Each year, BlackRock’s CEO Larry Fink writes a letter to the CEOs of all the companies that his firm invests in. BlackRock, an American global investment management firm manages $6.3 trillion of assets – the largest amount worldwide. His 2019 Letter to CEOs urges CEOs to focus on creating long-term, sustainable growth which BlackRock clients can rely upon when investing. How does he suggest doing this? CEOs must lead with purpose.
Larry Fink’s Letter to CEOs
Hey CEOs! Larry Fink urges, “the world needs your leadership.” The current global landscape is vulnerable and uncertain. Environmental protection, race and gender equality, and the retirement gap are at the forefront of today’s issues. The public is losing faith in government’s ability to solve these important issues. Instead, they are increasingly turning to businesses to provide leadership, with 53% of consumers who now believe that the corporation holds more power to solve societal issues than the government.
Profit and Purpose
“Purpose,” writes Fink, “is a business’ fundamental reason for being.” It’s how a business adds value to stakeholders daily. Today’s stakeholders have higher expectations of businesses taking a stand in current social and economic issues, and it’s that are millennials are driving this new paradigm. A recent survey from Deloitte found that 63% of millennial workers believe that the primary purpose of a business should be “improving society” instead of “generating profits.”
Leading with purpose and generating profits are not mutually exclusive, Fink explains, but they are connected. A business must continue to generate a profit in order to be of value to its stakeholders, and this can be done by having a well-defined and embodied purpose. Purpose then serves as a compass, providing a framework for making strategic decisions, driving ethical behaviour and keeping the business accountable to its stakeholders. Purpose creates community both within the internal culture and throughout its external customers and shareholders. The bottom line is that a clearly defined purpose creates long-term sustainability in the value of a business.
“Leading with purpose and generating profits are not mutually exclusive,”
Millennials Want More
This isn’t the first time we’ve talked about the millennials driving a change in mindset and values. This shift is being continually reinforced as baby boomers retire and millennials advance into high-level professional positions. Millennials are rewarding companies that “do good” with their attention and dollars, with 87% choosing to buy from companies that advocated for an issue they care about. Additionally, according to Fink, the world’s largest transfer of wealth in history is taking place. $24 trillion is being passed from baby boomers to millennials. Therefore, millennials bring their higher expectations to companies that they work for, buy from and invest in.
What’s next? HeartPress can help you lead with purpose.
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