnected world. That purpose has already moved from radio to audio (including podcasts and so on) and must now move to pure storytelling. This is a difficult move to sell to the board of directors. Alisa described PRI as a ‘battleship in a tempest’. In order to survive, she feels the organization has to move to a hybrid business model, combining for-profit and not-for-profit revenue in order to survive. The challenge will be to remain true to their purpose during such significant change.
Andy Hobsbaum, Co-Founder of Green Thing, and Niall Murphy, Founder and CEO of Evrythng shared a common theme, arguing that many companies have a purpose centred on endless growth, a proposition that is unsustainable. Kris Manos, former CEO of Hermann Miller returned to this thought at the end, musing about how persevering values can be.
The lunch ended by going around the table with everyone stating their biggest insight and offered a provocative what-if question. What if China ruled the world? Was China different from the West only because it was at a different stage of development? What if women ruled every company and every country? What if we understood the relationship between the economy and wellness? What if brands were important in China (meaning that they would do business more like the West)?
It was a wonderful format for a discussion. Susan was a magnificent hostess, guiding the discussion with a lovely light touch. What a delightful group of people! No concrete conclusions, but lots of food for thought.