The last two weeks I’ve spent in Harvard Business School, studying the new laws of business with international leaders. Great people, great classes. The purpose+profit thinking of future organisational leaders was addressed multiple times (mostly by Michael Tushman, whose new book I’d highly recommend), and explained in pragmatic terms by Harish Manwani – COO of Unilever. According to Manwani: organisations have strived to move from good to great in the past (thanks to Jim Collins), but now need to move from ‘great to good’.
He explained two primary issues with the growth of business today: i) it is incompatible with existing resources (slide below, check the biocapacity line in particular), and ii) it’s growing in an increasingly unequal way for people (second slide below).
Manwani’s solution to the current issues was a fundamental shift in the mental model CEOs use to lead their organisations: from ‘either’ to ‘and’ model. Since CEOs face dilemmas on a continuous basis (e.g. focus vs scale, freedom vs framework, shareholders vs stakeholders, purpose vs profit), in most cases they’re better off embracing both dimensions at the same time. An example: choosing short term gains (profit) over doing well for the long term (purpose) doesn’t fix problems in the long, and was described as an ‘operation was successful but the patient died’ model.
On the question from the audience how Unilever had approached the growth dilemma, he explained Unilever’s dual goal as ‘double the business, and cut the footprint by half’. The growth model Unilever uses internally is known as 4G: where employees are asked to grow their business in four ways at the same time (examples of 4G reporting can be found online):
- Consistent growth (consistent stable growth is what makes you rich)
- Competitive growth (growth vs competitors, market share)
- Profitable growth (maintaining good margins)
- Sustainable growth (grow sustainably)
To summarise, it is imperative that our organisations move their focus from great to good. Companies that do this are known to be more successful in the long run. CEOs can help steer in this direction by acknowledging the multiple dimensions of growth, and helping their teams see the implications. Organisations can be both great in business, as well as good for society.