In my work as an innovation consultant time and time again I've experienced the hopes of teams working on an exciting new idea crushed by the decision making of senior leaders. No matter how much talk there is of focusing on customer need, being more agile, taking bigger risks, behaving more like the Amazons of the world etc., at some point in the process all of that butts up against the cold hard reality of short term share price pressure. In my experience, 9 times out of 10 that results in the death of the idea - sometimes in a clean and clear decision but more often through the long, slow, painful 'death by a thousand cuts' of requests for more data, integration with other projects or whatever other way the leaders of that organisation have perfected of making a decision without making a decision.
Frustrating thought this behaviour is, the truth is that it takes a rare (and somewhat rash) courage for a leader to take a leap of faith around the new and unproven. The prevailing belief at the top of most public companies is that their ultimate concern is shareholder value. In most companies individual and collective incentives are all lined up behind this belief. So any decision that prioritises future promise over quarterly returns is not only counter cultural, it risks compromising the team's success and one's own income.
I'm now finding myself and the leaders and teams I work with facing the same challenge when it comes to pivoting their businesses towards delivering against a higher purpose - towards placing equal value on their impact on people and planet as they do on financial profit. Just yesterday I was in a conversation with a senior exec who described how the deep held desire of the VPs and EVPs of that company to deliver on their much lauded public commitment to being a company of purpose being undermined by the sense they feel of shareholders "holding a gun to their head" in demanding short term growth.
So it's with great excitement that I have been tracking the rise of ESG motivated shareholder activism, and talk of shifting boardroom incentives in line with broader commitments, over the course of the last year.
We're not there yet, but a future in which the desire for change rising up within the world's leading companies will be met by downward pressure from shareholders to deliver more than just profits is coming into view. When those two forces meet great things are going to happen.
Photo by Maxim Hopman on Unsplash
Quote and image from Lean CX Score.