CEOs & Stakeholders' Value Creation

The primary goal of CEOs is to leave a meaningful legacy, something greater than themselves and the organizations they lead. They aspire to accomplish the extraordinary. Today’s legacies differ from yesterday’s. We are in the midst of a historic transition where old paradigms are giving way to new challenges and innovative possibilities.

Based on our experience with high performing executives and our review of the best thinking on leadership, we have determined that the most successful CEOs are purposeful leaders. They create motivated, successful organizations that work well in both human and business terms. While companies depend on sustainable profits for their very existence, these leaders recognize that they are not sufficient in and of themselves. Not all profits are equal. It matters how money is made. David Gregory Roberts, author and former heroin addict and convicted “gentleman bandit”, said it well: “If we can’t respect the way we earn it, money has no value. If we can’t use it to make life better for our families and loved ones, money has no purpose.” (Shantaram, 2004) For purposeful CEOs, leadership includes social responsibility.

As Michael Porter and Mark Kramer contend “profits involving a social purpose represent a higher form of capitalism, one that creates a positive cycle of company and community prosperity.” (“Creating Shared Value: How to Reinvent Capitalism - and Unleash a Wave of Innovation and Growth”, HBR, January-February, 2011) Great CEOs make a positive contribution to society through their organizations. These leaders are self-aware, optimistic, persistent and resilient. Their message is one of hope, respect and compassion. As a seasoned CEO and mentor once told me, “If you treat your stakeholders as children and they will act as children. But if you treat them as adults, with respect and trust, they will act as mature responsible adults.”

The most successful CEOs understand the purpose, values and culture of their organizations. They realise that business is about creating lasting value for all their stakeholders: shareholders, team members, vendors, customers, society and the environment. All are linked, interconnected. This interconnection creates a vibrant circle of harmony where each stakeholder complements synergistically the others and leads to the creation of even greater value, including higher profits.

Ah but the proof is in the pudding. Companies win in the marketplace. Respected companies such as “Southwest Airlines, Google, Costco, UPS, POSCO, Tata, The Container Store, Amazon.com, Whole Foods Market, Nordstrom, Patagonia, Trader Joe’s, Panera, and Bright Horizons have all shown that this way of doing business is leads to multifaceted success over time.” (John Mackay and Raj Sisodia, Conscious Capitalism, 2013)

Purposeful leadership is not for the faint of heart. It calls for great vision, courage and resolve. But the rewards are real and fulfilling. As stewards of all their stakeholders’ values, purposeful CEOs choose service over short term self-interest. They embrace the interdependencies and synergies between them. They inspire all their stakeholders to build an enterprise which is greater than its individual constituent parts. This is their legacy. By fashioning a vibrant circle of harmony between all of their stakeholders, purposeful CEOs create the extraordinary.

We will explore in subsequent posts the role of CEOs as stewards for each of their stakeholders, starting with shareholders.



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