Purpose Pioneers Series: the importance of purpose and the multi-stakeholder approach

The multi-stakeholder approach with a profitable, sustainable company that cares about its staff and looks after its customers and the local community is the true new paradigm that is becoming more and more established in many businesses. This new philosophy - which does not only place shareholders at the centre, as in the past - is guided by purpose. It focuses on the challenges that this entails and on why companies should embrace change. For his interview format entitled “Purpose Pioneers Series”, Darren Rudkin, founder of The Mind At Work, meets several entrepreneurs who have been able to make purpose the driving force of their company.

Going beyond Friedman is possible

Many business leaders struggle to move away from a traditional model to another that embraces the wellbeing of multiple stakeholders. But as Caoire Blakemore, Group Director at A.F. Blakemore & Son points out, this type of choice does not mean denying the drive for profitability. "It is still present, but it is connected - she explains - to colleagues, to customers, to the community with which a continuous dialogue is necessary. Profitability is very important to us, but it is important to everyone in our organisation, with the aim of being able to reinvest while balancing impact on customers and community. This generates a purpose, and everything is connected."

However, such an all-stakeholder approach requires a profound transformation of the corporate ecosystem. It's not just a question of abandoning Milton Friedman’s assumption, which has been guiding companies in their choices over the years. In his interview, the Dean of POLIMI Graduate School of Management, Federico Frattini, asks why companies should not question the fact that they exist only to generate economic value. The new generations are asking employers to go beyond mere profit. The financial markets themselves believe that companies that only think about maximising profits may no longer exist in 10-20 years’ time. Not to mention that customers or consumers also want to buy goods and services from companies that take a stand on social and environmental problems and are committed to solving them. "All this pushes - explains Frattini - companies to increasingly reflect on their purpose, which should be oriented towards improving the environment and society. And there's a range of empirical evidence that shows how companies with a higher purpose than maximising profits create more value for shareholders over the long term."

Going beyond Friedman is possible for Kevin Davis, CEO of Vine Trust Group & Social Entrepreneur, who argues: "When profit is the only engine, we see corporate bankruptcies disconnected from responsibility. But we cannot live like this - we are human beings and we have mutual responsibilities." It is necessary to change the whole narrative and find a collaborative and shared approach.

A defined higher purpose drives the business

A defined purpose that everyone is aware of is able to guide the business and the people in the company, also involving customers and acting with a multi-stakeholder approach. "I think that if you take care of your customers and stakeholders underpinned by purpose - explains Gary Lubner, former CEO of Belron International - you will get results and also achieve financial performance and the shareholders’ goals." Not to mention that at Belron, they are trying to measure everything, from staff engagement to customer participation to the impact of charitable activities. This is with the aim of constantly improving.

For A.F. Blakemore & Son, the multi-stakeholder approach is nothing new. It's been their driving force for several years. "As a family business - concludes Peter Blakemore, Chairman of the company - we are very explicit in directing attention at our stakeholders. As a family business, we reinvest 94% of our profits for the next generation. There is a growing interest in sustainability, diversity and inclusion. I think the next generation will have some great opportunities thanks to this approach."

The focus on purpose, but also on the theme of sustainability - not forgetting diversity and inclusion - are all elements which feature in our International Full-Time MBA. The programme, in fact, aims to prepare future managers and leaders to lead an organisation, but also to contribute to building a better and more sustainable future.