A group of 181 CEOs recently upended decades of convention by signing the Business Roundtable’s revised “Statement on the Purpose of the Corporation.” The statement formalized a growing belief that businesses exist to create value for all of their stakeholders, from workers to people in the communities they operate in, and not just their shareholders.
In signing the statement, the Business Roundtable CEOs have now bared themselves for greater scrutiny of their practices and higher standards of accountability when it comes to societal and environmental impact. The future health of businesses, and the society that surrounds and nurtures them, will increasingly defined by concrete action to foster “inclusive prosperity”, as the BRT statement says.
To deliver on their promise, business leaders need to radically rethink their impact strategies, taking heed of some of the major lessons learned and transformations that have occurred in philanthropy over the last 20 years.
Since the mid-to-late 1990s, when a group of visionaries helped catalyze the social entrepreneurship movement, we have seen a wave of change centered on innovation, evidence and rigor, cross-sector collaboration, systems-based approaches, and diversity, equity, and inclusion.
The most significant impact of this evolution has been in global health, where entrepreneurial leaders from across sectors and communities have come together to deliver tremendous results. According to the United Nations Foundation, the global under-5 mortality rate declined by 44%, new HIV cases decreased by 35% since 2000, and in 2015, about 60% of the population that is at risk for malaria had access to insecticide-treated nets, compared to just 34% in 2010.
In the U.S., inequality remains a pressing problem but the seeds of change have been planted in important systems. A revolution in how we nurture learning in children, driven by advances in our understanding of developing brains and led by organizations like Transcend and City Year, is taking root in early childhood and K-12 education. A new workforce development paradigm is rising, evidenced by a wave of investment in talent, attainment, and alternative pathways to good careers, led by organizations like Year Up, MLT, Braven, and postsecondary institutions across America. Growing efforts are being made to engender diversity, equity, and inclusion inside organizations and across the philanthropic sector. And we can see similar positive, if nascent, change playing out in criminal justice, reviving struggling cities and towns, and other areas.
Many of the Business Roundtable CEOs have supported these transformations but the bar is now set higher, which means they must go much farther bringing their power to bear to accelerate change. Here are five pieces of advice for CEOs—and philanthropists thinking about their own role in driving change—as the journey into this new era begins:
Exemplify humble, curious leadership: Be curious and prepared to learn, endeavoring to stand behind and lift up leaders who have deep experience in the work. Taking a back seat is not something most business leaders are comfortable with but it can be catalytic in social problem solving.
Prioritize proximity: In choosing partners, designing internal teams and practices, or taking on other activities related to social impact, it is critical to have people with direct experience with the issues being addressed at the table in leadership roles. One of the first steps in this direction is committing to diversity, inclusion, and equity as business imperatives, not just human resources side projects. Companies like Deloitte and Bridgewater Associates have partnered with MLT to do important work in these areas.
Use a systems approach: Business leaders should take on a systems approach to driving change, which aims to mobilize the totality of skills and resources at hand, in partnership with a wide range of players, to shift the conditions that hold entrenched problems in place. No single organizational partner can drive change on complex, systemic problems, so it’s more effective to design approaches that holistically address policy, programs, resource flows, power dynamics, relationships, and mental models in tandem. JP Morgan Chase’s large-scale, collaborative effort to support Detroit’s resurgence is a developing example of this approach.
Lean into gaps: Use convening and networking power to bring cross-sector stakeholders together and help unify their efforts, matching unique individual and organizational skills and resources to the various pieces of the systemic problem solving puzzle mentioned above. In particular, authentically engage with nonprofits and other social impact partners to find out what capacity they have or don’t have, looking for ways to fill those gaps and achieve greater impact.
Walk the walk on policy: Social impact at scale will rarely happen without supportive policy at the local, state, and national levels. Too often, we see great dissonance and little transparency between corporate social impact programs and policy advocacy efforts. This must change, or the promise of inclusive prosperity will never be realized.
These are by no means silver bullets for solving such complex challenges but they can help CEOs, philanthropists, and other leaders orient themselves towards concrete impact. Renewing America, and keeping their businesses dynamic and growing, demand nothing less.
Jeff Walker is Chairman of venture philanthropy organization New Profit and Vice Chair in the United Nations Envoy’s Office for Health Finance and Malaria. Sam Hiersteiner is a Managing Partner at New Profit.
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