An extraordinary time to be a business director

According to the dictionary, to ‘direct’ means to aim people or operations in a particular direction, such as when directing traffic, or to guide performance, such as in a play or film.

It turns out that there is an intimate connection between our journeys and our stories.

Our brains evolved in order to enable us to move with intentionality.

Moving on purpose requires a sense of where we’ve been, where we are and where we could get to.

Human cognition enables us to conceptualise this as the past, the present and the future.

And human language enables us to narrate these as the beginnings, middles and ends of our stories.

We may not be able to out-sprint a jaguar, or out-navigate a migratory bird, but our ability to think in narrative maps that enable us to chart more imaginative pathways through life explains why we haven’t just evolved like other species but have developed from generation to generation in ways that have so spectacularly accelerated in our recent history.

But as any business director knows, past performance is not a guarantee of future success.

Throughout most of human history there would have been nothing we could do to destroy the world we live in.

With the advent of nuclear weapons that changed, and we could destroy significant portions of it if we made a serious mistake.

With the climate emergency we now face a high likelihood of making substantial areas of the globe uninhabitable and even greater portions uninsurable, and therefore unviable for business, unless we actively make significant changes.

And with the arrival of A.I. we face risks that could overtake us far more quickly than climate change, making our response to the climate emergency appear like a failed dress rehearsal for faster-moving threats coming our way. And we do so at a time in which so much of our world order is coming into question.

At the same time, the very capabilities that have landed us with these problems are also the reason why we have never been better equipped to improve lives and livelihoods.

By working together in the right ways, we can come out of most of our problems better off than we went into them, and that is where businesses may have such an extraordinary role to play.

I was recently invited to speak about why I’ve written my books to an Institute of Directors audience, so I have been reflecting on what my writing most has to offer its members.

In extraordinary times we may need different stories to guide our journeys as business directors.

Is the goal of creating competitive advantage holding us back?

I wrote my first book to challenge the conventional story of strategy and my second to challenge the conventional story of purpose.

In my first book Collaborative Advantage I argued that the problems we faced in business were increasingly not problems we could best solve on our own, if ever they had been.

And so, I proposed collaborative advantage as a fundamental alternative to the conventional strategy of creating competitive advantage.

Competitive advantage is the idea that you line up the resources you own, manage and control to create a superior value that you then deliver to your customers as the passive recipients of that value.

I felt that in its emphasis on resources to be controlled rather than relationships to be empowered, this misconstrued and underestimated the true nature of value creation and obscured our greatest opportunities for growth.

If you took a conventional economist to Starbucks for example and asked them who was creating the most value, they might identify the manager, the barista or the brand but they probably wouldn’t say the customers.

And yet if you go to Starbucks to meet your friend, I’d say that the obvious truth is that the real attraction is the conversation you’ll have together while the warm brown liquid plays a relatively ancillary role.

Far from being mere ‘consumers’, whose only agency is to reduce the world’s supply of whatever we are trying to pour into them, our customers are the people doing the most to improve their own and each other’s lives. So, we can best see our role as finding the right ways to make it easier, more fulfilling or perhaps even more magical for them to do so.

Similarly, we don’t have to see colleagues as ‘human resources’ to be ever more micro-managed, but as people whose contextual judgement, creativity and discretionary effort can be the heart and soul of the business.

We don’t have to just see partners as suppliers delivering to a contract when they could be co-creators of a shared future with us.

And we don’t have to just seek passive investors as walking cheque books, largely invisible to management, when a more engaged investor base can help live up to that future.

Markets don’t exist – have you ever seen the market for soft drinks? – but communities can make business come to life and spread change far more quickly than may be predicted in conventional market research.

And our shared home is not an asset to be exploited in a value chain but is the thing that makes business possible in the first place and our greatest source of abundance.

Antoine de Saint Exupéry wrote that the perfect relationship consists not in looking inwards at each other but outwards in the same direction.

In Collaborative Advantage I sought to show how we can grow a business more effectively by harnessing the value-creating potential of all its most important stakeholders, developing its purpose as a shared agenda with the people it serves, framing its innovation as the creation of the right opportunities for people to pursue that purpose, creating an environment conducive to the change it is enabling, working with and through its early adopters and strongest supporters to improve its offerings and break through to bigger opportunities and to partner up to scale further and faster than it ever could alone.

If we see a business not as the creator of value that is delivered to our stakeholders but as the enabler of the far greater value that can emerge from the relationships that the business brings together, then we can raise the ceiling on our upper level of ambition to meet the needs of more extraordinary times.

And that’s perhaps particularly necessary in that if we now look back to the kinds of problems we faced when my first book came out in 2018, we might be forgiven for seeing them as ‘the good old problems’.

Since then, we’ve had the biggest global health emergency of our lifetimes as well as the biggest interruption to life and work, conflict in Europe, the Middle East and Africa, a cost-of-living crisis and some of the most extreme weather events and patterns we’ve ever seen. And the Trump presidency and the response to it is creating a far more surprising, less certain and potentially much more dangerous environment within which to operate.

Can we upgrade the purpose of enterprise?

If shared problems gave rise to the need to change the story of how we work together, worsening problems that so often come from outside our prior frame of reference may mean we need to radically improve the story of what we are working together for to access a deeper source of motivation and value creation.

That’s why I wrote my second book The Purpose Upgrade: Change your business to save the world. Change the world to save your business.

In 1929, Paul M Mazur put it to the Harvard Business Review that business needed to move from addressing human needs to addressing human desires. In a way that marked the inception of decades of subsequent consumerism.

I’d argue that today the pendulum needs to swing back the other way, from manufacturing spurious consumerist wants to addressing priority human needs.

This is about moving away from making the attractive necessary to making the necessary more attractive.

In researching for my book, I found that the most significant corporate turnarounds of the past decade had all involved purpose-level change.

Perhaps my favourite example in the book, having spoken extensively with its global leadership, is a coal mining business that managed to become a sustainable food business, working explicitly to fix the world’s broken food system.

The business is called DSM. DSM originally stood for Dutch State Mines and the company was born from digging coal out of the ground and delivering it to people’s homes for heating and illumination.

DSM now stands informally for Do Something Meaningful and making the transition from what was once a perfectly respectable endeavour to becoming a true champion of important Sustainable Development Goals and a vastly more successful business as a result, DSM embodies the kind of purpose upgrade that we may need right across the economy as incumbent patterns of living and working become increasingly unviable.

As our most pressing global challenges continue to play out, they are likely to continue to create rapid and extensive shifts revealing the deeper needs of the people whom we serve.

Re-purposing our businesses around these priorities may now represent the biggest opportunities available to us.

In The Purpose Upgrade I developed a model to find more valuable problems to solve as a better point of departure; take stakeholders on a more meaningful journey of change; and achieve more inclusive outcomes that reward participation in those journeys.

I was recently on a panel at a conference where the question came up of the right orientation for business – a product-orientation, a finance-orientation or a market-orientation.

I argued that we need to foster a contribution-orientation. Reason and the extensive meta-analysis of available data shows that businesses that prioritise creating value for their stakeholders out-perform profit-maximising businesses because in seeking to be useful to their stakeholders they identify a wider range of opportunities for innovation than their profit-maximising counterparts, a subset of which end up unlocking more profit for the business.

The most effective way to overcome the limiting effects of prior assumptions can be to ask ourselves a new set of questions.

So, I’ll leave you with a few questions you might like to consider.

You likely know what your business does best – but do you know enough about what the business enables your customers to do better? And the changing context in which they are doing this?

What could it look like if instead of aiming to direct the best business in your sector in the world, you instead aimed to lead the best business for the world?

And how would you change your business plan if its intended audience was its external stakeholders and its purpose was to mobilise them to help you achieve your shared goals together?

If you have questions or comments you would like to share about these questions or my work and writing please reach out to me on LinkedIn here.

Author Paul Skinner recently joined the IoD Surrey Branch for its Quarterly Directors Business Book Club Dinner at Foxhills to share what business books can contribute in today’s world.