Last August, the trade association for US CEOs redefined the purpose of the corporation. Business widened its remit from delivering profits to shareholders to serving a wider range of stakeholder needs and interests. Notwithstanding some criticism, the change reflects a shift in business realities also evident in the growth of ESG investing. After all, integration of environmental, social and governance factors into investment decisions is in part a recognition of the need to take account of a wider range of risks and impacts when allocating capital.
The imperative for economic actors to revisit their long-term business strategies has been lent further urgency by the wide-ranging impacts of the coronavirus pandemic. Having caused a sharp and painful dip in economic activity in the first half of 2020, the legacy of the lockdown will be far-reaching, affecting working practices, customer interaction, supply-chain relationships, operational infrastructures and much more.
In the latest in our Calastone Leadership Webinar series, titled ‘Sustainable Growth in a Post-Pandemic Society’, futurist Anne Lise Kjaer argued that profit is only one of four Ps that firms should prioritise as they formulate business models to meet the needs of multiple stakeholders emerging into the new normal. People, Planet and Purpose should drive strategy too.
“The real leaders in the post-pandemic reality will be those with a holistic outlook that balances economic and social goods,” she noted, calling on firms to focus on the factors that help humans to flourish.
Culture a critical success factor
The C-suite must monitor metrics beyond pure profit to achieve sustainable success partly due to the sheer complexity of the 21st century business environment. A landmark IBM survey of 1,500 CEOs in 2010 found that most organisations were not equipped to handle growing complexity and, as a result, identified creativity as the most important leadership quality for the future.
“No matter which industry, tomorrow’s success stories will depend on how well we channel our creative energies,” said Anne Lise. “We’re all looking for inspiration. How do we reach beyond what we know today in order to cultivate new thinking for a more sustainable future?”
Curiosity is a key attribute of creative and successful business leaders – from Bill Gates to Warren Buffett to Michael Dell. Fostering an enterprise-wide culture of creativity and curiosity is a bigger task of course, and a critical one when long-held values and assumptions are being challenged.
“Culture is a critical factor for success or failure. The more things change, the more culture matters, she said. “In the past, P was just for profit, but today we need a much wider definition of success.”
To lend structure to companies’ response to complexity and to help them build a culture that recognises and accommodates key societal drivers in the post-pandemic world, a flexible strategic framework has been developed by Kjaer Global, the trend management agency founded by Anne Lise. In essence, this maps four core elements of human consciousness (scientific, social, emotional, spiritual) to the four components of the 4P sustainable business model (profit, people, planet, purpose), and fits key trends into one of the four quadrants. For example, evolving social and family structures, factors influencing work/life balance, and the emergence of new communications needs and channels all feed into the People agenda, informing initiatives that support lifelong learning and ensure staff diversity. “New diversity and lifelong learning will drive innovation capacity, while boosting resilience,” Anne Lise explained.
This ‘whole brain thinking’ also requires C-suite executives to join the dots across the 4Ps. Changes in how firms behave towards stakeholders such as employees and customers are not contained solely within the People agenda: digital inclusion (Profit); collaborative communities (Planet); and trust and agility (Purpose), will all play a supporting, reinforcing role.
Amid many post-pandemic uncertainties, customer engagement and working practices seem set to change more rapidly after the lockdown, fuelled by increased levels of automation and greater adoption of artificial intelligence (AI). Over the past decade, digital technologies had already offered opportunities to overhaul the customer experience and derive new process efficiencies and insights, thus shifting the traditional work/life balance and required skill sets. This accelerated under lockdown and firms will now build on that experience, rather than revert.
“Adoption of AI is exponentially transforming all areas of society, while driving disruptive innovation at scale,” said Anne Lise, noting the creation of internal analytics academies at certain large firms to foster fast learning.
But progress remains uneven. A recent McKinsey report  suggested AI was not yet a priority in many c-suites, citing lack of strategy, talent and infrastructure as key barriers. Here as elsewhere, balance is crucial.
When firms deploy AI to monitor how customers are using their platforms, they still need to deploy softer, human skills. “The things AI can do are not value creators on their own, but they give us more time to think about how to do things better. When we are stuck in operations, we are fire-fighting; we are not creative or productive. With AI, we can use that time to co create in new ways,” Anne Lise said.
Sustainable investment solutions
Large corporates and financial institutions across the world are facing similar questions. But Anne Lise’s analysis resonates with the challenges facing the investment management sector, particularly in the aftermath of the pandemic.
For many firms, the lockdown quickly demonstrated the importance of robustness and resilience of operating systems and processes. The transition was smoother for some than others, but all firms across the funds industry now recognise they can and must be able to function on a remote working basis, enabling clients, staff and suppliers to interact efficiently on an ongoing basis. This will spur greater investment in automation in general and AI in particular. AI-driven data analytics will become increasingly important in providing customer value at a number of levels. From delivering differentiated investment performance, to identifying and resolving operational breaks and delays, to customising reporting and other client-facing interactions, the ability to derive insight and efficiency from data will be critical to sustainable success.
Efficient interaction with clients and between teams must be aligned with a sense of purpose and with regard to the future of the planet in order to thrive in the long term. Alongside other digital technology innovations, AI capabilities will help managers to identify and respond to client priorities in terms of the tailored integration of ESG factors, but it will also require a commitment to collaboration and trusted relationships to deliver sustainable investment solutions over the coming decades. The original P for Profit has been squeezed relentlessly over the past decade, through regulatory costs and reduced fee structures, meaning that cost savings must be pursued. But new sources of value and insight can be achieved in parallel through partnerships that are framed by a common vision and informed by data.
Don’t leave it to chance
This pandemic is far from over, of course, and neither the social nor economic consequences are yet fully understood. But we have begun to gain sufficient insights into the new normal, both through our own experiences and through the work of professional futurists such as Anne Lise. After all, it’s never too soon to start thinking about a more sustainable vision for the future that considers all stakeholders.
“We can’t just live in the present. If we do that, we will be left behind. Those visions of the future cannot be left to chance. We need new voices and new models,” she concluded her webinar presentation. “The future isn’t just somewhere you go, we must invest in that future. We are in this together.”
Although the pandemic has given us all pause for thought, investing in the future requires ongoing improvement rather than a ‘big bang’, once-in-a-generation project. Too often, large-scale transformations can be highly disruptive to business as usual and can lose momentum over time. In our experience, building incrementally toward the future – informed by a clear, common purpose – will yield the best long-term returns.
 Global AI Survey: AI proves its worth, but few scale impact – (McKinsey, November 2019)