Aligning corporations and society: what leadership is needed?

Prof. Rob van Tulder

Department of Business-Society Management, Partnerships Resource Centre

“We're the world's biggest NGO…”

Paul Polman, CEO Unilever

TRANSFORMATIONAL LEADER ….

…. The only difference is, we're making money so we are sustainable.”

“ Half of the women in the world do not take part in the labour market. This is not only a missed opportunity in terms of the skills and potential of these women, but is also damaging for the world as a whole."

Monique van ‘t Hek

WHAT ABOUT TRADITIONAL NGOS?

THE GOVERNMENT PERSPECTIVE….

“Three lessons we should take to heart as we move forward….

First: by working together

Second: goals …. should go hand in hand with multi-stakeholder involvement,…

Third: we must have more private sector involvement in long-term financing, in public-private partnerships and in projects on the ground.”

27 September 2015

The basic alignment challenge….

Companies NGOs Governments

Value proposition: adding and scaling value

Value proposition: enablingValue creation

Value proposition: Creating and living value

“ Shared Value Creation”

Choice of issues that are material to companies

Choice of issue that are material to society

Leadership challenge overcoming barriers to alignment (positive agenda setting)

RSM-ORG research on leadership…

The leadership discourse does not help…

Servant leadership

Authentic leadership

Transactional leadership

Transfor-mational

leadership

Thought leadership

Integrative leadership

Visionary leadership

Ethical leadership

Autocratic leadership

Transitional leadership

connected leadership

Strategic leadership Collective

leadership

Sustainability leadership Social

leadershipPragmatic leadership

connectedleadership

Valuing leadership

- Context dependent- Related to transition phase- Related to societal issue- Combinations possible- Strongly related to value proposition of

company- Legitimacy of leader depends on ‘poor’ vs ‘rich’

value proposition (and segment)

Serious Legitimacy problem

Legitimacy?

“Poor value proposition” means

“Rich value proposition”

General characteristics

Instrumental, simplistic, quantitative

Resilient, inspirational, entrepreneurial, qualitative, societal orientation

Finance Profit maximization; cost minimalizing;shareholder value

Enable the financial means for a company to thrive;

Purchasing/supply chain

Purchase as cheap and as flexible as possible

Empower suppliers to contribute to your value creation process

HRM Produce with the least number of people the highest possible output

Organize an inspired and committed staff

Strategic management

Being the biggest, the first Being the most innovative, creating the most value for society, solving particular societal problems

Challenge: reframe your value proposition

“Poor value proposition” means

“Rich value proposition”

General characteristics

Instrumental, simplistic, quantitative

Resilient, inspirational, entrepreneurial, qualitative, societal orientation

Finance Profit maximization; cost minimalizing;shareholder value

Enable the financial means for a company to thrive;

Purchasing/supply chain

Purchase as cheap and as flexible as possible

Empower suppliers to contribute to your value creation process

HRM Produce with the least number of people the highest possible output

Organize an inspired and committed staff

Strategic management

Being the biggest, the first Being the most innovative, creating the most value for society, solving societal problems

Challenge: reframe your value proposition

What is material to you?

Agenda setting: the search for materiality

What do we know of the materiality approach of big

companies?….Our research:- Almost all companies engage in materiality questions (G4)- All also engage in ‘partnering’ - Most engage in stakeholder dialogues and engagement- Motto and vision development as internal and external alignment

strategy is taken up

What do we know of the materiality approach of big

companies?….Our research:- Almost all companies engage in materiality questions (G4)- All also engage in ‘partnering’ - Most engage in stakeholder dialogues and engagement- Motto and vision development as internal and external alignment

strategy is taken up

The practice of materiality:- Still quite reactive or selection of ‘easy’ issues- Supply driven- Stakeholder consultation from the perspective of company interests- Implementation is not guaranteed- Selection of stakeholders is skewed: friendly stakeholders prevail- Relationship with partnership portfolio is not clear or contains gaps- Every year ‘priorities’ change (because of changing stakeholder

engagement)

What do we know of the materiality approach of big

companies?….Our research:- Almost all companies engage in materiality questions (G4)- All also engage in ‘partnering’ - Most engage in stakeholder dialogues and engagement- Motto and vision development as internal and external alignment

strategy is taken up

The practice of materiality:- Still quite reactive or selection of ‘easy’ issues- Supply driven- Stakeholder consultation from the perspective of company interests- Implementation is not guaranteed- Selection of stakeholders is skewed: friendly stakeholders prevail- Relationship with partnership portfolio is not clear or contains gaps- Every year ‘priorities’ change (because of changing stakeholder

engagement)

Conclusion: there is considerable improvement possible!

Example: Bayer’s value proposition

‘easy part’ ‘difficult part’

Science Better Life

Inside-out Outside-in

Alignment of cultures External alignment of cultures

Stakeholders? Stakeholders?

Materiality? Materiality?

Leadership toolkit? Leadership toolkit?

Bayer’s value proposition

‘easy part’ ‘difficult part’

Science Better Life

Inside-out Outside-in

Alignment of cultures External alignment of cultures

Stakeholders? Stakeholders?

Materiality? Materiality?

Leadership toolkit? Leadership toolkit?

Bayer’s value proposition

‘easy part’ ‘difficult part’

Science Better Life

Inside-out Outside-in

Alignment of cultures External alignment of cultures

Stakeholders? Stakeholders?

Materiality? Materiality?

Leadership toolkit? Leadership toolkit?

Bayer’s value proposition

‘easy part’ ‘difficult part’

Science Better Life

Inside-out Outside-in

Alignment of cultures External alignment of cultures

Stakeholders? Stakeholders?

Materiality? Materiality?

Leadership toolkit? Leadership toolkit?

Example Bayer’s value proposition

‘easy part’ ‘difficult part’

Science Better Life

Inside-out Outside-in

Internal alignment of cultures External alignment of cultures

Stakeholders? Stakeholders?

Materiality? Materiality?

Leadership toolkit? Leadership toolkit?

LIFE: Leadership, Integrity,Flexibility, Efficiency.

Bayer’s value proposition

‘easy part’ ‘difficult part’

Science Better Life

Inside-out Outside-in

Internal alignment of cultures External alignment of cultures

Primary stakeholders Secondary stakeholders

Materiality? Materiality?

Changing business model Partnership portfolio

Leadership toolkit? Leadership toolkit?

20142013

Materiality Matrix

Increasing insights….

Our advice: from negative to positive framing

Common Frame for the global community (for next 15 years)

Your leadership survival kit…

Connected leadership Thought leadership Transformational leadership Visionary leadership Ethical leadership Strategic leadership Sustainability leadership

Smart combinations

Timely

Issue dependent

Partnership

portfolio

management

Materiality

(shared) value

proposition!

Positive frame

Consistent (15

years) but flexible

?