The Executive Mindset Must Evolve To Thrive In The Impact/Stakeholder Economy
Updated: Jun 15, 2021
A leader’s first job is to see the truth. The truth is specific and requires context. It is not general or abstract, and in business it is constantly evolving. Therefore executives must evolve their mindset, strategic approaches and information flows, alongside the evolution of their business models, in order to ensure they know the truth. Much of the executive leadership in North America is stuck in or between old paradigm business models blocking them from seeing the truth within their organizations. The truth, and its context, is critical to inform strategies, operations and day to day decisions, as risks and opportunities evolve alongside business models.
To evolve mindsets and business models we must understand the specifics of where we are. The first step to get out of the status quo is to understand the truth, second is to envision the future and then create the roadmap to get there.
Every leader and organization will be somewhere within the continuum of business models outlined below. Looking at the three models below, can you identify where you and where your organization sit?
Hierarchy Business Model: This was established in the 1800’s. It prioritizes profit and shareholder returns and is run by people that are ranked one above the other according to status or authority. Value and performance are measured primarily by financial measures. Information is linear and analytical, and flows from the top down and bottom up. Performance reports use simple data sets and charts comparing apples to apples.
Sustainable Business Model: This started to gain momentum in the 1990’s. Defined as an enterprise that has minimal negative impact on the global or local environment, community, or economy. It’s a business that strives to meet the triple bottom line of profit, people and planet.
Environmental, social and governance (ESG) performance is added to traditional top down, bottom up and cross-divisional information flow. ESG performance is largely siloed. Value is measured by assessing traditional financial measures in addition to ESG performance from specific linear outcomes resulting from a company’s operations.
ESG is largely self-reported, with standards in their infancy. Lack of universal ESG standards create unverifiable and incomparable data.
Impact/Stakeholder Business Model: This is an enterprise that has a positive impact on the global or local environment, community, society, or economy - an organization that strives to provide value for all of its stakeholders while enhancing profitability for its shareholders. The impact business model is a networked ecosystem, and has emerged as the next iteration and future of business.
Impact performance is interconnected and can only be analyzed using complex data sets informed from operations and multiple stakeholders. Universally recognized ESG standards are emerging to organize complex data sets that reveal relative relationships, as data is useless without full context.
It’s critical for executive leadership to gain a holistic perspective of their organizations: how material issues are identified and addressed from strategy, through processes to outcomes and how they are all interconnected. The Impakt IQ Executive Report™ is the first executive report to provide holistic insight into what matters most, and why: the truth in today’s economy. It provides critical insights for executive leadership to see “all” impact risks and opportunities in relation to each other and their whole organization, backed by auditable investment grade data.
Executive leadership must now decide whether their truth, and its context, is relevant in today’s impact economy. If it’s not, and they are stuck between old business paradigms, their choice is to evolve and embrace the impact/stakeholder economy, or be left behind.
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