A Purposeful Celebration in conversation with Prof. Alex Edmans
Earlier this summer we invited our growing community to celebrate Blueprint’s tenth anniversary as a registered charity. The event was hosted by JLL and the highlight of the evening was a conversation between our CEO Sarah Gillard and Alex Edmans, Professor at the London Business School, a member of Blueprint’s Advisory Council and author of influential books such as Grow the Pie: How Great Companies Deliver Both Purpose and Profit.
Sarah and Alex reflected on how far Blueprint and the purpose-driven business movement had progressed over the last ten years. Alex recalled that when he first became a professor 17 years ago, if he mentioned the word purpose, people would laugh and leave the room. Nowadays, he observed, many students care about having a career which is not going to just give them a high salary and good promotion prospects, they want to make a difference and believe purpose can achieve both financial returns and positive societal impact.
He believes that it is now more generally accepted in business that there are certain decisions that cannot be driven down to just a financial calculation. Businesses are not limiting how they think about success to metrics and financial performance but understanding that it is the right thing to do. Importantly, having a purpose beyond profit allows a company to be more profitable in the long-term by freeing it to take value-creating business decisions that could not be justified by a profit motivation alone.
As Alex celebrates the release of his new book, May Contain Lies: How Stories, Statistics and Studies Exploit Our Biases – And What We Can Do About It, Sarah asked him to share some of the key insights that he feels are important for purpose practitioners and enthusiasts.
The importance of critical thinking
Alex explained that the book is essentially about critical thinking – which he feels is important on two dimensions: firstly, to seek out differing views and challenge our thinking to enrich our understanding, and secondly, to challenge the things we want to be true, seek to avoid confirmation bias, and recognise that evidence might be nuanced and require judgement.
Moving beyond a focus on symptoms to looking at root causes
Alex spoke about how he feels one underlying problem is too much focus on symptoms which are quantitative, rather than underlying causes which are qualitative. He drew on an example from asset management where there is a desire to increase the number of female fund managers. If you are just focused on symptoms, one particular and asset manager can increase its own statistics by hiring a female fund manager from a competitor, even though this doesn’t improve the aggregate representation of female fund managers. The much more difficult thing to do is to examine the root cause of the shortage in female fund managers which in his view includes the importance the industry attaches to an unbroken track record which can disadvantage women who take time off to have a family.
The role of regulation
Alex was asked about the role of regulation and what legislation he would like to see a new government introduce to support purpose-led business. Continuing on the theme of looking at root causes rather than symptoms, Alex wanted to see legislators consider the underlying problem that they are trying to address, and make sure that any regulation or legislation is targeted at that underlying problem, rather than at a symptom. It is difficult to regulate and force companies to be moral and ethical, which is why a lot his work focuses on trying to show companies that it is in their interest.
“If you want to build a successful business, which has the best employees working for you bringing their best selves to work, you need to have a purpose. And I think that is difficult to do with legislation because legislation can look at quantitative factors, but not qualitative factors.”
However, if something can be quantified it should, and so one of the roles of government is to correct for quantifiable market failure. Externalities are market failures where companies can have an effect on wider society and not feel the consequences, and regulation can be address quantifiable externalities by taxing negative externalities such as carbon emissions and subsidising positive externalities such as clean energy.
Sarah’s final question to Alex was where can we look to provide hope as we look ahead to the future and what that looks like for the purpose-driven movement.
Alex said he drew hope from the fact that people think it is really important – so many busy senior people attended Blueprint’s celebration because they believe that purpose is something very key. He also noted that the fact that there has been some pushback is positive, because people only push back on things that they think are important – if sceptics thought the purpose movement was irrelevant, then there would be no reason to try to push back against it.
When he started this journey, just like Blueprint did over ten years ago, purpose was very niche and there was a lot of inertia. It takes a long time for momentum to build, but once momentum does build the pendulum finally swings. But the same momentum can lead to it swinging too far: people get too excited about purpose and forget the importance of drawing boundaries and appreciating commercial realities. Pushback can help the purpose movement become even more effective, fully leveraging its inspirational potential while navigating pitfalls and trade-offs.
For more from Alex – watch this webinar Profit and Purpose in Practice – where Alex is in conversation with Dee Corrigan, Head of Corporate Engagement at Blueprint, discussing some of the practical challenges businesses face.