The Purpose of a Company…

Company Purpose

Yes, I know I’m about to sound like a bit of a nerd, but I came across something really exciting in my LinkedIn Feed yesterday. Now please bear in mind that what the American Business Roundtable does, usually doesn’t have immediate impact in New Zealand – so some of you will point out (quite correctly) that this is old news… but a former colleague shared the ‘news’ that the Business Roundtable has redefined the purpose of a corporation to promote “an economy that serves all Americans”.

Common parlance is that the purpose of a corporation is to maximise the return to shareholders… which you don’t have to be a genius to realise sometimes means that companies sometimes do things that to most of us, are clearly in dubious ethical territory. With so many crazy things happening in the world at the moment, this stands out to me as a decidedly optimistic and encouraging bright spot.

I’m hatching a plan to write a book about how organisations can become ‘aware’ of their impact holistically, and take actions that enable them to create ‘unexpected good’ that drives their reputation in the right direction but also positively impacts the bottom line. So this is great news…

Here’s what some of the big players said in response to this news:

I welcome this thoughtful statement by Business Roundtable CEOs on the Purpose of a Corporation. By taking a broader, more complete view of corporate purpose, boards can focus on creating long-term value, better serving everyone – investors, employees, communities, suppliers and customers,” said Bill McNabb, former CEO of Vanguard.

This is tremendous news because it is more critical than ever that businesses in the 21st century are focused on generating long-term value for all stakeholders and addressing the challenges we face, which will result in shared prosperity and sustainability for both business and society,” said Darren Walker, President of the Ford Foundation.

You can read the full statement and the rationale here

Now the question is, can a company really track and perform against a broader – more holistic – suite of expectations, when most leaders can only make sense of a limited number of things at the same time? Check out more about enhancing sense-making here.

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