Dr Robert S Kaplan - Reflections on Positive Impact
Dr Robert Kaplan (Senior Fellow, Marvin Bower Professor of Leadership Development, Emeritus, Harvard Business School) reflects on what Positive Impact means and how businesses can build this way of thinking into their profit maximising agenda.
The Palladium Summit 2017 brought together nearly 250 delegates to explore the huge potential for Positive Impact – the intentional creation of enduring social and economic value.
What is Positive Impact?
Dr Robert S Kaplan: It means that when companies pursue their profit maximising agenda to create economic value for them and their shareholders, they’re also having a Positive Impact in the communities in which they purchase, in which they distribute and sell, and from where they hire. And so it’s the combination of both having favourable economic impact for them, and positive social impact for the communities and their suppliers.
How can we practically incorporate Positive Impact into how businesses operate?
RSK: If you take the Kaplan and Norton Balanced Scorecard and Strategy Execution System, we have various objectives for shareholders and for customers in there that managers are trying to achieve. I would add to those some specific objectives relating to Positive Impact. Managers would be accountable to for delivering benefits to their communities and to their suppliers and their customers for that gain.
When you add those objectives and metrics for accountability then managers simultaneously have to be concerned and thinking about delivering good financial performance as well as good social and environmental performance.
That’s the start of having Positive Impact strategies incorporated into the normal profit maximising strategies of companies.
We actually think it should be possible for them to continue to get economic benefit while delivering social impact. The value proposition then is that by making conditions better in the communities in which they purchase and sell and hire from, they will have a more sustainable corporation, and the corporation will then be welcome in the communities. Many corporations find resistance when they want to set-up in communities – “we don’t want big companies coming in here!” – but if you see a big company coming in, creating jobs, that’s creating wealth in the local communities, that’s providing access to products and services, then the company is going to be welcomed into the communities.
That will help them even more being profitable and sustainable corporations.
What role do you see for Palladium?
RSK: The big idea we have and that we’re articulating here is that creating Positive Impact often requires creating new ecosystems on the ground. It’s not a simple strategy. We have to create new linkages between people and suppliers, local communities and the companies.
So it’s a more complex strategy to follow to build this ecosystem.
One of the things we hope that Palladium will get called in to do is to be the expert, to have the expertise and capabilities to help companies build those bonds and relationships in communities.