HOW ENTERPRISES CAN CREATE MEANINGFUL PURPOSE TOGETHER WITH THEIR STAKEHOLDERS
Before the onset of COVID, there was a seeming shift in the idea of why business organizations exist. Having long been wedded to a belief in profit-maximizing shareholder primacy, businesses started to profess a different faith. Driven by the interdependent demands of investors, consumers, employees and activists and a growing recognition of a broader responsibility to society, businesses began to espouse a stakeholder view. Focusing solely on profit seemed out-of-place. An indication of this was the Business Roundtable (an association of the chief executive officers of nearly 200 of America’s most prominent companies), and its replacement of its 1997 shareholder focused statement with a new commitment to the role of business in the world. The newly crafted 2019 purpose refers to creating “value for customers,” “investing in employees,” fostering “diversity and inclusion,” “dealing fairly and ethically with suppliers,” “supporting the communities in which we work,” and “protect[ing] the environment”, with “shareholders” not being mentioned until word 250 of a 300 word statement.1 At the end of 2019, the World Economic Forum also refreshed its 30-year old Manifesto, to further emphasize its multi-stakeholder view: “The purpose of a company is to engage all its stakeholders in shared and sustained value creation. In creating such value, a company serves not only its shareholders, but all its stakeholders – employees, customers, suppliers, local communities and society at large. The best way to understand and harmonize the divergent interests of all stakeholders is through a shared commitment to policies and decisions that strengthen the long-term prosperity of a company.”2
The COVID pandemic has led to some polarisation This indicates the challenge of both defining and delivering a credible purpose. In this article, we argue that a purpose can only be truly lived, when stakeholders play an active role in co-creating it.
