Aligning corporations and society: what leadership is needed? Prof. Rob van Tulder Department of Business-Society Management, Partnerships Resource Centre

“We're the world's biggest NGO…” Paul Polman, CEO Unilever TRANSFORMATIONAL LEADER …. …. The only difference is, we're making money so we are sustainable.”

“ Half of the women in the world do not take part in the labour market. This is not only a missed opportunity in terms of the skills and potential of these women, but is also damaging for the world as a whole." Monique van ‘t Hek WHAT ABOUT TRADITIONAL NGOS?

THE GOVERNMENT PERSPECTIVE…. “Three lessons we should take to heart as we move forward…. First: by working together Second: goals …. should go hand in hand with multi-stakeholder involvement,… Third: we must have more private sector involvement in long-term financing, in public-private partnerships and in projects on the ground.” 27 September 2015

The basic alignment challenge…. Companies NGOs Governments Value proposition: adding and scaling value Value proposition: enabling Value creation Value proposition: Creating and living value “ Shared Value Creation” Choice of issues that are material to companies Choice of issue that are material to society Leadership challenge  overcoming barriers to alignment (positive agenda setting)

RSM-ORG research on leadership…

The leadership discourse does not help… Servant leadership Authentic leadership Transactional leadership Transfor- mational leadership Thought leadership Integrative leadership Visionary leadership Ethical leadership Autocratic leadership Transitional leadership connected leadership Strategic leadership Collective leadership Sustainability leadership Social leadership Pragmatic leadership connected leadership

Valuing leadership -Context dependent -Related to transition phase -Related to societal issue -Combinations possible -Strongly related to value proposition of company -Legitimacy of leader depends on ‘poor’ vs ‘rich’ value proposition (and segment)

Serious Legitimacy problem Legitimacy?

“Poor value proposition”  means “Rich value proposition” General characteristics Instrumental, simplistic, quantitative Resilient, inspirational, entrepreneurial, qualitative, societal orientation FinanceProfit maximization; cost minimalizing; shareholder value Enable the financial means for a company to thrive; Purchasing/ supply chain Purchase as cheap and as flexible as possible Empower suppliers to contribute to your value creation process HRMProduce with the least number of people the highest possible output Organize an inspired and committed staff Strategic management Being the biggest, the firstBeing the most innovative, creating the most value for society, solving particular societal problems Challenge: reframe your value proposition

“Poor value proposition”  means “Rich value proposition” General characteristics Instrumental, simplistic, quantitative Resilient, inspirational, entrepreneurial, qualitative, societal orientation FinanceProfit maximization; cost minimalizing; shareholder value Enable the financial means for a company to thrive; Purchasing/ supply chain Purchase as cheap and as flexible as possible Empower suppliers to contribute to your value creation process HRMProduce with the least number of people the highest possible output Organize an inspired and committed staff Strategic management Being the biggest, the firstBeing the most innovative, creating the most value for society, solving societal problems Challenge: reframe your value proposition What is material to you?

Agenda setting: the search for materiality

What do we know of the materiality approach of big companies?…. Our research: - Almost all companies engage in materiality questions (G4) -All also engage in ‘partnering’ -Most engage in stakeholder dialogues and engagement -Motto and vision development as internal and external alignment strategy is taken up

What do we know of the materiality approach of big companies?…. Our research: - Almost all companies engage in materiality questions (G4) -All also engage in ‘partnering’ -Most engage in stakeholder dialogues and engagement -Motto and vision development as internal and external alignment strategy is taken up The practice of materiality: - Still quite reactive or selection of ‘easy’ issues -Supply driven -Stakeholder consultation from the perspective of company interests -Implementation is not guaranteed -Selection of stakeholders is skewed: friendly stakeholders prevail -Relationship with partnership portfolio is not clear or contains gaps -Every year ‘priorities’ change (because of changing stakeholder engagement)

What do we know of the materiality approach of big companies?…. Our research: - Almost all companies engage in materiality questions (G4) -All also engage in ‘partnering’ -Most engage in stakeholder dialogues and engagement -Motto and vision development as internal and external alignment strategy is taken up The practice of materiality: - Still quite reactive or selection of ‘easy’ issues -Supply driven -Stakeholder consultation from the perspective of company interests -Implementation is not guaranteed -Selection of stakeholders is skewed: friendly stakeholders prevail -Relationship with partnership portfolio is not clear or contains gaps -Every year ‘priorities’ change (because of changing stakeholder engagement) Conclusion: there is considerable improvement possible!

Example: Bayer’s value proposition ‘easy part’‘difficult part’ ScienceBetter Life Inside-outOutside-in Alignment of culturesExternal alignment of cultures Stakeholders? Materiality? Leadership toolkit?

Bayer’s value proposition ‘easy part’‘difficult part’ ScienceBetter Life Inside-outOutside-in Alignment of culturesExternal alignment of cultures Stakeholders? Materiality? Leadership toolkit?

Bayer’s value proposition ‘easy part’‘difficult part’ ScienceBetter Life Inside-outOutside-in Alignment of culturesExternal alignment of cultures Stakeholders? Materiality? Leadership toolkit?

Bayer’s value proposition ‘easy part’‘difficult part’ ScienceBetter Life Inside-outOutside-in Alignment of culturesExternal alignment of cultures Stakeholders? Materiality? Leadership toolkit?

Example Bayer’s value proposition ‘easy part’‘difficult part’ ScienceBetter Life Inside-outOutside-in Internal alignment of culturesExternal alignment of cultures Stakeholders? Materiality? Leadership toolkit? LIFE: Leadership, Integrity,Flexibility, Efficiency.

Bayer’s value proposition ‘easy part’‘difficult part’ ScienceBetter Life Inside-outOutside-in Internal alignment of culturesExternal alignment of cultures Primary stakeholdersSecondary stakeholders Materiality? Changing business modelPartnership portfolio Leadership toolkit?

Materiality Matrix Increasing insights….

Our advice: from negative to positive framing Common Frame for the global community (for next 15 years)

Your leadership survival kit…  Connected leadership  Thought leadership  Transformational leadership  Visionary leadership  Ethical leadership  Strategic leadership  Sustainability leadership Smart combinations Timely Issue dependent Partnership portfolio management Materiality (shared) value proposition! Positive frame Consistent (15 years) but flexible ?