On April 26 and 27, I participated in Bloomberg’s online Green Summit. The two-day agenda was stacked with top executives, policymakers and investors sharing their perspective on the imperative to shift to meet stakeholder needs, addressing the core issues of climate change, and putting a spotlight on the changes happening with businesses and investors. Among the exceptional roster of speakers were Marc Engel, Unilever’s chief supply chain officer; Larry Fink, Blackrock’s chairman and chief executive officer; Célia Blauel, deputy mayor of Paris; and Jean Case, chairman of National Geographic Society. The event validated the growing pressure for businesses to move from focusing on maximizing shareholder profit to embracing the broader spectrum of their stakeholders’ concerns.
Growing evidence points to the fact that businesses must play a significant role in solving the most difficult problems facing humanity. Climate change and the need to reduce carbon emissions is one of these problems. Inequality, diversity and inclusion, access to clean water, and forced human migration are others. For more than a decade, the United Nations has backed the Principles for Responsible Investment (PRI) initiative, a commitment by investment companies to incorporate environmental, social and governance (ESG) issues into their investment decisions. Early adoption of PRI signaled a growing movement for businesses to step up to meet the needs of a wider range of business stakeholders.
The Beginning of the Shift
In the summer of 2019, almost 200 members of the Business Roundtable signed a declaration that the purpose of a corporation has changed. The signatories declared that companies need to take a broader view of whom they serve and that primarily serving shareholders was no longer enough. Businesses also must deliver value to customers, employees, suppliers, their communities and the larger needs of humanity. In short, they must embrace a human-centric perspective.
The challenge in this shift is that serving stakeholders is different in many ways from serving shareholders. Notably, transforming from shareholder purpose to stakeholder purpose changes how businesses approach learning and development (L&D). Acknowledging the differences is only the start. Then, we have to do the hard work to overcome the momentum of the past decades. We have to shed processes, procedures and behaviors that are no longer useful for meeting new organizational objectives. We must make room for new capabilities and culture within our business. In the simplest terms, maximizing shareholder profit demands an effort to increase organizational efficiencies and effectiveness to deliver on financial goals.
But serving stakeholders will need an emphasis on creating transparency, building trust, collaborating and improving two-way communication to listen and learn about the issues requiring solutions.
In many of today’s organizations, there is a disconnect between L&D team goals and organizational objectives. There are many possible reasons for the disconnect; for example, many L&D professionals lack operational experience, while in some organizations, the focus is on training rather than creating an innovation culture. L&D traditionally focuses on things that are easily measured, such as the number of completions of a course. As organizations pivot to become more human-centric and focused on stakeholders, they need different skills, capabilities and behaviors, which may be more difficult to quantify.
From Transactional to Transformational Learning and Development
The shift in organizational objectives also creates a need to replace transactional L&D with transformational L&D. Transactional L&D tends to be more concerned with maintaining the normal flow of operations than with looking ahead to identify the next challenge to overcome. We can describe transactional L&D as “keeping the ship afloat.”
On the other hand, transformational L&D helps people want to change and to lead change. It goes beyond managing day-to-day operations to developing strategies for taking the organization to the next level of performance. Transformational L&D focuses on team building, motivation and collaboration at different levels of the organization and across various stakeholder groups to build the agility needed to achieve successful outcomes.
Transformational L&D is nuanced, contextual, collaborative, fluid and actionable. It tests courage, focuses on the future, maximizes potential, focuses on growth, expands influence, focuses on solutions, develops strategic thinking skills and moves people beyond their comfort zone. For the leaders tasked with teaching and developing tomorrow’s human-centric organizations, necessary transformational skills include the ability to build trust, strategic thinking and a bias for action, systems thinking, stakeholder leadership, managing complex dynamics, understanding human behaviors and using emotional intelligence to guide decision–making.
L&D teams must use a wider set of tools to enhance their current programs. Practitioners must use a full suite of studying, reading, writing, conversation, experimentation, and experiential and reflective techniques. The goal is to build capacity in the organization’s people so they can be responsible to stakeholders and actively engaged in solving humanity’s hardest problems.
Embracing New Models
The old “universal” laws of business are not universal any longer. We are transitioning from models that emphasized stability, order, uniformity, equilibrium and linear relationships. In today’s business climate, information, innovation and human energy have become critical resources. We face a reality characterized by inevitable social change, disorder, instability, diversity, disequilibrium and nonlinear relationships. As organizations transition from shareholder primacy to stakeholder primacy, a human-centric perspective of learning and development will lead the way.