In 1995, grey wolves were introduced back into Yellowstone Park for the first time since the 1930s. In the subsequent twenty-five years, scientists have documented a cascade of system-level changes, starting with a rebound in Aspen tree shoots, a growing population of beavers, and some claim it even changed the flow of the river. There is controversy about how much credit the wolf introduction deserves because eco-systems are notoriously hard to study. It’s hard to believe that an initial eight “high-on-the-food-chain” wolves could create such a cascade of impact. There are also those who don’t want the wolves to get credit, perhaps because they see them as a menace and would like their protected status to be removed.
A few weeks ago, nearly 200 CEOs from the Business Roundtable issued an open letter titled “Statement on the Purpose of a Corporation.” They asserted that the purpose of a corporation is not just to serve shareholders (their official position since 1997), but “to create value for all our stakeholders.” Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co. and Chairman of the Business Roundtable went on to say, “The American dream is alive, but fraying. Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”
The announcement got a raft of attention from Wall Street and the cable news pundits. The Council of Institutional Investors respectfully disagreed with the statement. The Wall Street Journal Editorial Board claimed it was primarily a political move and “That CEOs who abandon shareholders won’t appease the socialists.”
Many cheered loudly. The American Sustainable Business Council, which represents 250,000 responsible businesses issued a statement in support, with CEO Jeffrey Hollender saying, “We welcome Jamie Dimon and the leaders of the other companies now agreeing with what we have been saying for ten years. Business can and should be a force for good – for people and the planet. It is great news that we finally have that shared understanding.”
So what’s the connection between those 8 wolves and these 181 CEOs? It comes down to the ripple effect of behavior, something that is incredibly complex to study and understand, particularly when that change occurs with those “high on the food chain.” CEOs, like grey wolves, have an outsized impact relative to other executives and other employees. The CEOs of the Business Roundtable, which represents the nation’s largest businesses, have an outsized impact on our economy, our political environment and even the global economy.
The importance of behavior has been researched by a team at Harvard who said, “In our data we find that companies with high levels of purpose outperform the market by 5%–7% per year… They also grow faster and have higher profitability. However, the link between purpose and profitability is present only if senior management has been successful in diffusing that sense of purpose further down in the organization, especially in middle management, and in providing strategic clarity throughout the organization on how to achieve that purpose.”
Assuming those CEOs begin to behave differently (and many already are), they will likely influence our economic system in ways we can’t even comprehend today. To the extent this view increasingly channels the power of the private sector to address and solve major social and environmental problems, I, for one, am cheering each and every one of them on.
Quote of the Week: “Both hope and pessimism are deeply contagious. And no one is more infectious than a leader.”John Ortberg