The Strategic Importance of Recognized Leadership

Building a Recognized Leadership Framework

The need for reputable corporate leadership has never been more acute. We are grappling with large-scale global challenges - climate change, social dislocation, economic inequality, financial uncertainty - that require a new type of leadership from global entities.

Governments appear unwilling or unable to lead. Civil society, while highly engaged, does not have the scale or infrastructure to deliver the required change. Despite low levels of societal trust in companies (see graphic below), all roads lead to more committed and effective leadership by global business as the engine to drive a sustainable, stable and prosperous world. This is in the self-interest of multinational companies as well, as a global company cannot succeed in a failed world.

Net Trust in Institutions

Now, that's a bold statement!

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The ROI on enlightened corporate leadership has, in many cases, been underwhelming. Despite the promise of strong social and environmental performance to drive business value – enhanced reputation and brand equity, stronger policy influence, deeper customer and shareholder loyalty, increased market share, and greater talent attraction/retention – all too often there have been obstacles between a company’s commitments and the promised benefits.

One of the fundamental obstacles to creating more value for the enterprise from its sustainability performance and strategy is the limited understanding a company’s stakeholders have of these commitments. Without stronger engagement and recognition of a company’s commitments, business value remains limited. The solution, we feel, can be found in building leadership that is recognized.

Why recognized leadership? We believe that the only type of leadership that is enduring and catalytic is one that is recognized. Recognized leadership delivers value to the business in multiple forms, inspires stakeholders, creates virtuous competition among competitors, and turns trust deficits into surpluses.

Our simple but potent insight here is that in order to accrue the benefits of enlightened commitments people need to understand what you stand for as a business and how you are executing on your corporate purpose. Collectively and in general, companies have done a poor job engaging with their employees, customers, suppliers, communities, investors and NGO partners in this area around a shared vision and benefits. This goes well beyond marketing and communications.

Recognized corporate leadership requires the thoughtful alignment of a number of moving parts that includes Purpose (vision and strategy), Performance (impacts, positive and negative) and Participation (engagement and involvement). A branding campaign is insufficient to deliver recognized leadership without it being tied deeply into business performance. Similarly, a strong vision or purpose underwhelms if I cannot be a way to engage stakeholders more deeply.

Three Pillars of Recognized Leadership: Performance, Purpose, ParticipationAccording to the latest GlobeScan/SustainAbility Survey of experts, companies such as Unilever, Patagonia, Interface, M&S, Nestlé and Nike have taken a more holistic approach to purpose, performance and participation and are driving the agenda and increasing business value.

GlobeScan’s approach is to build recognized leadership strategies based upon a foundational assessment of the business context and through internal and external stakeholder intelligence and engagement. The challenge is to develop an integrated strategy that manages risks, optimizes opportunities and societal contribution, as well as best captures the imaginations of stakeholders. All this in ways that build recognition for the company, which closes the loop on business value and in turn leads to greater societal impact as the company derives greater benefits.

Reasons

Recent examples of companies that are creating strategic frameworks that are well-positioned to engage stakeholders include Anglo American’s Real Mining, Real People, Real Difference, AT&T’s Connect to Good, BT's Better Future, HP's Living Progress, M&S’s Plan A, McDonald's Together for Good, Nestlé Creating Shared Value, The Walt Disney Company's Be Inspired and Unilever's Sustainable Living Plan, among others.

We are on the cusp of a new era of corporate engagement that will fulfill many of the promises of the business case for corporate sustainability. We have better understanding of the challenges we face and the actions required to secure a better world for our children and grandchildren. Recognized leadership can help progressive companies mobilize their capabilities for a brighter future.

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