Larry Fink, CEO of BlackRock, sent shock waves through the business world a few weeks ago when he issued a letter to CEO’s of companies that he invests in, as well as the CEO’s of the top global companies, that basically said: It’s no longer business as usual, and if you don’t have a bigger purpose as a company beyond making money, I’m not interested.
To say that this was a big event would be to say that the Gettysburg Address was just a little speech.
Let’s be clear – BlackRock has $1.7 trillion (yes, with a t) of funds under active investment. That is enough to move markets. The magnitude of this kind of investor wielding their influence is exactly the kind of shift that will mean something. For years, if not decades, movements have been working to shift the focus away from profit to a broader measure of benefit. This includes not only shareholders but stakeholders and society. Approaches and movements such as Stakeholder Theory, B-Corps, B-Team, Triple Bottom Line, and even the World Economic Forum which espouses to “improve the state of the world” have been working to get the sole focus of our organizational world away from profit to something broader. They have been ripples in the ocean. But Larry Fink’s letter is a tidal wave.
The impact that this will have on the future trajectory of the business world is fascinating and will serve as the focus of a future post. Here in this post I want to address the connection between this call to action and remarkability. What intrigues me here is that Larry, a through and through business minded investor, is preaching one of the three P’s of remarkability as a core tenet of what he will evaluate in terms of the worthiness of his time and money – purpose.
Imperative of Purpose
As you know from previous posts, purpose is the starting point of remarkability. While remarkability has three essential elements – purpose, people and platform – one cannot create a remarkable organization without the purpose. Purpose is absolutely essential to the other two elements. You cannot find, hire and retain the best people if there is no purpose for them to believe in and work for. You cannot build a value proposition, strategy, or offering platform if you do not have a purpose upon which to frame your offering and value. Therefore, purpose is the bedrock and core DNA of any remarkable organization. That is why Larry Fink’s letter was music to my ears.
Larry’s letter clearly states things from the lens of an investor in public and private companies, but his words and comments resonate to ANY organization – for-profit, non-profit and even governmental organizations. There is significant alignment of his comments with those of mine in terms of not only remarkability but in terms of what society is not expecting out of any leader and organization. Larry is now clearly a devotee of purpose driven organizations, and therefore clearly remarkability.
In terms of the growing expectation that any organization serve a higher purpose other than to follow the dollar, he states that “society is demanding that companies [or organizations] serve a social purpose” and further suggests that “without a sense of purpose, no company [or organization] can achieve its full potential.” He is quite clear that not only is it up to the organizational leadership to define and pursue organizational purpose in all that it does, but that the board of directors has a significant role to play in terms of helping “articulate and pursue its purpose.” Sweet music indeed.
The Missing Purpose
I am constantly amazed in the work that I do how many organizations don’t have a purpose. As a reminder, your purpose is your why; why do you exist? What problem are you solving? What is your reason for being? Your purpose defines you and your reason for being. Many organizations and their leaders can tell you what they do, but they struggle to tell you why they exist. This view of the differentiation between your why and your what was made famous with Simon Sinek and his Golden Circle approach within his Start With Why book. Ultimately, leaders and organizations need to first start with why they exist before they can ever hope to figure out what they do.
Many new organizations are starting their existence on better footing because they are taking the time to define what their purpose is. They are recognizing the need to be purpose-driven organizations not only from a remarkability standpoint but from a brand standpoint – they need it to differentiate themselves in terms of staff retention, investment attraction and sales growth. All one need do is look at businesses like TOM’s Shoes or Warby Parker, or non-profits like charity:water or Pencils for Promise. They are starting with why.
So many older organizations however, ones that are rooted in old ways of doing and thinking, need to shift towards a purpose driven base. They need to transform their organization to one that is purpose-driven. It can be tough and intimidating to do – to stop, really question why they exist and then make all the adjustments through people, culture, value proposition, strategy and policy that will support a refined purpose. But it is essential.
Get with the Program
Organizations that resist this requirement to rebuild who they are from the ground up are resisting against forces that are stronger than they are – the demands of markets, investors, customers and members. People, and now with Larry Fink’s commitment, investors, want to be part of something bigger. They want to feel part of an improvement, a movement or a betterment of this place we call home. Leaders that feel a return to their why is nonsense and unnecessary will find over time how wrong they are.
The reason that so many organizations operate without a true orientation of why they exist is because for decades leaders and boards have been sucked into believing that crafting a solid vision, mission, mandate is the way to articulate their competitive advantage and their strategy. And these things have often been crafted by committee and become such verbose, meaningless statements that they become vague, generic and incapable of inspiration.
Creating your Purpose
As boards and leaders do come together to discuss how to transform they should be thinking about a new approach to their planning sessions. The approach that needs to be taken is three concrete steps: First craft a transformational purpose. Identify your why and make it clear, compelling, simple, precise and inspirational. It need only be 4 or 5 words. But it should serve to rally people – to work for you, buy your product and support your work. It holds the vision of what you want to see your organization impact over time. Second is to solidify your values as an organization so that you may find and retain the right people. Finally, identify your targets as an organization that will enable you to assess whether you are moving in the direction towards your purpose.
From there, you have an ability to begin to shift your organization towards one that is truly purpose driven. Leaders that want to transform in more significant ways, and to become remarkable, should build their own remarkability agenda and bring about a wholesale shift in their operation.
Make no mistake, the words and message of Larry Fink have sent shockwaves through many circles around the world. But for many leaders it is not just the message that the investment game has changed, but that for you to truly be worthy and have a chance at the long-term, you had better think about your purpose.
Et Insigni
