IMD International

What’s the purpose of your firm?

How business values can nourish society through stewardship

November 16, 2015

When it comes down to it, why does your company exist? In today’s high-stake business world, the answer to that question is increasingly ‘to make money’ or ‘to create shareholder value'.

Yet such pressure on the bottom line creates tensions that can easily lead to increased risk and ultimately, scandal. The headlines from Volkswagen may be the most recent example, but many others such as FIFA, Siemens and Enron have all shaken the world with poor corporate governance.

So what should companies be focused on? “We need to drive organizations with values, integrity and authenticity,” said IMD Professor Didier Cossin at IMD’s Orchestrating Winning Performance (OWP) program in Singapore.

And to do that, Cossin emphasizes the need for stewardship, where stewardship is the act of safeguarding and enhancing the capability of an organization to create economic and societal value over time.

“At of the end of 2014, the value of managed assets amounted to $68.7 trillion – about doubling the GDP of the entire world,” Cossin said. “Financial pressures are mounting and to leverage that capital, leaders will have to think beyond short-term growth.”

To embrace stewardship, companies should uphold an ownership mind-set for sustained success which embodies attachment to the community, awareness of diverse needs and caring for people.

Contrary to the idea of having abandoned financial focus, by becoming more steward-like, research on 872 companies has shown that companies tend to outperform financially without the aggressive focus on figures.

“To be a steward leader, it is important to remember that actions are greater than words,” said Cossin. “Helping employees find meaning, integrating principles of trust, upholding brand promises, and fostering harmony through cultures are all examples of actions to take.”

And in speaking of examples, there are many well-known business leaders that serve as role models. Ratan Tata, Bill Gates, Lee Kuan Yew, Deng Xiaoping, Warren Buffett, and Eiji Toyoda all have led successful endeavors that were guided by their values and beliefs.

By looking at these leaders, we see that it is not easy to find stewardship in a corporate mission statement or model. It is living values, not simply stating them. Stewardship must also be distinguished from Corporate Social Responsibility (CSR). As CSR focuses on giving back and sustainability, stewardship encompasses a much more global concept of making the right decisions both internally and externally.

But what if you weren’t just naturally born with the abilities of a steward leader like Buffett or Toyoda? It doesn’t matter. While these may be examples, real stewardship isn’t just at the top of an organization, residing in a sole person. Stewardship comes from employees, labor unions and governance boards. In fact, stewardship is chanelled by governance.

“We all have a role in promoting stewardship excellence,” said Cossin.

Learn more about the IMD Global Board Center.

IMD's Orchestrating Winning Performance (OWP) program runs every November in Singapore. For live insights from the program follow on Twitter at #imdgloballeaders or check out OWP pictures on IMD's flickr account.

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