By Coco Brown Founder and CEO
This past week, I stepped into a San Francisco restaurant for a dinner with several other CEOs. 10 of us gathered in a small private dining space; some familiar faces and some new. We came from a variety of business sizes and models. As we sipped our drinks before we sat down, the topic of the evening loomed before us: Culture, Purpose, and Profit.
This wasn’t an ordinary networking dinner. These CEOs gathered together to share their stories, their perspectives, and their vulnerabilities through a tightly moderated conversation.
A new era of leadership
Before we explored how to build modern leadership teams and boardrooms, we first considered the thought leadership of Larry Fink, CEO and Chairman of BlackRock.
Why Larry Fink? He is CEO of the largest asset management firm in the entire world. More than $6.3 trillion sits under Blackrock’s management. He’s got more than $40 trillion in the market and collectively owns 80% of all indexes. His is an important voice to consider as it holds tremendous weight on Wall Street. And while not all of us are leaders of public companies, we may strive to be, one day. As we consider what it means to deliver value to all stakeholders, to build a modern leadership team, to deliver long-term value to the communities we serve—we should consider what leaders like Fink care about, and what they consider to be the imperatives of modern businesses and the true drivers of profit.
We’re all moving at a lightning-fast pace, operating our businesses in a world that is changing around us. Sometimes the changes occur so fast that it’s hard to grasp until they become a reality. To underscore how drastically things have changed in just the last decade, takeaways from Larry’s earlier letters to CEOs emphasized shareholder (not stakeholder) relations and traditional governance best practices. Take his 2012 letter, for example, where he frames Blackrock as a “fiduciary investor with responsibilities to protect the economic interests of our clients.”
Fast forward to 2016, however, and Larry’s message shifts. In 2016, he sent a message to CEOs with a dramatically different tone:
“We also believe that companies have an obligation to be open and transparent about their growth plans…Today’s culture of quarterly earnings hysteria is totally contrary to the long-term approach we need.”
CEOs today are leading in an ever-evolving business landscape. With the rise of the stakeholders—versus shareholders—roles that have historically been marginalized are now equal peers in the C-suite, such as those relating to customer and employee engagement, ESG, society, and culture. Leaders today must consider how to drive culture (often in multigenerational, globally dispersed teams). They must consider their legacy. They must architect their own approach for serving their greater communities, customers, and employees. And they must discover how to take a stand—even if it means alienating a subset of their stakeholder community.
In the face of all this change, I’m happy to report that the forward-thinking CEO is alive and well. I want to protect the CEOs who attended this very special dinner last week (your words are safe with the group), while sharing with the broader community your raw perspectives on leading with purpose:
Purpose is not the “what”. It’s the “why”. And Culture is the “how”.
Across the group, it was clear: start with why. Knowing both the company “why” and your personal “why” are essential to shaping culture, engagement, and strong business outcomes. Why did you start this company of all the ones you could have, or why did you take this CEO job? What personal purpose do you derive from building and leading this business?
“I’m building a product that I believe is magical. I believe you can build an amazing company, one with a good culture, and win.”
“You as a person and as a CEO drive purpose for the company. Your personal purpose drives your company’s success. Where goes the CEO goes the Company. Not the other way around.”
On culture, one dinner attendee referred to culture as “here’s how we do things here; here’s how we get things done.” I’ll offer my favorite way to encapsulate culture. Culture is expressed in the combination and interplay of Values, Beliefs, Behaviors, and Symbols. Values and Beliefs are very much intertwined and drive what we choose in our Behaviors and Symbols.
Taking a simple example of this, a planet-first culture might value preservation, maintaining a modest footprint, etc., driven by the belief that humans have control over the health of our planet. And the behaviors that illustrate the commitment to these values and beliefs would be recycling, buying small homes, turning off the water… and the symbols may be observing “Earth Day” in some way, and being a member of the Sierra Club.
Values, Beliefs, Behaviors, and Symbols exist in our companies, whether intentionally designed or not. The question is how do you ensure these four elements intentionally align to a culture you want to instill?
Purpose above profit
Profit—or, for many Silicon Valley private companies, growth—cannot be sacrificed for short-term gain. But there is a hard reality: you cannot make much impact in the world if you’re not on the path to growth. If growth is not a constant in our companies, that can be a scary place to be.
A profit or growth view centers thinking around metrics considered tried and true for the business model e.g. SaaS: the rule of 40, LTV:CAC, Churn, NPS, the top of the funnel…
A purpose view centers again on the why, and whether or not the company is fundamentally delivering on, and expanding on the promises of the why. It’s product market fit, yes, but more than that. It’s true adoption, a blissful experience that results in loyalty, an identity your stakeholders share with you and derive in part by being your customer or employee.
“If your brand is associated with earning profit at any cost—you will lose.”
“Stop focusing so much on your exit.”
“The reality is, growth is important. If you don’t have it, you can’t have a lot of impact.”
“If you get the right people on the bus, you can do anything.”
Making tough decisions and addressing matters of society
There were strong themes among the group of empathy and trust. CEOs lean on these characteristics most when making the hardest decisions. And increasingly, society will not allow CEOs to take a pass on matters their stakeholders care about, even if opinions are polarized.
When it comes to protecting employees, the group agreed it’s non-negotiable. But when it comes to addressing matters of society, the line can become a bit gray. Again, it starts with trust. We see this in how CEOs address polarizing legislation; in the way they respond to community needs; in how they fold matters of ESG into their business.
Please read Larry Fink’s 2019 letter to reflect on this further, and listen to this 30-minute podcast from HBR about “CEOs Taking a Stand”. I also shared the approach Brian Moynihan, CEO and Chairman of Bank of America, shared with me: that his top leadership team is made of a diverse set of views and beliefs and he takes tough issues to them, to debate as a jury of peers and to guide him in what, if any, stand needs to be taken on a particular matter.
If your business touches on issues of great debate for your stakeholders, it is almost inevitable that at some point your stakeholders will push the CEO to take a stand. This is what I found with Athena when SB-826 was passed. My community demanded I speak to my personal position—which is here—even though I knew some of my most powerful community members were writing opposing views.
“There is a leadership void in this country and us CEOs need to step in and fill it.”
“At the end of the day, you must deliver against a mission. Which means you need to make hard decisions for the company, but you must do so with empathy.”
“As leaders, we need to create a space where our team trusts us to make decisions. But those decisions may not make everyone happy.”
One clear uniting feature of all of us around the table is the desire to do things the right way. To lead with heart. To hire the right people and to allow them to move on with integrity when they decide to. And to not only create a legacy for ourselves, but to enable others to do so too.