Center Co-Founder Mike Beer joined VoiceAmerica’s Chris Efessiou, May 15, 2014, for a live radio interview titled “Higher Ambition Leadership: How Great Leaders Build Firms that Do Well by Doing Good.” On the show, Beer discussed the Higher Ambition movement, the specific qualities that distinguish higher ambition leaders and companies from their counter parts and the steps firms can take to adopt a higher ambition culture.
Missed the show? Fear not! Listen to the podcast or read the most important takeaways which we’ve captured for you:
Higher Ambition Leaders have a long-term perspective. “Higher Ambition Leaders steer away from quarterly guidance,” Beer said. “They say: ‘This is a long-term proposition, we want a legacy as a great institution.’” While the conventional wisdom is that the purpose of the firm is to maximize shareholder value, the Higher Ambition Movement pushes for more long-term earnings assessments. Quarterly earnings are still the primary focus for most CEOs, and since earnings drive stock prices which dictate bonuses and salaries, CEOs often steer clear of riskier, but high-potential changes, for fear of poor earnings reports.
Earnings do matter, they’re just not all that matters. Excellence in performance is one of the core pillars to running a higher ambition firm. “Money, and thus the performance of a company, is a means to a larger end,” Beer said. “You have to maintain that performance but you don’t maintain it in a blind way.”
Culture is key. “Culture is important,” Beer reiterated throughout the show. “The meaning of culture is that it becomes a sort of a cult, if you will, of people with shared norms and shared understandings.” A strong culture creates engaged employees, which drives both purpose- and performance-driven agendas.
Honest, collective and public conversation drives change. “Honest, collective and public conversation about where the enterprise is or is not in relation to the direction you want to go is a powerful way to unlock and expose where the gaps are between the goals the senior team espouses and the actually capability of the company to get there,” Beer said. Regular surveys of employee engagement and satisfaction, as well as feedback on performance, can create a clearly directed and supportive culture. High-performing, purposeful companies tend to utilize both vertical feedback (employees on management and vice versa) and horizontal feedback (peer-to-peer).
It starts with the CEO. The higher ambition transformation starts with the senior team. “The CEO must be committed to a values-driven strategy,” Beer said. “If the CEO isn’t inspired to move the firm, the firm as a whole can’t be transformed… Unless there is agreement, understanding and dialogue at the top, it’s hard to move forward.”
But the CEO can’t be the only one on board. Transforming and maintaining a higher ambition company requires initiative from leaders at all levels. “The CEO can only do so much,” Mike said. “They can inspire, they can create a vision, but ultimately they have to create a set of policies and practices that can lead to the development of leaders, development of culture, the development of operating systems that provide excellence in performance.
Business schools need to adopt a Higher Ambition mindset. While most business schools have begun to recognize that they have to create leaders not mangers, the programs that have seen change in this regard are primarily in the human-resources departments. Finance and strategy departments still teach that shareholder value is the primary focus in business. Business schools should design more classes focused on creating high-commitment, high-performance systems.
Like what you read? Listen to the full podcast here: http://www.voiceamerica.com/episode/77896/higher-ambition-leadership-how-great-leaders-build-firms-that-do-well-by-doing-good or download the podcast from iTunes to listen on the go. (http://bit.ly/itCEradio)
Mike Beer is the Cahners-Rabb Professor of Business Administration, Emeritus at the Harvard Business School, co-founder and Chairman of TruePoint Partners, a management consultancy that works with senior executives to develop effective high performance and commitment organizations, and the Center for Higher Ambition Leadership, a not for profit organization dedicated to increasing the number of companies and leaders committed to creating economic and social value. Mike has researched and written widely about organization effectiveness, organizational change, high commitment, high performance organizations, leadership, as well as human resource management.