Unlike when we published our Purpose Report (2020 edition), business leaders now understand the importance of purpose; where they struggle is in the delivery. This report aims to address that gap, with every chapter reinforcing the need for purpose in the present moment. Thank you to all those who generously gave their time to be interviewed and share their thinking. To Ed Clements, who was tasked to lead this extracurricular project so soon after his arrival at Pulse. And, most importantly, to all businesses and leaders who seek to live and work with purpose in the hope of creating a better future.
...there
is no better time for purposeful businesses to step up and bring their unique strengths to bear in helping address some of the greatest challenges the world has ever faced.
It’s been almost four years since we released our first insights report, ‘The State of Purpose’ and it is safe to say that quite a lot has changed since then! The idea of purpose as a driving force for good for the corporate world and wider society seems to have taken root and become something which businesses believe can change both the way they work and the role they play in the wider world.
At the same time, rising energy prices and global inflation have put a spotlight on the role of purpose versus the need to make a profit. And as a result of that, many of the forces that protect and reinforce the status quo have reared their heads.
In many ways the world is at a very stressed and sensitive juncture – one of those epochal periods of time where everything appears to be on the cusp of huge change and uncertainty. This report brings together a number of brilliant thinkers leading the charge for purpose. We argue that there is no better time for purposeful businesses to step up and bring their unique strengths to bear in helping address some of the greatest challenges the world has ever faced. This is the time for longer-term thinking and for finding new ways to collaborate to help build a fairer and more sustainable future.
Pulse stepped into the world of purpose 21 years ago. This latest barometer of that world sets out some of the ways in which we believe purposeful businesses can truly step up. We talk to leading thinkers involved in government, sustainability and the private sector, all of whom provide a fascinating analysis of where we are now, where we need to go and how business can play its part. Undoubtedly, the thread that ties all their arguments together is a recognition that early adopters will be rewarded, while any delay will be costly.
We hope you find it an enjoyable and useful read!
Purpose in an uncertain world
Simon Milton (Founder of Pulse and co-founder of MovingBeyond)
Twenty or so years ago I set up Pulse, a communications and cultural change consultancy designed to help leaders build more purposeful businesses and take on some of the great challenges we currently face. It was clear to me at the time that business needed to reinvent itself. Shareholder capitalism was failing, and initiatives like corporate social responsibility felt hollow and lacked real conviction.
My feeling was that business needed to play a much more prominent role in driving the profound change we so desperately needed to see. This was built on a rather sceptical view of the ability of governments to effect change, given their naturally short-term outlook based on election cycles. If anything, it is even more clear now that governments will only act decisively when society demands – and even then, only when there is political advantage in doing so. Regrettably, there is no better demonstration of this perspective than the present moment.
Businesses, however, do have a mandate to think and act long term and are backed by investors who are increasingly making judgements on how profits are made. We also have a cadre of young future leaders who demand more meaning in their work and are less motivated by pay cheques or titles.
Businesses, however, do have a mandate to think and act long term and are backed by investors who are increasingly making judgements on how profits are made.
The context is changing, a sense of urgency is needed
What has changed since Pulse was set up is the overwhelming evidence that unchecked capitalism is having on our lives. The global economy has quadrupled in size in the three decades after the 1990s and a series of political, economic, social, technological and digital revolutions have transformed many aspects of how we live.
While the worst consequences of Covid-19 seem to be behind us, the impact of Brexit (for the UK/Europe), conflicts in Ukraine and Gaza and a global downturn in the economy are still very much being felt. Geopolitical issues continue to create uncertainty making it difficult for business leaders to carry out long-term plans.
We have also seen the rise of populism and a return to inward-looking nationalistic politics. In the corporate world, we have seen initiatives like environmental, social and governance (ESG) and diversity, equity and inclusion (DEI) being challenged as ‘wokery’. A mark, perhaps, of the old vestiges of power, or the fear of the new and unknown fighting back to protect the status quo.
Making purpose count
When we published our first report nearly four years ago, purpose was already starting to become mainstream: leadership teams were beginning to find their unifying purpose and inspiring future; the UN’s 17 Sustainability Development Goals (SDGs) were driving the corporate agenda; Elon Musk had stolen a march on a complacent car industry; and bp had announced plans to reinvent itself and deliver a major cut to oil and gas production by 2030.
But as purpose continues to take hold, we need to be wary of a possible backlash. Purpose-washing could become the new greenwashing if we are not careful, and what was meant to be a tool to galvanise consumers and workforces may simply become an empty promise. You might argue we are already seeing the backlash and that the real danger is business losing confidence in what they are capable of doing beyond shareholder returns.
If all that investors want is higher profits, all that employees want is a pay rise or a shorter working week, and all that customers want is everything to be cheaper, then it’s not surprising that a newly minted purpose might end up being seen to be more spin than substance.
But a compelling purpose in the right hands allows corporate leaders to look up and truly step into the future – to see opportunity rather than problems that require simplistic, immediate solutions. In the purpose world, a business is more courageous; it can work with others to deliver systemic-level change by collaborating with customers, investors and governments. And maybe most importantly of all, it enables the full potential of its workforce to challenge the way it currently works and what could be improved.
But a compelling purpose in the right hands allows corporate leaders to look up and truly step into the future - to see opportunity rather than problems that require simplistic, immediate solutions.
Purposeful businesses need to sense the moment
The most significant impact on business is arguably to the natural world, our biosphere and all its life forms. The climate crisis much heralded by our politicians when the UK hosted COP26 in Glasgow has been trumped by energy security and concerns over rising inflation. For that reason, much of this report looks at how business navigates the duality between profit and purpose and its critical role in helping to shape a more equitable, resilient and sustainable world.
If ever there was a time for transformative change it is now. A change driven by the needs of society and new forms of partnership between business and government.
Jane Davidson has been an inspiration for her work in Wales and The Wellbeing of Futures Generations (Wales) Act 2015 is a brilliant framework for understanding new ways of working, the importance of purpose and the need for business leaders to act with a sense of urgency (see pages 16 to 23).
Profit, yes please
The modern, purpose-driven corporation also has to learn to simultaneously grapple with holding what is a long-term commitment, while delivering what is the perennial challenge to any business leader – delivering the profitability to remain viable and sustainable.
In my early thinking I was largely focused on a world ‘beyond profit’. That thought I now know was deeply flawed. Without profit businesses stagnate and die. Profits can attract and retain exciting talent, fund upskilling, and of course, are taxed to fund public services. The role of profit, used in the right way, suddenly becomes a force for good. In this way, profit delivers the products and services the world needs without damaging the planet or increasing inequality.
A compelling purpose can help a business drive profitability and become an essential commercial driver in delivering real value to the world. Alessio Terzi’s book, Growth for Good, published in 2022 has been a major inspiration and is an essential read for all CEOs seeking to act meaningfully. He argues that growth is important, but how it is achieved and deployed is how we will ultimately solve the existential problems humanity faces today (see pages 24–31).
Purpose needs courage
It is clear that purpose-driven business leaders are struggling to truly grasp what it takes to commit to a genuine purpose given the number of difficult challenges they face. This report will (unapologetically) return to the following point repeatedly: businesses that act now and align with their wider purpose will be well positioned to capitalise on their efforts long into the future. In our interview with Lord Deben, he expresses this view clearly and repeatedly, constantly reiterating the need for courageous long-term thinking (see pages 32–39).
Profits can attract and retain exciting talent, fund upskilling, and of course, are taxed to fund public services. The role of profit, used in the right way, suddenly becomes a force for good.
Convening change from the ground-up
If we truly want to build a more sustainable and equitable future, change needs to be driven from the ground up. In fact, the real leaders of change will come from those politicians, businesses and community groups who deeply connect and galvanise support of the wider community. Where innovative business models emerge, local capability is built and capital is able to flow.
We step into the world of placebased innovation and the critical role business can play in convening change with a number of truly inspiring leaders operating in this space (see pages 40–51).
Unleashing the workforce
Prior to setting up Pulse and in previous consulting roles, I had started to witness the gap between the board and the talent that operated on the frontline, and it became increasingly clear to me that what was effectively the organisation’s greatest asset was often not being heard, let alone being allowed to flourish. A sign of a truly purposeful organisation is a workforce that is given the space and freedom to flourish. In fact, I realised some time ago that my personal work supporting corporate leaders in the purpose space felt powerful and important at the time, but the real magic of Pulse was the work being done supporting clients on the frontline. This thinking is brilliantly captured, in our final chapter, by my colleagues Laura Watcham and Andrew Leith who have decades of experience supporting teams operating on the frontline (see pages 52–63).
...businesses that take action now and align with their purpose will be well positioned to capitalise on their efforts long into the future.
Chapter 1
Jane Davidson Demonstrating purpose through action
Jane Davidson is the former Minister for Environment, Sustainability and Housing in the Welsh Government, author of #futuregen: Lessons from a Small Country, pioneer of the Well-being of Future Generations (Wales) Act 2015 and Chair of the Wales Net Zero 2035 Challenge Group. Davidson’s career is, put simply, an example of a ‘life lived’ in an effort to ensure prosperity and security for future generations.
In our wide-ranging conversation we discussed that life, Wales’ landmark Well-being of Future Generations (Wales) Act and the role of purpose in an increasingly uncertain world. It was an insightful and eye-opening discussion about how we must think differently, the existential task that lies ahead and how Wales aims to punch above its weight in the fight against climate change – and in many ways, is leading the way.
Now, more than ever, there is a critical need for businesses and business leaders to authentically embrace purpose , but for Davidson, this can only be demonstrated with equally purposeful personal behaviour .
Purposeful leadership as a purposeful life
Purpose, to some, is a worn-out buzzword. Its ubiquity has grown rapidly over the past few years and there appears to be little sign of this slowing up. Whether this has led to a reduction in its impact and meaning is a pertinent question but remains largely outside the scope of this text. However, as Davidson notes, while it had felt that the value of purpose was on the verge of taking off, “we seem to have got further away … and the challenges for which you need purpose have got greater.” Now, more than ever, there is a critical need for businesses and business leaders to authentically embrace purpose, but for Davidson, this can only be demonstrated with equally purposeful personal behaviour.
Davidson is clear that purpose is exhibited primarily through action first, and policy or legislation second. Leaders, therefore, that want to talk authoritatively on purpose, must not “behave in their own lives in ways that contradict the very purposes that they apparently espouse because it takes credibility away from their agenda.” This is plainly true. People hate nothing more than being lectured by someone without they themselves first demonstrating their own commitment to a particular cause. Leaders, put simply, must embody the purposeful values their organisation claims to hold, or else they are not going to create the change they profess to want to see in the world, with accusations of hypocrisy easily justified.
If you are going to do anything that is purposeful, it must be tied to a delivery mechanism because you have to see the output of the purpose.
The Well-being of Future Generations (Wales) Act
It was noticeable how regularly Davidson used words like ‘action’, ‘delivery’ and ‘output’. Purpose for Davidson is not nebulous, nor is it something indefinable, rather it is inextricably tied to real material change created in the world and needs to be the basis for which purpose should be judged. “If you are going to do anything that is purposeful,” explains Davidson, “it must be tied to a delivery mechanism because you have to see the output of the purpose.”
The Act, introduced in 2015, requires public bodies in Wales to behave in accordance with the United Nations Brundtland Commission definition of sustainability by ‘meeting the needs of the present without compromising the ability of future generations to meet their own needs’.1 It contains seven well-being goals and five ways of working (see right).
Davidson maintains that the five ways of working would be a “very good set of articles of association for any progressive, purposeful organisation wanting to think long-term, preventatively, collaboratively and so on … [As a result] you will be able to do a great deal of good in the world.” This pioneering piece of legislation provided increased impetus for the UN Declaration for Future Generations and the UN’s follow-up proposal for a UN Special Envoy for Future Generations to be ratified at the Summit of the Future in New York in September 2024.2
THE WAYS OF WORKING
Integration Long-term Prevention
Involvement
Collaboration
1 “The United Nations Academic Impact,” United Nations, accessed April 10, 2024. 2 “Wales leading the way with Future Generations Legislation – UN plans to adopt Welsh Approach,” Future Generations, November 10, 2021.
How to achieve good governance and regulation?
For Davidson, the critical questions that need answering are around responsible governance, good decision-making and what good regulation looks like. Regulation itself has become almost taboo given its tendency to hamper efficiency and innovation (or so the conventional wisdom goes). Perhaps understandably therefore, businesses remain naturally hesitant about the prospect of increased regulation – particularly when imposed on them by a government partial to shifting its own climate goals.
Importantly, however, while there are of course examples of bad, unnecessary regulation this does not mean regulation itself is inherently bad. How we achieve good regulation will almost certainly come through a collaborative effort between business and government. It is simply unrealistic to expect regulation independently drafted – either by the state or businesses themselves – to ensure that businesses change their practices to secure the prosperity of future generations and remain able to make profitable business decisions. It is far more likely that good regulation will be brought about through a collaborative process, with businesses explaining their priorities and challenges to the government and for this to inform the overall result.
Regulation simply being handed down by the government will very likely receive a hesitant response. As Davidson explains, “businesses who see themselves as delivering purpose, need to collaborate [with other businesses] and call on the government for [regulatory] changes…” but unfortunately, she continues, “as far as I’m aware, there is no real collaborative mechanism for this.”
A more proactive approach from businesses, to work with government, to plan for a future that seeks, above all, to assure the prosperity of future generations, could have a transformative impact.
Truly purposeful businesses, insists Davidson, “would be up for a change in regulation that drive better … behaviours,” and a collaborative effort would ensure feasibility and efficacy. The alternative is delay, which will almost certainly lead to bad regulation, ironically confirming the fears that are prevalent within the business community. All the more reason therefore, to draft the appropriate regulation now, not when panicked governments are responding to immense pressure from their electorate.
Davidson further suggests that we should re-examine how we measure business risk, not in terms of security of investment but rather by “their risk to humanity”, rendering fossil fuel companies “the riskiest for all of us”. Additionally, business decisions should be informed principally by the interests of “current and future shareholders” with Davidson concluding that “if we are really talking about [business] leaders on purpose, they would act by doing these two things.” It is then of course, explains Davidson, up to the “government to reward those [businesses] who are reducing risk [to humanity]” providing even further motivation for leaders to act purposefully.
Challenges of delivery and deepening culture wars
The challenge for businesses to stay true to their purpose is not easy and the current political landscape has only added to the complexity. For example, in much the same way the issue of regulation has become a somewhat sensitive subject, terms like environmental, social and governance (ESG) and indeed, the term net zero itself have become engulfed in ongoing culture wars. As a result, Davidson suggests, “it is making it very difficult for people to suggest routes to delivery.” To disentangle the politics therefore, and to make it easier for business leaders to speak authoritatively on issues related to sustainability, Davidson argues, “future generations are the best lens because it takes you away from this notion about climate .”
Another issue that has become increasingly prevalent, particularly in political discourse, is growth. Politicians are increasingly looking to growth as the panacea for the current and impending political and social issues. The path to growth and how it can be achieved is altogether less clear, but politicians across the political spectrum are absolutely convinced about its necessity and substantial power to overcome the problems prevalent today.
Quite naturally, this has given rise to a reasonably loud contingent of people presenting the opposite case, that growth is not something to strive towards in a world of finite resources. 3
Staying clear of this debate, Davidson prefers to talk about prosperity. The debate, insists Davidson, is not really between growth and degrowth but how growth is created. So, the question for Davidson becomes, “what kind of society do we want? What jobs are fit for purpose? Because we are still acting as though the jobs that were created in the early part of the industrial revolution are still relevant [for growth]”. We could instead configure a plan “to upskill a whole generation, which would really put us ahead of the game” recognising the extent to which the world has changed and how the current situation demands a different approach.
“One of the things that the Future Generations Act doesn’t do,” concludes Davidson, “is use the word growth It talks about prosperity. It’s this redefinition of what matters that should be the big discussion of the 21st century.” With purpose at the centre of this discussion and prosperity for future generations at the heart of decision-making, leaders no longer have to feel like they are trying to navigate through a political minefield blindfolded, constantly worried they are going to make the wrong call. Instead, with a path carved out that stays true to their purpose, they can be confident that progress will represent positive change for themselves and for the organisations they lead.
Successful collaboration between business and government is clearly going to be key in determining the path forward. While there remain so many unanswered questions about what the future will look like, with the well-being of future generations and a genuine purpose at the centre of discussions, progress is almost certain to proceed in a positive direction. Davidson’s fundamental ask then, to think differently and to lead and behave with purpose, perhaps offers a route out of the deeply unhelpful quagmire of highly politicised culture wars and inaction. Wales has certainly signalled its intention to embark on this necessary journey; it would serve businesses well to do the same.
3 See chapter 2 for further discussion on growth versus degrowth.
One of the things that the Future Generations Act doesn’t do, is use the word growth. It talks about prosperity. It’s this redefinition of what matters that should be the big discussion of the 21st century.
Chapter 2
Alessio Terzi
The critical role of business driving new forms of sustainable growth and innovation
Alessio Terzi is an economist, lecturer and author. His recently published Growth for Good – a Financial Times Summer Reading Favourite (Economics) – makes a powerful case that growth lies at the heart of combatting the effects of climate breakdown and creates the conditions necessary for a just transition. In certain quarters, growth has become somewhat of a dirty word, but for so many politicians and business leaders around the world, it’s the elusive panacea for financial stagnation and something to strive for above all else. By reframing how we understand value and exposing the unhelpful debate between lower consumption and technological innovation, Terzi invites us to think bigger, acknowledge that there is much progress left to be made, but feel confident that capitalism provides the framework for getting us there.
Terzi presents a convincing argument that capitalism and crucially its ability to generate innovation can be reoriented towards a more just, greener and sustainable world – it is an illuminating and hopeful account for the future.
How should we define growth?
A somewhat obvious, but often neglected, point when discussing the merits of growth is that value creation did not start in the 1700s. This, Terzi points out, is particularly important to recognise as we move towards a period with a strong need to turn away from the burning of fossil fuels. “I have a different view of what growth is,” explains Terzi. I am not talking about GDP, to my mind, when you are trying to generate economic growth, you are actually trying to generate value and value is not necessarily something determined by creating more stuff and didn’t start by burning hydrocarbons.” On the contrary, growth has occurred throughout human history.
Acknowledging this view, makes it far easier to imagine a future where growth and a reduction of fossil fuel production can meaningfully coexist. Yes, growth in the past 150 to 200 years has been intimately tied with fossil fuels. But history also tells us that this has not always been the case and does therefore not need to be the case moving forward.
The reason growth picked up in the 1800s, is not because we started burning fossil fuels, but because there was a deep acceleration of innovation, and innovation generates new opportunities.
“The reason growth picked up in the 1800s, is not because we started burning fossil fuels, but because there was a deep acceleration of innovation, and innovation generates new opportunities.” This, explains Terzi, is likely to happen with the green transition. “As we recognise there is value in green alternatives and that new ways of doing things encourages innovation, there will be an expansion of new value opportunities.” For example, the decline in the costs of materials to generate renewable energy continues to drop significantly. What were once thought to not be commercially viable, are now cheaper than [in most cases] fossil fuels themselves.1 This is likely to have massive consequences for global energy consumption.
Expense and profitability concerns are often deployed as the most important reasons that the energy sector or policymakers might be wary of green technologies. “But to my mind,” explains Terzi, “it makes sense as a business to be a leader in these green technologies and that you are doing a disservice, even if only to your shareholders, in trying to double down on technologies that will rapidly be old and driven out of the market.” Tesla and their pioneering of electric vehicles perfectly demonstrates the advantages of being ahead of the curve. Now the global market is trying to catch up, but with Tesla so far ahead it is no surprise that it continues to dominate the market. “If you can crack the technology now, you can lock in the benefits for decades,” concludes Terzi. This is equally true for developing economies.
It is often suggested that pursuit of a green economy is a luxury and that states that are continuing to industrialise need to be left to do so as they have not experienced the benefits of burning fossil fuels. For Terzi, this is fundamentally short-term thinking, the benefits of which will be very short-lived. “You may have fast development for a short period of time, but you need exports (Taiwan, Korea, Japan, Brazil and Vietnam all relied on exports to boost their economies) because you need an external market and the window for entering that market is narrowing with consumer preferences shifting.” Additionally, the advantages of pursuing an economy rooted in fossil fuels production is predicated on the idea that it’s the cheaper alternative; this will not be the case indefinitely.
There is nothing inherent about green technology that requires it to be more expensive than traditional energy sources. The internal combustion engine has become cheaper because of continuous efficiency improvements over hundreds of years. The price of green technologies is following a similar path with the cost declining rapidly and price parity not far away. Consequently, doubling down on the old energy system, a system that is not going to give you fast export growth and is not even going to be cheaper for very long seems like a deeply unwise strategy. As a result, according to Terzi, rather than “entering a market that is likely to become stagnant very soon … it is a much better bet to try and catch the green train.” The potential for significant, exponential growth is a real possibility in this instance and will set developing states up for longterm sustainable growth. This is not a moral argument, it is merely a much more sensible economic strategy.
…[rather than] entering a market that is likely to become stagnant very soon … it is a much better bet to try and catch the green train.
Should we continue to have faith in our ability to solve all the issues with the advancement of technology?
Terzi is unapologetically optimistic when it comes to the role of technological innovation in combatting the worst effects of climate change and believes passionately that private business and capitalism more broadly will provide the answers. As a result, he gives very little credence to lower consumption arguments. Not because this would not be desirable, but because asking people to consume less is simply unrealistic. “I’m sceptical about lower consumption arguments; my view is very technologically centred. Capitalism has many problems, but if there is one thing that it is good at it is churning out innovation which is what we will need to move toward the goal of decarbonisation.” This is why, for Terzi, the state can only do so much.
Of course, “incentives, carbon pricing and regulations of various sorts” will make an impact, and governments can start to lay the groundwork with certain types of infrastructure. But the scale of change is such that “business is going to do much of the heavy lifting, in part,” according to Terzi, “because it is a matter of technological development, and the private sector is good at that. But mostly because private industry is essential for scaling up these technologies.” This will naturally cost an enormous amount of money – way out of reach of most government budgets. But businesses at the forefront will reap the benefits, “meaning it is an investment opportunity, not simply a cost for the ‘good’ of society.”
Often views that put a lot of faith in our ability to innovate out of the problems we face from climate change are criticised for not recognising the severity of what lies ahead. Not with Terzi, he goes to great lengths to stress environmental problems will occur and, in some cases, will be devastating. “We know how climate change will materialise, it will materialise in the form of extreme weather events which will create scarcity, often in countries that have not caused the problem and will increase tension among countries with a huge impact [for example] on immigration.” This disruption is only going to make multilateral, global agreements even more tricky. The idea that, “all the countries will sit down at a COP and agree on an ultimate treaty where everyone pays their fair share,” is very unlikely to happen. The world is going to be fractious; it will be full of scarcity and environmental catastrophe so progress will not be linear, it will be tumultuous and hard fought and all sorts of geopolitical events are going to get in the way. As a consequence, it is vitally important, according to Terzi, “to align the incentives of the various players involved in a way that makes [committing to the green transition] their best bet in the current context.”
All that said, the lower consumption model is not something to be necessarily avoided. If consumers decide that is the preferable route, capitalist business models will respond accordingly. This could transpire in a number of interesting and transformative ways. The decline of car ownership giving rise to car sharing apps, wearable watches that measure minute-by-minute carbon footprint metrics, meat substitutes that are indistinguishable from the real thing or apps that make the secondhand clothes industry so efficient rendering fast-fashion virtually obsolete. “This is one of the beauties of capitalism,” explains Terzi, “it is a very flexible system that responds to incentives.” Consequently, both viewpoints can coexist, and will both contribute to making the transition a success.
Why are we not seeing the level of progress required?
It seems so obvious. So self-evident. So why then, are we not seeing significant progress? Terzi’s answer is a familiar one: the sheer size of change needed is colossal. “The scale is huge, you are trying to steer an oil tanker, or the Titanic with the proverbial iceberg in front of you – this is not something that happens fast.” However, according to Terzi, this is all about to change. Humans are myopic, as a result, it is very hard to mobilise against a threat that seems so far away. “We were stuck in a negative equilibrium, with business waiting for consumers to send signals for change while consumers were waiting for business to provide more sustainable products.” Now, with an increased appetite from consumers for all things green, business has the incentive to take advantage, so the negative equilibrium cycle has been broken.
There is, of course, a very long way to go and change needs to happen more quickly. Importantly, progress will be messy, and unforeseen problems will arise along the way. But for Terzi, forward momentum is on the horizon, and we will see a remarkable accelerated level of change in the next few years.
Terzi’s historical analysis is methodical and comprehensive, and the assuredness with which he dispels the criticisms which have reasonably been levelled at growth-centric arguments is impressive. Undoubtedly, business will be at the forefront of the transition and its impact in determining the speed and size of the change will be enormously influential. Naturally, it will be the businesses that identify the opportunities early that will be most financially rewarded and whose legacy will reverberate for decades to come.
…it will be the businesses that identify the opportunities early that will be most financially rewarded and whose legacy will reverberate for decades to come.
Chapter 3
Lord Deben Courage at the heart of long-term thinking
Over the past year, we at Pulse have spent significant time thinking about what it means to be courageous. In a time of so much uncertainty, truly sustainable businesses require leaders to think and act courageously, and purposeful businesses are best positioned to do so.
Lord Deben (John Gummer), the former Chair of the UK Climate Change Committee (CCC) – a position he held for 11 years – is an ex-MP and former Secretary of State with extensive experience in government and business, giving him a somewhat unique perspective on the path forward. Fundamentally, Lord Deben believes that the transition is inevitable and the businesses that have the courage to take the issue of sustainability head on will be those that are best positioned to thrive.
We sat down with Lord Deben to look back on his time as Chair of the CCC, assess the current moment and discuss the need for business and government to come together to create a sustainable future. It is a fascinating and comprehensive discussion and will give the reader an introduction to the ideas of a man who has been a champion of sustainability for decades.
In a time of so much uncertainty, truly sustainable businesses require leaders to think and act courageously .
How to demonstrate courage?
“Courage is not foolhardiness; courage is acknowledging that when you are planning for change, it’ll be difficult. It’ll be tough, you will be standing out, but you believe strongly that you can do it.” This, believes Lord Deben, is where so many businesses fall down. Often with great intentions, businesses set goals that sound ambitious and seem to recognise the urgency of the moment but lay out no real strategy for achieving them. Accusations of greenwashing are so much more easily avoided when the pathway is set out clearly with an acknowledgement that bumps in the road are likely, but the commitment is absolute.
Courage is not foolhardiness; courage is acknowledging that when you are planning for change, it’ll be difficult. It’ll be tough, you will be standing out, but you believe strongly that you can do it.
“For me,” explains Lord Deben, “the right approach is simple, every company should have a clear journey that they are on and a clear target to reach – but that target must be realistic. The way you get confidence is not by promising things which clearly you can’t do or are so far away that there is no meaningful way of ascertaining whether the targets are achievable. Take ExxonMobil as an example. Exxon has committed to reach net zero by 2050 but it’s doing absolutely nothing that suggests they can achieve this.” Without any real strategic changes in place, a 2050 net zero goal has no meaningful value and people are not naïve to this.
Responsible, forward-thinking businesses understand this. It takes courage of course, to set out a detailed journey to achieve net zero goals because your performance can be easily marked against this ambition. But for Lord Deben, a clearly presented journey is fundamental and provides credibility. “If you’re a sensible business, you will have the courage to lay out the journey. Now, perhaps, you won’t have all the steps along the journey in place and the further along you get it might get more difficult, but you will be able to show that your speed of progress is congruous with the end point. Where bp and Shell made their mistakes (referring to their recent decisions to lower their emissions targets) is that they promised things which they clearly knew they couldn’t do. Which reveals to me that they didn’t do the work in the first place to understand whether their goals were achievable and this is the part that’s the most crucial.” Reneging on commitments therefore, in Lord Deben’s view, is far more costly for a business than setting out less ambitious goals.
Leading the way
In response to a question about slow progress and why it seems that businesses do not seem to have really grappled with the financial implications of inaction, Lord Deben is unequivocal. In his view, any sensible business would have already started to adapt and be ready for a future defined by climate change. Primarily because the financial cost is inevitable and so the businesses that choose to move early will be in the best position to harness the opportunities that are presented. In many ways, this statement seems to strike at the core of Lord Deben’s outlook. There is, of course, a moral imperative for businesses to adapt, but for leaders who do not feel this urge, there is an equally weighty financial incentive.
Despite this reality, there remains a stubborn and pervasive view in the business world (often echoed in political discussions) that an accelerated transition is simply too expensive. “Businesses are yet to catch on to the fact that the most expensive way forward is to wait for government legislation that demands a particular course of action. One of the primary reasons for early adoption is that you can strategise according to your own business timetable which is much cheaper – it really is as vulgar as that,” explains Lord Deben. The possibility of having to comply to poorly thoughtout, hastily put together legislation that hampers business’s ability to be flexible will likely impact a whole host of businesses who remain desperately wedded to the status quo.
...businesses need to confront the fact that they will have to change .
Simply put, businesses need to confront the fact that they will have to change. While this requires courage, it is also a perfectly logical response to the current direction of travel. The pace of change required is still up for debate, but this is by no means a reason to delay. “The one certainty in life now is that climate change will get worse every year. That means that it’s going to be more important to grapple with it because more people are going to start being impacted and therefore it becomes more central in people’s minds. This will lead to mounting pressure [directed towards governments and businesses].” As the reality of climate change begins to set in, businesses and governments will be forced to react, often in ways not of their choosing.
Consequently, it is vitally important that businesses move towards a more sustainable model and build room to manoeuvre into their forecasts. “The uncertain nature of the world means that you’ve got to be much more resilient [as a business] than you’ve had to be up to now.” That means firstly, to be “quick on your feet”, but secondly to forward-plan with an expectation that conditions will require a change in direction. Crucially, according to Lord Deben, “resilience is also about getting as much right now, so that you’ve got enough elbow room in the future to shift and to be courageous enough to be one step ahead, giving you the opportunity to be able to face the absolute uncertainty that is about to arrive.” Any business with a strong purpose at its core will find responding to the need to change significantly less disruptive. While business models and strategies may need to be adjusted, a commitment to purpose will provide comfort and consistency.
The need for business and government to work together
At a time where the world is still recovering from the Covid-19 crisis and with the impact of Russia’s war in Ukraine still ongoing, the capacity and appetite for businesses and governments to implement change seems small. In the face of so much uncertainty, long-term thinking is at a premium. For Lord Deben, sustainable, joined-up thinking is only truly possible when business and government come together, listen, and ultimately trust each other’s commitment to creating a sustainable path forward.
“Businesses should be building relationships with government so that the government will genuinely engage when businesses raise concerns.” The announcement made last year that no bids were made for new offshore wind project contracts because of profitability concerns – despite repeated warnings from private industry that this would be the case – Lord Deben cites as an example of a business-government relationship breakdown.1 Furthermore, the decision by the UK government that revised the timeline for the phasing out of petrol and diesel cars, produced an incensed response from car company giant Ford.
Businesses should be building relationships with government so that the government will genuinely engage when businesses raise concerns.
What business once understood to be an ‘immovable’ date in July 2023, was a few months later shifted significantly and, according to Ford, undermined the three things business needs from the government to forge a successful partnership: “ambition, commitment and consistency.” 2 The constant ‘moving of the goalposts’, explains Lord Deben, is clearly not conducive to successful relationship building nor does it create partnerships formed on trust.
Healthy government–business working relationships requires buy-in from both sides. Both need to be incentivised and see each other as sensible actors. The government, therefore, in Lord Deben’s view, retrieving “as much gas out of the North Sea as possible is logical, exploring for more oil which we simply will not need in the 2030s is not,” and signals to business the government’s strategy for net zero 2050 is incoherent. Not leading by example has profound ramifications for “our leadership position in the world”.
It is decisions like this, concludes Lord Deben, “that reduces the amount of security that people view your decisions by, and sets an unhelpful precedent whereby businesses do not have faith in future decisions.” Without trust, businesses will be reluctant to reconfigure their business models in accordance with government policy believing – with good reason – that these are likely to change. As a result, a consistent message is vitally important. That is not to say there will not be bumps in the road and a need for amendments as circumstances change, but with a belief that the government is committed to its journey, businesses are much more likely to make allowances.
1 Michael Race, “No bids for offshore wind in government auction,” BBC, September 8, 2018.
2 Archie Mitchell and Adam Forrest, “Ford and Eon lead furious business backlash to Sunak plan to row back on net zero pledges,” Independent , September 21, 2023.
Reasons for optimism
There are, of course, signs of progress. “We’ve had the Paris Agreement, which means that we know what direction the whole world is moving in. We’ve had the Glasgow Climate Pact, which has put real force behind much of that and we have most of the industrial nations signed up to a proper programme towards getting to net zero.” The necessity to progress more sustainably therefore, is more or less assured, the speed of change required is what is left in question.
While there are some obvious contradictions in Joe Biden’s legislative approach to combatting climate change, the Inflation Reduction Act (IRA), that pledges over $400 billion dollars to be spent on greenhouse gascutting initiatives (including electric vehicles, solar and wind power projects and green jobs) is certainly encouraging3. And in the UK, explains Lord Deben, “when you think about the fact that we had no renewable energy at all 15 years ago and now more than half our energy is coming from renewables, it’s a huge change.” The EU are also making huge strides and while their coal production is an obvious cause of concern, China’s significant investment into renewable energy is a significant step forward.4
It will require courage, but with a commitment to purpose any business will be free to take advantage of the array of opportunities the transition presents.
For Lord Deben, China’s progress is hugely significant. “China has weaponised the whole concept of the transition by acknowledging [through their actions] it is clearly going to happen. They therefore have made the decision to be the leaders in the manufacture of electric vehicles and are going to be the leaders in making photovoltaics. They have turned what might have been a huge problem into an opportunity – which is a good lesson for business.” Lord Deben’s fundamental assertion then, that change is not only necessary but inevitable – with the cost to be determined by the time spent stalling – seems to have been recognised even by states historically sceptical towards questions on climate change.
“If I look backwards, I have to say to myself, I never thought 11 years ago that we’d be here. It is better than I thought.” This is reassuring from Lord Deben but is by no means a reason to step off the accelerator. Complacency is obviously to be avoided, but the debate surrounding the reality of climate change has seemingly been won. The scale and quickness of change is where discussions now rest and it’s up to business and governments across the world to plot this path forward, not pause for a collective pat on the back, but to use this moment as an opportunity for future success. It will require courage, but with a commitment to purpose any business will be free to take advantage of the array of opportunities the transition presents.
3 Tom Kertscher, “Joe Biden has approved more oil drilling. Why? And does it undo his efforts to fight climate change?” Politifact, April 13, 2023.
4 Amy Hawkin and Rachel Cheung, “China on course to hit wind and solar power target five years ahead of time,” Guardian, June 29, 2023.
What now?
In summary, for businesses, getting out in front of competitors and being able to operate with freedom when adapting to more sustainable business models is crucial. A stubborn commitment to the status quo will only end in failure and is antithetical to the fundamental principles of capitalism. Lord Deben said it best in a recent interview with Finextra, where he criticised business leaders who fail to recognise the importance of this moment. Those that choose to delay and refuse to respond to the present moment, “aren’t believers in free enterprise, they aren’t capitalists … capitalism is about competition; it is about disruption. It is this stubbornness that brought the demise of Kodak, and it is what happens to any business that doesn’t recognise that sustainability … is a thing you have to get right if you are to be successful.”5
Lord Deben is confident in his assertion that change is coming whether businesses are prepared for it or not. Therefore, businesses must adapt to more sustainable models or risk being left behind. This shift is preferable from a financial and long-term viability perspective, but it does demand enormous courage. There are many signs of progress, but importantly, the speed of the transition will yield significant dividends and an acceleration will reduce the need for panic-induced responses as the urgency increases. In the face of so much uncertainty and the necessity to change, there exists a natural human tendency towards the status quo. But capitalism’s enduring dominance has been largely due to its remarkable ability to adapt. Courageous businesses with a sustainable purpose, have the capability to chart a path towards a profitable, vibrant and sustainable future. The key lies in seizing the opportunity.
5 Richard Peers, “Lord Deben implores us all to take action on Climate Change,” YouTube video, posted by “Finextra Research,” May 2, 2023.
Chapter 4
Business as a convenor of change
Investment at a local level and place-based innovation
As the pressure to accelerate the social and environmental transition increases, so the need to bring all sections of society (business, government, investors, civic society, community leaders) together grows, in order to bring about the change the world desperately needs. This belief formed the basis of the MovingBeyond initiative co-led by Pulse in the UK (now into its fourth year), a community of likeminded people from all corners of society with one very present goal in mind – to drive the change to achieve net zero 2035 and sustainable ways of living.
To take this thinking a step further, we wanted to explore the idea of place-based investing and innovation, an approach which has captured the attention of business leaders and industry pioneers alike. ‘Place’, in this context, refers to specific geographic locations where investments are directed to generate positive social or environmental outcomes. This approach addresses the unique needs and challenges of a particular place, leveraging its local assets, resources and community strengths. Place-based innovation, at its core, is locally driven by various interested parties and aims to create innovative, sustainable solutions that work for everyone. There is also increasing appetite from the investor community to deploy their customers’ money in local initiatives with a strong people and planet agenda.
We therefore sat down with the Good Economy – an organisation that helps investors making a positive contribution to sustainable development to measure their impact, Good People – which connects purposeful businesses and their opportunities to local people, and social impact professional, Anthony Harte.
The conversation was energising and in various ways, encouragingly optimistic. What follows is a small flavour of what was said, which will introduce the idea of place-based innovation, its effectiveness for addressing spatial inequality and the practical and business case for its delivery.
Note: Quotations are used sparingly to introduce the following sections and are not attributed to a particular person or organisation (unless stated otherwise) but are taken directly from the discussion.
Richard Tyrie Mark Hepworth
Anthony Harte Sarah Forster
What is place?
It makes so much sense to see investment through a place lens; place really means something to people.
As the world continues its relentless march towards digitisation, and globalisation means the barriers preventing interconnection have been almost totally eradicated, the significance of place seems more elusive than ever. But while there are undoubted advantages to our increasingly online world, place remains integral to the human experience and holds profound significance for individuals in shaping identities, a sense of belonging and well-being.
How we understand place is becoming increasingly complicated. So much interaction now takes place virtually, sometimes simultaneously isolating those from marginalised communities who lack access to digital resources and connecting those where physical connection is not an option.
Communal outdoor spaces, churches, pubs and youth clubs are becoming increasingly vulnerable as physical places of connection – with those failing to keep up with the pace of change at risk of being left behind. The online/offline hybrid mode is surely here to stay but the scales are at risk of overbalancing. Place is worth preserving and revitalising local assets such as health support systems, community hubs, housing, schools and green spaces, is a meaningful way to achieve this important goal.
Will the real innovation please stand up?
How much innovation has there really been over the last 30 to 40 years?
It is generally considered that SMEs offer the most fertile ground for innovation. Small and nimble organisations have the ability to strategise quickly and set or respond in real time to emerging trends. More typically, however, SMEs tend to be swallowed up by large companies, bringing an abrupt end to any innovative potential there might have been. Despite unprecedented technological advancements and a seeming endless stream of disruptive ideas, the pace of innovation in many sectors has plateaued.
Furthermore, over the last few years, many of what are considered to be the most successful examples of true innovation, on closer inspection can be more accurately described as mere mechanisms for circumventing protective regulation. Thomas Frank, for example, in his book
Listen Liberal , maintains that Amazon allows customers in many places to avoid sales tax, Uber avoids adhering to local safety and insurance laws, while Airbnb’s success is built upon the ability to evade zonal laws that traditional hotels must satisfy. 1
So why such little innovation? One crucial factor that Edmund Phelps advances in Mass Flourishing , is that true innovation, far from coming from a select few maverick entrepreneurs, is far more readily produced by the millions working every day at a grassroots level. 2 Perhaps then, to re-establish a culture conducive for mass innovation, empowering workers on the frontline – achieved by emphasising purpose and reasserting the importance of place – can meaningfully pave the way for this important change.
1 Thomas Frank, Listen Liberal: Or, What Ever Happened to the Party of the People? (Scribe, 2016), 209.
2Edmund S. Phelps, Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change (Princeton University Press, 2015).
Why are communities losing faith?
...so, for me, the just transition and the net zero agenda is very important, but I think inequality is even more important.
Fundamentally what has happened is that the financial sector has essentially lost its purpose and has disconnected from serving society with decision-makers having their eyes on the screen and not on the ground.
Trust is falling across the board, whether that’s entire states, politicians or business, trust is in significant decline everywhere you look.
When you think about the level of attention the need for change in the face of climate change has attracted, particularly in the past few decades, and compare with issues of inequality, the disparity is glaring. How far these two enormous existential issues can be meaningfully separated is a reasonable question, but one does not need to look too far before the scale of inequality becomes almost overwhelming. Economic growth in the UK has left little to be excited about for almost two decades, the concentration of wealth towards the top 1% continues to rise exponentially and living standards have dropped to their lowest on record.3 It is therefore perhaps surprising how little attention inequality is given in both political discourse but also in business strategies ostensibly configured to meet net zero commitments.
So, while financial interests are increasingly drawn to the economic opportunities of the transition towards net zero, attention towards social issues has lagged. Investment into local assets that strengthen community ties is one meaningful way of achieving this and by building social capital and resilience, the grounds for bottom-up innovation becomes noticeably more fertile.
It is worth considering however, that the conditions over the past few years have had a meaningful impact on the confidence people are willing to give to once broadly trusted institutions, such as the media, government or business. There has been a significant loss of faith in their ability to lead with people better equipped now to ‘fight back’ against perceived unfairness.
The fall in trust and the realignment of power is a very potent combination. Suddenly, communities are far less willing to acquiesce and feel more empowered to stand up for their own interests, whether that is against the Keystone XL Pipeline, or local objections in the UK against fracking and onshore wind turbines. Resistance movements are not always successful but the ability to organise is easier now than at any time in history. Furthermore, there is a growing feeling that institutions with significant power no longer work to serve people’s interests but are at their core, self-interested. This trend is palpable across most liberal democracies but perhaps is best demonstrated by the fact that young people, in particular, are losing faith with democracy itself – in a recent report for example, just 19% of young UK adults (18-24) said democracy served them well with 55% saying ‘badly’.4
This lack of trust is equally apparent between the private and public sector. Governments are regularly accused of moving the goalposts preventing business from fully committing to long-term plans, while there is often a perception that businesses are far too wedded to the status quo, failing to grasp the urgent need to adapt. Evidence of this decline in trust played out most noticeably with the UK government’s failed offshore wind auction 5 and in the decision to delay its commitment to ban the sale of new petrol and diesel cars.6 This is similarly the case at a grassroots level with local authorities and their local stakeholders often disagreeing on the most effective ways forward.
3 Ed Conway, “‘Undeniably grim’: Why there’s been an unprecedented fall in living standards,” Sky News, February 15, 2024.
4 Toby Helm, “Young adults have dramatic loss of faith in UK democracy, survey reveals,” Guardian, April 10, 2022.
5 Jillian Ambrose, “What went wrong at UK government’s offshore wind auction?” Guardian, September 8, 2023.
6 George Parker, Lucy Fisher and Jim Pickard, “Rishi Sunak announces series of U-turns on net zero pledges,” Financial Times, September 20, 2023.
How can business create meaningful change?
Don’t make place about numbers, place is about people.
We all have a vested interest in place because businesses rely on thriving communities to be sustainable.
Rebuilding trust, particularly for businesses and investors looking to make a meaningful social impact, should be high up on the agenda.
Proper engagement with local communities and a real understanding of place might cause delays in the short term, but long term costs will be significantly reduced. Consequently, not only will potential interruption from disgruntled stakeholders be more easily managed, but the resulting support can be used effectively. By breaking out of silos, working together at a grassroots level and recognising the unique issues related to place, transaction costs will markedly decrease providing sustainable grounds for innovation.
Businesses begin in and grow out of community but then somewhere along the line this attachment dissipates, and they lose their sense of place. Businesses need to reclaim what it truly means to be in and serve community. What is it, for example, that the community really needs, and can business play a central role in delivering it? Moreover, by working with community, how can business build the sustainable business models that investors will find attractive, to unlock the necessary funds to convene meaningful change? A lot of this comes down to bringing people together from traditionally competitive or siloed sectors to cultivate an environment conducive to genuine idea-sharing, propelled by a unified purpose.
I think women have a massive role to play here. Women are much more relational in the way they see things – less competitive and are not going to try and out ego each other. Women have a vital leadership role in the transition because endless transactional relationships have not led to the necessary change.
Good Economy
It is vital for organisations in the private and public sector to come together in order to address some of the most profound inequalities all across the country and this is only feasible by having good faith discussions – seeking to share knowledge through non-transactional conversations. This is surely a more productive avenue to pursue, with the ultimate goal of ending up in a position where outcomes are aligned, and investment is measured by its social impact first, and financial return second. Recognition of the uniqueness of place, with a profound consideration for its people, community assets and history can stimulate regional economic growth leading to more equitable distribution of resources and opportunities within and across communities.
The lack of affordable housing, for example, is a perennial issue in the UK and the need to increase the number of homes is clear. Investors might not see the scale of returns accrued on luxury flats but the societal benefits in investing in affordable housing are hugely significant and over the long term, profits will remain significant. These sorts of investments can easily yield longterm returns and as local authorities become more open to this dynamic the opportunities for business will only increase further.
IMPACT INVESTING
Investing underpinned by impact investing principles and impact measurement and reporting practices. Local Government Pension Scheme and other institutional investors.
SPECIFIC PLACE
Local priorities, needs and opportunities as defined by local authorities, strategic authorities and local stake holders
It is vital for organisations in the private and public sector to come together in order to address some of the most profound inequalities all across the country...
Unfortunately, often the way business-to-place investment works is by reducing place to numbers. For example, “the data shows place X needs more investment in y”. But without meaningful context accompanying these numbers, the full impact of the investment is often lost. Building proper partnerships with local stakeholders and forming the connection required to make maximum use of the investment is crucial. Having built trusting relationships with the community and local stakeholders (from the bottomup), suddenly investment is no longer paternalist in nature, but collaborative and tailored in a way that accommodates the locally specific idiosyncrasies.
The Good Economy’s Conceptual Model of Place-Based Impact Investing.7
Is it scalable?
Where is the change at the scale and pace required going to come from? Harnessing the energy at community level will go a long way to answering this question.
Despite the uniqueness of place, place-based initiatives can scale. Characteristics are, of course, shared place-to-place, meaning initiatives in a certain area are likely, perhaps with minor modifications, to be feasible in other areas ensuring their commercial viability. This is where investors are needed, firstly to see that there is a very real and obvious return on their investment, but more importantly to see the level of impact a relatively small amount of capital can achieve if targeted in the right way.
For business, the opportunities are abundant. The levelling up agenda in the UK is once again a noticeable feature in political discourse, but tangible progress remains elusive. The recent cancellation of the northern section of High Speed 2 is further evidence of this reality with the divide between north and south – or perhaps more accurately, London versus the rest – only set to widen. Reconnecting capital to place, particularly through community-driven initiatives, can address these disparities and unlock investment opportunities in clean energy, affordable housing and transport infrastructure – ultimately benefiting both investors and communities.
Investors are needed, firstly to see that there is a very real and obvious return on their investment, but more importantly to see the level of impact a relatively small amount of capital can achieve if targeted in the right way.
Chapter 5
The role of purposeful leadership in unleashing the workforce
Laura Watcham and Andrew Leith from Pulse
At the heart of any business is its people. Over the past couple of decades this way of thinking has become more mainstream, “Our people are our greatest asset” is so commonly used that we no longer really hear it. But we know from our conversations with leaders that there is still a gap between what this belief means and how it manifests into an organisation’s culture.
We believe organisations that will thrive are the ones where everyone can operate at their natural best, using their skills and experience in a way that fulfils them and supports the goals of the company. When we talk about purposeful business, that is what we mean.
Culture is largely defined by behaviours and communication. It is relational and organisations with a strong purpose have a real advantage here. Something we have observed through our client work is that organisations are very good at operationalising everything. Controlling, managing and putting resources to work to drive efficiencies. The difficulty, however, is that human relationships are not ‘resources’ that can be operationalised. People are complex and relationships between colleagues are intricate, ever-changing and often unpredictable. But in the knowledge economy, with organisations facing greater uncertainties than ever before, nurturing trusting relationships to unleash the potential of each person is becoming the new competitive edge.
On one level, this chapter is simply a conversation between two people who have both worked at Pulse for over a decade who are curious about human behaviour and intimately tuned in to the world of workplace culture on the frontline. At another level, it is about the insights picked up over the years by Laura and Andrew that can support business leaders to navigate the challenges of helping their people flourish. There are no authoritative claims, or any pretence that ‘Pulse knows best’. Nonetheless, this chapter teases out a number of important elements that go into nurturing the human side of businesses, where the workforce takes centre stage.
Andrew Leith
Laura Watcham
How do leaders unlock the capability that exists within their teams?
1. Laura
There seems to be an increasing awareness that what were once perceived as necessary leadership characteristics are less relevant now. Of course, people value conviction, confidence and competency in a leader, but there’s also an increasing acceptance of imperfection. If I think about it, I definitely feel closer to people who aren’t hiding behind an appearance of perfection. I think this is true of most people. We want to connect with people who are like us – human and fallible. However, leaders have often risen to the top by hiding or masking their failings or mistakes.
This is particularly true when you get to the top of the organisation and become the public face. Investors only want the good news. Customers want solutions, not problems. But in reality, they are also human and recognise that the great challenges we face in the world are enormously complex. They increasingly expect leaders to share their vulnerability and to learn from mistakes.
3. Laura
That is a really important point. This all starts with creating safe environments because people need to be encouraged to truly turn up to work so they can both fulfil their potential and create real meaning in their work. A leader’s ability, therefore, to recognise that their workforce is diverse and that individuals [employees] require different conditions to perform at their natural best – often quite radically different to the conditions they themselves would normally thrive under – cannot be underestimated.
2. Andrew
I think that is right. There is a real balancing act in play. I think employees want to see a bit more vulnerability or something that feels more human but they also want strong leaders with a clear and consistent vision of what they are trying to achieve. Good leaders know when to get out of the way and allow those who are closer to the real need to make that more informed decision.
Why do leaders struggle to build trust?
1. Laura:
That’s a tricky question. But I suppose, at its most fundamental level, the ability to cultivate a working environment that allows employees to thrive is dependent on being able to form trusting relationships. Now, building trust is very difficult, it takes time and there are plenty of things –personalities, egos, pressure to perform – that can get in the way and prevent trust from being realised.
Leaders, I think, feel under enormous pressure to perform and produce results. And much of this pressure comes from the very nature of business and the need to deliver the profits no matter what is happening in the market. Consequently, with this single-minded focus on delivering this profit it is often very difficult for a leader to admit mistakes or make their vulnerabilities known. It’s easy to see how a leader may see it as a threat to their status if they admitted personal failings. It’s a natural instinct to protect ourselves from what might be perceived as a threat. But building trust relies on being vulnerable. And showing vulnerability builds trust. It’s a very circular concept. As a result, an acknowledgement from leaders that mistakes are inevitable is one of the most meaningful changes leaders can employ to create thriving working environments.
2. Andrew:
There’s a lesson in there at the organisational level too. Businesses – quite naturally – want to give the impression that everything is positive and under control. But being in complete control is, of course, impossible. We are always just one part of a system, and we don’t have control of all the parts. Showing strength can be reassuring and give others confidence, but when it’s a façade, things break down, the cracks begin to show and often this is where the cover-up or back-tracking starts. But this is obviously not going to build much trust! It takes courage to be honest about difficult situations, but people expect a degree of uncertainty and error, being honest about this is a better way of cultivating trust with stakeholders. We accept it of each other as a natural part of forming deep and meaningful friendships. Why not when we are in our organisations?
3. Laura:
It’s impossible for things to go right 100% all of the time. I think that’s true for individuals as much as it is for organisations. Organisations always want to put a positive spin on everything – internally and externally. But in doing that, are they missing out on what could be learned? And what about when something bad or even traumatic happens? Organisational trauma. Mass layoffs. The sudden departure of a CEO. Sweeping those events under the carpet with a ‘keep calm and carry on’ attitude just buries the grief instead of accepting and going through the feeling. It’s well documented in medicine now that if humans ignore emotions, like grief, they just manifest in a different way which leads to other problems. The same is true at a macro level for organisations.
an acknowledgement from leaders that mistakes are inevitable is one of the most meaningful changes leaders can employ to create thriving working environments
How has the work-employee relationship changed?
1. Laura:
The world has changed dramatically over the past few decades. Historically, people leaned on traditional institutions, for example, church, unions, working men’s clubs or the Women’s Institute as means to socialise and to feel a sense of belonging, beyond the immediate family. Along with the state, these were institutions that people trusted and respected. But with these options much less prevalent today, work almost through necessity, has had to step up and fill the void – for better or for worse. We rely on organisations much more now and work now occupies a much bigger part of our lives, certainly in terms of our sense of identity.
work almost through necessity, has had to step up and fill the void – for better or for worse.
2. Andrew:
3. Laura:
For so long, people went to work, had a job description, did what they were told and went home again. For many, work was about collecting a pay cheque and not much else. Organisations had met their commitment to employees if they paid them on time. But so much has changed, business leaders have a much better appreciation for the need to support the workforce and to create an environment where each person can thrive and contribute.
And this is mirrored by how business thinks of itself now too. I guess it’s similar to how businesses saw themselves existing primarily to serve their shareholders and to turn a profit. But now, they generally give much more serious consideration to people and planet with investors, employees and consumers all showing an increased interest in how those profits are made. The boundaries for why a business exists and what we regard as the role they must play have expanded. At the moment it feels like businesses are still trying to figure out what is the best way to create that right culture and how we create the right conditions for it to continually thrive. It’s not an easy ask as it does require resetting some of those qualities we have been rewarding over the past few decades.
4. Andrew:
I agree. It’s been slow, and there is certainly a lot of progress still to be made, but I think there is a broad understanding that an empowered workforce, with a proper purpose, is beneficial for all within the business; and a healthy workplace culture almost always makes the business far more innovative and agile and therefore more sustainable.
5. Laura:
Yes, true! Equally, employees have far more choice. What businesses offer now in terms of working arrangements, perks, culture, and so on … is far more extensive and can make the difference between acquiring a talented new employee or retaining a long-serving employee who might be tempted by pastures new. Ultimately, employees expect far more than simply a monthly pay cheque from their place of work. Customers too, of course, want to know who the people are behind the business and the broader contribution the business delivers to society. We live in a relational world where shared values and beliefs are central to business success.
6. Andrew:
Businesses are very effective at operationalising their assets; it is therefore easy as an employee to fall into the trap of seeing that our roles are to satisfy those processes and procedures – we are put to work in a way that can feel mechanical, and the way we are rewarded is part of this mechanical view too. I still can’t get this right myself. So, I have a title as Creative Director, that will have a description, and a set of criteria that I will feel I am being judged against. But I know I can be easily drawn into satisfying those rather than always thinking what is best overall. And this can get compounded with rewards and recognition that further focus on me doing my bit, over and above the overall bit.
we definitely see more businesses putting more attention on their purpose and values than in the past
It’s culture that enables this, and we definitely see more businesses putting more attention on their purpose and values than in the past. But you often pick up in the language used around it that it’s something that is being operationalised – deliver our values programme, roll out our communications about purpose down-the-line. It’s operational rather than relational language. Which is a practical way to talk, but often turns these initiatives into tick-box exercises.
Is this really in the best interests of businesses
or is this more about simply
being nice?
1. Andrew:
Often paying attention to developing a healthy workplace culture is seen as desirable, but ultimately nonessential. It is perceived as something to be worked towards for the benefit of employees which doesn’t really have an impact on the overall success of a business. Leaders will often talk about culture but often struggle to understand how to move from the ‘transactional’ space, designing and delivering operational plans, to unlocking truly transformational thinking and behaviours.
This is a fundamental mischaracterisation. An empowered workforce, motivated by a clear purpose can have significant impact on success. I’d argue it’s the most important challenge for most leadership teams at the moment. As the old saying goes ‘culture eats strategy for breakfast’. A workforce that is simply going through the motions is unlikely to have the energy and passion to deliver meaningful change or drive a business to the next level. That doesn’t happen when you are simply there to pick up a pay packet. But an empowered workforce, given the freedom and blessing from leaders to be bold, ambitious and to innovate are far more likely to generate the ideas needed for that business to adapt and make the right decisions.
2. Laura:
I agree, and this goes back to the relationships point. It’s impossible for leaders to create productive cultures without forming proper human relationships with their workforce. This is why spending time with colleagues on the frontline is crucial. Not only does it indicate that leadership cares and wants to have open lines of communication throughout the business but it also provides a valuable insight into the day-to-day challenges, and what frontline workers need to perform well. Supportive measures can then be implemented in collaboration with the frontline rather than imposed from the top-down by potentially misguided leadership teams. Critically, it also ensures strategy emerges from the ground up, from those who are running facilities, talking to the customer or who are close to the community. Rather than the more historical and antiquated top-down strategy fed down from head office.
Authentic leadership: where less is more
At a basic level, culture is all about creating the right conditions for the workforce to thrive. Openness, trust and attentive conversations are key to getting this right. All this, and a commitment to creating an environment where the workforce feels valued is vital for progress. A safe workforce, coupled with a pursuit of high standards and a relatable purpose, will reduce the barriers that prevent growth – namely, apathy and fear. With employees feeling free to pursue innovative ideas and take positive risks. And it all starts with the mindset of the leader –from the outset – setting the tone.
There is a real temptation for business leaders to implement initiatives targeted to improve workforce culture and think: “I’ve done that, what’s next?” But the ‘what next’ is often just committing to the longer journey until it is embedded and feels natural. Culture is behaviour repeated at scale. It’s not improved through a tick-box exercise, rather it is something to be continuously worked towards in alignment with your purpose. Sometimes … less is more. From working directly with people on the frontline in organisations, we have learned that overcomplicating or introducing a shiny new initiative every four years just causes confusion and fatigue. Sometimes it is enough to keep the core the same and just look at new ways to keep it meaningful over time as the organisation adapts to stay relevant in the world.
At the heart of this, leaders need to be honest about the challenge the business faces. It means being open and transparent when mistakes are made. It means encouraging bold long-term thinking that confronts the status quo. It means learning from rather than avoiding failure.
Most importantly, it means organisations have a well they can tap: the humanity of their own employees. We all desperately want to be doing something meaningful and contribute the best we can to those things we care about. When given the space and support, those on the frontline can be incredibly innovative and driven, secure in the knowledge that they have the unwavering backing of their leaders and colleagues.
Culture is behaviour repeated at scale. It’s not improved through a tick-box exercise, rather it is something to be continuously worked towards in alignment with your purpose.
