More than three dozen CEOs and other executives gathered with leaders of the Center for Higher Ambition Leadership for its annual CEO Summit outside of Boston in early January. The executives represented companies ranging from the Fortune 500 to the mid-market from across North America and Europe.
The theme for the 2016 conference was Building the Future One Quarter at a Time: Balancing Short Term Performance and Long Term Value Creation. The conference opened with a discussion led by Center Executive Fellow David Langstaff and Research Fellow Kate Isaacs using insights from their extensive interviews they conducted with the attending CEOs and others. One finding was that executives committing to overly ambitious short-term goals can fall into a trap when meeting those commitments requires giving short shrift to long-term investments. Langstaff noted that executives need a “both/and” mindset rather than an “either/or” approach if they are to succeed, particularly for higher ambition companies seeking to create social as well as economic value. Short-term efforts should be in service of a long-term plan that is rooted in purpose and values, and is understood by and has benefits for all stakeholders.
Later in the day, Harvard Business School associate professor George Serafeim presented research on the tension between executives and investors around the short-term/long-term challenge. He noted that executives tend to blame investors for short-termism while investors put on the onus on executives. Analyses of the language used in calls with sell-side analysts showed that short-term concerns often get more attention especially in the formal presentations on the calls. Serafeim cited research showing that when CEOs’ language on the calls emphasized the short term, it was generally followed by actions consistent with that time frame. Serafeim also noted that companies more intent on immediate returns attracted investors with a similar time horizon. “Companies tend to get the investors they deserve,” he said.
On day two of the conference, Zeynep Ton of MIT (pictured) presented her “good jobs strategy.” Ton’s research shows that companies that invest in their employees with training, decent wages and benefits, and worker-friendly schedules achieve superior results. How? Superior productivity and operational excellence lead to lower costs, higher profits, and greater customer satisfaction. Ton cited companies such as Costco, Trader Joe’s, UPS, and Toyota as exemplars of this approach. The good jobs strategy aligns with higher ambition by creating the conditions for a high commitment, high performance organization that values the contributions of and delivers benefits to the full range of stakeholders.
In between these plenary sessions participants engaged in CEO-to-CEO case discussions. These small, off-the-record sessions allowed executives to share emerging best practices and discuss ongoing challenges in their higher ambition agendas. This peer-to-peer learning has become a hallmark of the Center’s annual summit.
The conference concluded with a discussion of the Center’s ambitious agenda for 2016 including the continuation of Langstaff and Isaacs’ research initiative, research into higher ambition boards of directors led by Ed Ludwig of BD, learning visits to higher ambition companies, and ongoing documentation of successful higher ambition strategies and practices. Also continuing in 2016 is the Center’s acclaimed Higher Ambition Leadership Institute led by former Campbell Soup CEO Doug Conant and leadership development expert Mette Norgaard as well as the Center’s own Mike Beer and Russ Eisenstat.