The concept of building shareholder value has been a driving force of business since companies began to go public. Yet as businesses and governments adjust to the new realities of the Fourth Industrial Revolution, the idea that the ultimate value of business success is the extent to which it enriches shareholders is now being questioned in progressive boardrooms around the world.
The co-CEO of Salesforce, Marc Benioff, recently called for an ‘inclusive capitalism’ that serves the causes of human equality and diversity and cherishes the ecology of the planet, alongside driving returns to shareholders. Other businesses have made the same call, paying wages at over the national average and providing a proportion of their profits as grants to social impact causes.
I have experience of this myself. I was lucky enough to receive a scholarship from Fundación la Caixa (La Caixa is Spain’s third-largest bank) to pursue graduate studies at MIT Sloan School of Management. This had a profound impact on my career and my life.
The technology driving the Fourth Industrial Revolution gives companies an ever greater influence on how we live, work and function as a society. As a result, customers expect business leaders to widen their focus beyond the narrow interests of shareholders.
This longer-term, broader strategic approach has proven rewards. McKinsey found that companies that take a longer view than quarterly shareholder reporting outperform their peers, with 47% higher average revenue growth and 36% better earnings growth.
In June 2018, I had the privilege of visiting St Martin’s School in Nairobi for the third time. It’s located in the middle of the Kibagare area, which is home to poverty, illness and substance abuse. It is also a place where profound and positive change is happening.
For my recent visit, I took a week of paid ‘volunteer time off’ to be part of the change. I was accompanied by a group of Salesforce colleagues and my family. We worked on a range of projects, including helping identify that a new borehole for water was vital and training students and teachers in basic coding and officeware. But, perhaps most rewardingly, we connected one-to-one with 300 students and recorded messages for their sponsors.
The experience was incredible, truly changing my perspective. When I reflect on it, I realize the power of a diverse and motivated set of people to do amazing things. It reminded me of my working life and the vital role of business as an incredible driver of change. Our urge to change the world can be so much stronger when the companies we work for support us on the journey.
My experience in Kenya brought home a truth that I see in every business I work with, including our own. Today, people want more than financial incentive.
Workforce of the Future, a recent report by PricewaterhouseCoopers, found that 88% of young people want to work for a company whose values reflect their own. Given that millennials will make up 75% of the global workforce by 2025, this trend is here to stay.
I believe this transformative shift is driving positive change, and that we are entering the age of responsible business. But what does that really mean? And how can business leaders bring their organizations in line with the expectations of the modern age?
When Salesforce started almost 20 years ago, its founders shared a vision of a company that had purpose and societal impact built into its DNA. They created the 1-1-1 model: giving 1% of our time, product and profit back to the community.
This model is the foundation for all our philanthropic work. It guides each employee on their own journey to making a positive difference in the world. It is what drove me to support St Martin’s, and it gave structure and collective purpose to the entire group who worked on the project.
Salesforce may have pioneered this model, but it’s clear that the passion for giving back has grown well beyond the walls of our company. Pledge 1%, which is based on our 1-1-1 model, has become a global movement that aims to create a new normal where giving back is woven into the fabric of companies of all sizes from the very beginning. More than 5,000 companies in 80 countries have made the Pledge 1% commitment, and we expect to see many more do so.
I am excited about the possibilities created by this new age of business. To work in an era where businesses aren’t just about making money, but about giving back to communities.
In Kenya, I’m proud to say that we made a lasting impact on the community. We left with a team that was more motivated than ever to continue to make a difference. That was just one project with one group of dedicated people – think about how much more we could do.
Imagine the change that businesses could make around the world if they were to adopt a new approach, one that gives people purpose and values. We live in uncertain times, politically, environmentally and economically. The one constant is that every individual has the power to instigate change. They just need the right push.
So I challenge you: what change are you going to make?