A client turned me onto the concept of Higher-Ambition leaders and I’ve kept the article close. It outlines what drives great corporate reputations and the kinds of CEOs that lead them. Higher-ambition CEOs are stakeholder-centered and purpose-driven. Their sense of purpose goes hand in hand with their focus on financial performance. They understand the challenges of running a company but also understand the importance of earning trust and commitment from their many stakeholders. The good news is that higher-ambition CEOs outperform their peers in terms of economic, social, organizational and stakeholder returns (including shareholder returns) and they do so for successive generations. Here is a short description on what they do from the HBR piece where I first read about them:
“They forge a more powerful strategic vision by drawing on an expansive view of their companies’ heritage and cultural, organizational, and social assets.
They build the widespread commitment and capabilities to achieve that vision by developing the organization into a community of shared purpose, marked by high levels of emotional connection, trust, and respect.
They have the strength of character to commit themselves and their organizations to that vision over the long term.”
Little did I know that there was a Center for Higher Ambition Leadership and an annual Summit. And I recently just learned that there is a working paper on Higher-Ambition Boards. The central question the authors –Edward Ludwig, Elise Walton and Michael Beer — asked was whether higher-ambition companies and CEOs had higher-ambition boards to guide them through their many business decisions and protect the company’s values for generations to come. They studied 14 higher-ambition companies* (see below) and their boards to find out how boards could contribute to the sustainability of purpose-driven companies. The findings are fascinating if you want to learn more about how these boards operate:
- Only 2 of the 14 companies indicted that the CEO was explicitly measured on nonfinancial metrics. Despite most board’s implicit support for higher-ambition companies, most are not explicit. Here is an example from Herman Miller’s explicit higher-ambition board evaluation of their CEO: “The board doesn’t jut look at money and math as an outcome. The company/CEO scorecard has volunteerism, environmental, inclusiveness, safety—and more. It’s a broader spectrum than the balanced scorecard of most companies.” CEOs should encourage their boards to be explicit about discussing what it means to be a higher-ambition company and not just accept that it is a given or intuitive in how they govern the company.
- Higher-ambition boards have a responsibility of taking an active role in talent management. In the research, they found one company where the individual directors took a more personal role in developing talent for the next generation by sitting down with executives and sharing their personal leadership journeys one-on-one. The directors also helped teach the leadership courses given to top executives and rising stars to demonstrate the importance of their involvement and trust-building.
- Higher ambition CEOs should engage and bring along their board members to be purpose-driven. They should recruit directors based on their values and commitment and should build in processes to sustain the commitment to higher-ambition practices. One company has each board member evaluate the board as a whole and then individually with non-attribution. Each board member gets their results. If the board chair learns from these evaluations that someone is not performing in a way that helps to drive high-performance, the board Chair steps in and sometimes has to take action.
*Aetna, Becton Dickinson, Con-way Trucking, Cummins Engine, Guardian Insurance, Henry Schein, Herman Miller, Steelcase, NYSE/Euronext, Terex, United Rentals, United Stationers, WESCO, Wyndham Worldwide