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Purpose and Social Risk: Helping Clients Succeed in the New Age of Leadership

January 20, 2020

The last decade has shown us that our world is getting more complicated, and as we begin 2020—and the 50th anniversary of the founding of the World Economic Forum (WEF)—it is an opportune time to reflect on the changing nature of corporate leadership. As we look ahead, leaders should understand the significance of corporate purpose, why everyone is now talking about it, what it looks like as we move into 2020 and how social risk plays into it all.

This year, the theme of WEF’s annual meeting is “Stakeholders for a Cohesive and Sustainable World,” and will look to concepts like “stakeholder capitalism” and prioritizing the mobilization of both the public and private sector in the areas of ecology, economy, technology, society, geopolitics and industry. Corporate purpose plays a key role in demonstrating to stakeholders that companies take these focus areas seriously.

As WEF Founder and Executive Chairman Klaus Schwab has said, to succeed in today’s complicated world, companies need radar and a compass. The radar allows organizations to navigate the complexity, avoid risks and manage a pathway to success. The compass provides the “true north” that allows them to operate with purpose and build reputational equity among stakeholders so that it is easier to withstand the “incoming” when the road gets bumpy.  In today’s world, the good companies also navigate with an eye toward social risk, learning when and how to engage in an authentic way that meets the expectations of their stakeholders and is aligned with their purpose.  Together, operating with keen radar and a united set of values behind the corporate compass create an engaged workforce, a supportive community and sustainable, steady growth for shareholders, while having a positive impact on society.

There are several factors which create a sense of urgency in stimulating this corporate move to purpose:

1. In today’s world, stakeholders are looking at companies to help find solutions to entrenched problems that seem beyond the reach, experience or available resources of government.  As these governments have shrunk and problems have become more complex, there is a compelling need and expectation that business will play a significant role in their areas of expertise.

2. A new generation of employees have expectations of their employers…that they will be engaged, be good corporate citizens and share common values with their employees and act on those values.

3. Rapidly changing technology and corporate transformations are also creating a sense of unease about the future. People want to know they are doing business with companies that are spending as much time thinking about values as they are thinking about value.

At the same time, outside pressures created by a 24-hour news cycle and the radical transparency that has resulted from social networks and the internet has caused many companies to realize that addressing these challenges and engaging constructively and authentically is not a simple thing.  That is why a clear definition of purpose and corporate alignment around that purpose is essential to the carving a successful path to the future.

And, lack of engagement or engagement on the wrong things can also create a new kind of risk in today’s world—that of social risk.  Studies have shown that more than 70% of these risks for corporations exist in plain sight and can be identified and risks avoided if you know where to look and take the time to look.

So how do companies enhance their ability to have a social impact, while minimizing their risk?

Since its inception in 1984, APCO Worldwide has been on a mission to use its strength and global platform to not only service clients but be the catalyst for bringing people together across complex problems and thereby contributing to a better world.  Over the years and through our research, we have discovered that there are certain characteristics shared by the best companies—the companies we feel have a “Champion Brand.” These are:

Champion Brand Pyramid

As you can see, Advocacy is at the top of the pyramid.  In our most recent study,  APCO’s Corporate Advocacy study, we found that 93 percent of people globally believe the best companies do good for their shareholders while also doing good for society.  Finding that “north star” is a vital part of corporate life and governance today.  And creating that corporate purpose must be done with great care.  Organizations embracing corporate purpose must ensure they have done their own due diligence on their social risks—both in the selection of their purpose and in those things in which they choose not to engage.  We have created the resources and tools to be a partner in this journey—a service we have offered since our earliest days and just enhanced with our acquisition of the Tembo Group. We stand ready to be your partner.

The world is a small place and by working together, across borders, with people who share your passion and know your markets but are global in their thinking—we can help our clients succeed in a complex world while contributing to positive change and progress.

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