A Gathering of Leading Executives and Thought Leaders
Purpose drives performance. Whether examining financial returns, customer satisfaction, or employee engagement, firms that embrace the challenge of making a positive contribution to the world outpace their more short-term focused rivals. That was the overwhelming consensus when The Center for Higher Ambition Leadership hosted its third annual CEO conference near Boston, Massachusetts on January 13-14, 2014.
Nearly 50 executives from Fortune 500 CEOs to investors and entrepreneurs ? and leading academics, gathered to share and discuss the impact of a stakeholder-centered, purpose-driven efforts and the future of the Higher Ambition Leadership movement. They represented organizations as diverse as the major health insurer Aetna, office supply distributor United Stationers, and iconic blender manufacturer Vitamix. Former vice president Al Gore and his co-founder at Generation Investment Management David Blood also participated.
Center chairman Michael Beer noted that “the circle of Higher Ambition leaders is growing ever wider.” Higher Ambition leaders are those that think beyond the shareholder and seek to create both economic and social value for the full range of stakeholders through their business practices.
Purpose-Driven Organizations and Leadership
As an example of the Higher Ambition approach, the group discussed the case of Henry Schein – a $9 billion medical, dental and veterinary supply company whose approach and success make it a paragon of higher-ambition leadership (check back soon for a more in-depth look at Henry Schein). Company CEO Stanley Bergman and COO Gerald Benjamin were on hand to share their firsthand experience and insights.
Henry Schein’s business model is built around a strong culture of trust and communication that drives the company’s success. The results are impressive: its market valuation, now at $10 billion, has grown at a 23 percent rate compounded annually since the company went public in 1995, according to Bergman.
In a discussion facilitated by Harvard Business School Professor Rebecca Henderson, conference attendees debated the relationship between strategy and culture and ways to foster employee engagement. Participants agreed that it was the connection of a compelling long-term mission to strategy and daily operations that enabled their firms to attract top talent, deepen customer relationships, and make sounder decisions in the midst of fast-changing market conditions. In their view, purpose and profit are complementary.
Larry Senn, chairman of leadership consulting group Senn Delaney, presented independent research showing that what he called “top culture” companies outperform “bottom culture” companies financially as well as in other key metrics such as employee and customer engagement. Participants then broke into small groups where they discussed their companies’ purpose and the how that purpose informs strategy and bolsters performance.
Later in the program, Gore and Blood spoke about the importance of sustainable capitalism. They called for a reform of capitalism arguing the current focus on short-term financial results is, over the long term, bad for investors, the environment, society, and even the businesses themselves. Blood noted that investing in companies with a long-term focus and concern for the sustainability of the planet on which they source and sell is a sound strategy. Generation Investment believes that companies with a long view are more likely to look at the full range of costs, risks, and opportunities.
Higher Ambition Boards of Directors
Day two’s programming focused on the role of the Board of Directors in supporting and sustaining a successful Higher Ambition firm over the long term. Ed Ludwig, former CEO of Becton Dickinson, and Director of the Center shared the results of a year-long CHL sponsored research project on this topic. He explained how higher ambition boards differ from even the well-functioning boards of non-higher ambition companies in a range of areas, from strategy reviews, to CEO succession and board member selection. The group discussed the importance of the board’s direct engagement with a company’s people and culture as key. For example, Henry Schein board meetings are often complemented by an opportunity for board members to meet with groups of up to fifty people from throughout the company. “Our board feels an ownership in our culture,” said CEO Bergman.
Reflecting on the meeting, Center director Russ Eisenstat said, “It has always been easy to feel good about the concept of Higher Ambition. What is gratifying to me is hearing about more and more success in practice. Higher Ambition companies are showing that this approach actually works. We are all excited for the year ahead.”