Organizational Governance

Are We Seeing the Emergence of the Enlightened CEO?

Society. It’s one of the three pillars of sustainability, but the least defined and the least understood. Corporations have traditionally struggled to blend social purpose with hard-nosed business acumen, but as consumers increasingly look to brands to combat key societal issues such as climate change, human rights, equality and unemployment, this is starting to change. Social brand value is becoming much more sought after, and with it the necessity for a new type of leadership — a more honest CEO.

By Maxine Perella | Published 10 years ago | About a 4 minute read

Perhaps the most vocal example of this was illustrated a few months back, when Apple CEO Tim Cook took a swipe at shareholders and defended Apple’s right to make business decisions that don’t always directly benefit the bottom line. “When we work on making our devices accessible by the blind, I don’t consider the bloody ROI,” he fumed.

But it is one thing to pay lip service to social value, and another to seriously consider society as a key stakeholder behind the closed doors of a boardroom. How can your average CEO gain a deeper understanding of not just how to create such value, but embed it meaningfully into their business model?

Three highly respected business leaders came together to discuss this very subject at a ‘CEO and Society’ event hosted by sustainability think tank The Crowd in London, UK, last month. Deborah Meaden, a well-known British entrepreneur (of "Dragon’s Den" fame) sat alongside Innocent Drinks CEO Douglas Lamont and Paul Westbury, CEO of Buro Happold, to reflect on what exactly makes enlightened chieftains tick.

Meaden wasted no time in issuing a clear challenge: She said CEOs must redefine profit beyond ROI and pure cash.

“The alternative meaning of profit is benefit … a CEO that will spend time considering global issues and their organization’s place in tackling those long-term issues, and then placing value on behavior that tackles those issues … that to me is an enlightened CEO,” she maintained.

Such vision undoubtedly requires a fundamental power shift. As a CEO begins to align business decisions with personal values, priorities must change — not just from employer to employee, but on a wider level, from corporation to citizen and consumer. Central to this is transparency; if it is treated as a function of compliance, any attempts at honesty will fail at the first hurdle. Transparency must be meaningful, part of daily behavior, and make CEOs accountable at every level of the organization.

“CEOs are terrified at the thought of openness and transparency,” Westbury noted, arguing that business chiefs must not only be brave enough to pursue “the simple honest truth” but back it up with action that will resonate. “The biggest challenge for a business is running a community of people — a model that will engage and get buy-in,” he added.

But what if such an operating model, driven by democracy and social responsibility, should fail? A recent high-profile case in the UK illustrates only too clearly the risks involved. Last March, Euan Sutherland quit his post as CEO of The Co-operative Group after only 10 months, calling it “ungovernable” due to its complex structure. A reformer, Sutherland wanted to bring a higher degree of corporate experience to the organization, which has suffered huge losses and been hit by a string of board-level scandals, but the resistance he came up against proved insurmountable.

The Co-operative Group is the largest mutual organisation in the UK. It prides itself on democratic ownership (it is collectively owned by nearly eight million customers) and has been built from the beginning with social mission in mind. Tragically its model, where many benefit rather than a few, has taken a serious knock and now serves as a warning to other firms looking to follow suit. If it is to any salvage any credibility, its immediate priority must be one of rebuild — and that will require a radical overhaul of how it is governed.

Westbury believes that trying to revolutionize a business owned in this way is “near impossible,” a view echoed by Meaden, who observed: “It worries me that when you have an organization that has had such a fantastic reputation and loses it — it can lose the will to change.”

However, her advice for the Co-operative was to go back to basics. “They need to ask their members what is important and make sure when they rebuild their reputation, it’s built around those core values.”

Many a CEO will be watching closely to see if the organization can succeed in repairing the bridges between business and society. Rest assured it’s a great opportunity. One interesting theme that came out of the ‘CEO and Society’ event was the fact that we live in an era in which stakeholders are more conscious of local and global challenges — this in turn is creating more space for enlightened leaders to emerge and resonate.