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a speech by Mario Morino, reproduced here by kind permission of Venture Philanthropy Partners
Mario Morino is co-founder and chairman of Venture Philanthropy Partners and chairman of the Morino Institute
In 1991, futurist and noted author Peter Schwartz framed a remarkable period of transformation, which he described as the “long boom”—spanning from 1980 to 2020—in The Art of the Long View.
Schwartz sees a period of economic and societal transformation driven by a continuing stream of new technology and the relentless process of globalization. Today, well past the half-way point of the “long boom,” the entrepreneurs of this period have generated a wealth creation of near unimaginable levels, with great impact and implications- economically, politically, socially, and philanthropically.
In the midst of this period, comparisons are often made to the philanthropy of more than a hundred years ago that came from the wealth created with the Industrial Revolution at the turn of the 20th century led by industrialists like Vanderbilt, Rockefeller, Carnegie, Flager, and Morgan. There are countless examples of how these families created great value and changed the American landscape in positive and lasting ways. Yet, despite their accomplishments, critics termed them “robber barons,” and Mark Twain and Charles Dudley Warner wrote of the waste and ridiculous excess of the era in The Gilded Age: A Tale of Today.
Even now, more than a century later, it is not clear in some circles how history judges these industrialist leaders against the scale of “robber barons” to philanthropists. It is prudent to similarly consider the positives and negatives that this “long boom” cadre of new wealth will have on society. I am fortunate to have been an entrepreneur who benefited from this period and have focused the last 15 years on philanthropy and civic engagement. With this context, I pose several questions to myself and others who have created wealth and are turning their focus to benefit society:
• How will our actions to better the world be judged in 2107?
• Will history deem our actions as leading to lasting, meaningful, and positive change, or will they instead see us as narrow, greedy, arrogant, and ineffective? Or, even worse, as causing unintended consequences with adverse impact on society?
• Will history conclude that our generations of wealth helped unify an increasingly divided America and world? Or will it find that we created our own virtual and isolated world populated by those with great wealth that disconnected from society at large as social and economic gaps widened? This question has already been posed in Robert Frank’s Richistan.
I hope we will respond to the remarkable opportunity that lies before us, so aptly described by John Gardner:
“There occurs at breathtaking moments in history an exhilarating burst of energy and motivation, of hope and zest and imagination, and a severing of the bonds that normally hold in check the full release of human possibilities. A door is opened...”
I believe we are in the midst of one of those breathtaking moments. To seize this moment, it would serve us well to learn from those who have plowed these fields before us. As Carl Sagan said, “You have to know the past to understand the present.” And Winston Churchill emphasized, “The farther backward you can look, the farther forward you can see.”
I hope we will be thoughtful, willing to learn from history, respectful of the success and failures that preceded our efforts, while bringing energy, resources, and innovation to make the world a better place.
It is with this hope that I want to share with you what I believe business entrepreneurs bring to philanthropy and the greatest challenges they face when they become involved in nonprofit, civic, and public policy matters. In doing so, I’m sharing my own experience—things that went well, missteps I’ve made and observed, and lessons we’ve learned in our work with Venture Philanthropy Partners.
THE TRAITS OF A BUSINESS ENTREPRENEUR
Endless books and articles describe business entrepreneurs and their traits. They bring many of these characteristics versus the more traditional patterns and habits of established philanthropy as they move into the social sector, as described in “The Seeds of Change in Philanthropy” report, authored by Katherine Fulton, Andrew Blau, and Gabriel Kasper. As new philanthropists, in general, they are younger, more “hands on,” prone to “giving while living,” more results-focused, involved in efforts both close to home and globally, and more. But from my personal standpoint, business entrepreneurs also bring additional characteristics to philanthropy and the social sector:
* A resourcefulness and, at times, a free-wheeling style;
* The ability to see problems and opportunities where others don’t and the aptitude to find new ways to solve problems and capitalize on those opportunities;
* An impatience with the status quo and “traditional thinking;”
* The capacity to get things done, make things happen—ideas are a dime a dozen and those who turn ideas into reality, often against the odds, are greatly valued;
* An obsessive compulsion or, some say, an irrational drive, to make vision a reality. Often in business, no one believes them at the outset and they generally got more discouragement than support until they had something tangible to show;
* Perseverance, often overcoming the insurmountable, so the same expectations are present with philanthropy;
* An unrelenting focus on results, rather than process; and
* A need (or want) for “big impact.”
IT’S IN THE DNA…
When business entrepreneurs make the transition into the world of philanthropy and the social sector there will be change—often with a flurry of questions ranging from the motive behind their actions to the “goodness and badness” of their efforts. There is no doubt the pot will be stirred—it’s in the DNA.
Here then are some generalizations about behaviors I‘ve observed or done myself:
They bring money ― Wealth makes business entrepreneurs sought after as money is a scarce resource, required by all in the nonprofit world. Not afraid to spend or, in this case, give it away, they bring money to a sector always in need of funding—and this alone makes them important.
They want to be part of the solution ― Writing a check isn’t enough. They want to be engaged. Many have built organizations, raised money, forged partnerships, hired talented people, and made difficult decisions. They like to use what they know to be effective in their philanthropy—to them it’s natural to think this way.
They find ways to leverage money and efforts ― It is more than making a gift. Often, they see it as an investment in their cause or community. And, as such, they’re willing to use their influence to leverage their money and efforts several times over if possible. This is how it worked in business, and continuing this approach with philanthropy is innate. They will use their influence to drive issues and bring people and resources to augment efforts.
They believe in talent ― They place a premium on highly driven, smart people. They understand how critical the right talent is to success and, as such, are impatient—a lot- with mediocrity.
They network with purpose ― Most instinctively understand how to network and use its power to the fullest. Eager to learn and leverage their efforts, business entrepreneurs reach out to peers and pull people they know into ventures (or try to). Ironically, they don’t always reach out to those who aren’t peers or inside their normal circles of contacts, which I believe has been one of the gating factors underlying the real or perceived divide between the new and the established. They use networks to open new doors and facilitate the flow of ideas and resources for the causes they support.
They’re not afraid to team up with others ― Because they had to find ways to work with the very firms with which they competed, working with others is not new. But, don’t make this more than it is, because they tended to work with those they liked and respected or, more often what is not said, they had to because of competitive pressures. The willingness to team and partner with others can be a positive for their efforts.
They’re more risk-oriented or, better said, less failure conscious ― For an entrepreneur, not getting something right or coming up short is not viewed as failure, but just another step in the journey. They often learn by trying. Probing, testing, and learning through an iterative process can drive folks not used to this mode of development crazy—just ask anyone who has ever worked with me! They bring a healthy understanding of what it takes to build a start-up, along with the risks involved, and are naturally drawn to support new leaders.
They want scale ― They did things quickly in business, some even moved and changed industries, and speed is an adrenaline source. They’ll push to make things happen faster and bigger. Business entrepreneurs will drive growth in size and impact.
They don’t think in terms of sectors, but rather broad impact ― It doesn’t matter whether a vision is achieved through a for-profit, nonprofit, or even public venue; it’s simply an interim vehicle (the means) to an end. They are more likely to look at how to solve a problem and then determine whether to do so through a for-profit, nonprofit, public, or hybrid approach.
They are increasingly global ― Their business careers have taken them to many parts of the world. They’re comfortable, even at home, abroad for both business and pleasure. They vacation all over the world, even having homes in other countries. They encounter global issues more and more and are choosing to focus their efforts on a broader basis.
Business entrepreneurs have much to offer and are a growing force with profound implications—economically, politically, and socially. And, here in America and increasingly on a global scale, society will benefit from their broader view of life engagement, as they move in the words of Bob Buford “from a life of financial success to life significance.” To help guide our work, shouldn’t we occasionally reflect on the long-term impact of our work —anticipated and unintended—and hold ourselves to a high scale to ensure we are, indeed, making a positive difference?
IF ONLY I HAD KNOWN…
Many make the transition from business, but it is seldom an “either/or” event. For most, it’s a gradual shift in their focus from business to becoming more vested in social or civic actions to give something back to their community and make contributions to society.
There is no assurance of how the new philanthropy emanating from the “long boom” will be viewed in 2107. In my relatively limited 15 years of observing the transition of business entrepreneurs to a broader philanthropic venue and having lived it myself, I suggest that the success from a social and civic standpoint—the real fruits of our labors—will be achieved or negated based on how well some of the challenges are encountered and handled. This has been conclusively demonstrated to me in our work with Venture Philanthropy Partners, where what we thought so simple, obvious, and ready for our “business-like approach” proved incredibly complex and involved—needing skills well beyond our business expertise. What we learned is that true impact comes not only from what we do but also is the result of the thoughtfulness, empathy, humility, and, yes, effectiveness of how we do it.
With the benefit of hindsight, here are some thoughts to consider for business entrepreneurs making the transition, particularly those involved with direct service organizations or efforts to serve targeted populations directly. It’s important, however, to set some caveats. First, what follows reflects the views and opinions I’ve developed—not right/wrong or good/bad scenarios. They are certainly not all inclusive. And, most important, these ideas have different and varying degrees of relevance across the broad spectrum of philanthropy and social innovation.
The social/citizen and the public sectors are really different from the private one—and it’s a big transition. Some of the differences I’ve observed and experienced include:
* Relationships play a much greater role in the social sector as does protocol in the public sector, often having greater importance than the “systems,” e.g., processes, products, and services.
* Context has an extremely significant function, again taking precedence over the content of an issue. Protocol, form, and respect are essential in this world and can sometimes obviate the “right” answer. At times, formal or informal credentials will override raw talent. The issue itself may be crystal clear to you, but understanding the context within which the issue is framed is key (and the difference between success and failure).
* All organizations deal with external factors, but social sector organizations confront and work through more outside conditions beyond their control and that are more social and people-based in nature.
* Social complexity—the combination of all of the above and then some—makes working in this sector more difficult, a point made quite well by Jim Collins in his monograph Good to Great and the Social Sectors.
There are certainly additional views of these differences. These particular points, however, illustrate that the business leader who brings an ability to read and have empathy with people and situations, understands nuance, and thinks beyond business practices, systems, and processes has a much greater chance to succeed in the social sector.
Understand the importance of respect and empathy. First, having a genuine respect for the people your philanthropy is meant to help is vital. And, second, regardless of your business fame or stature, realize you have to earn a new respect in this space, and it takes a lot of time and personal investment. I can’t emphasize this point enough. Earning the respect of the organizations we seek to work with and the children and people we hope to serve is absolutely essential. It can only be done over time and by getting engaged. Legitimate empathy (not sympathy) is another characteristic which helps you gain credibility within the sector and be effective with your efforts. You don’t have to have parallel experiences, but compassion and care about your philanthropic counterparts will be tested quickly. Fakery is soon “outed” in this world, but genuine concern is recognized and appreciated.
Recognize that things take longer, but don’t capitulate that it has to be as long as everyone tells you. We have learned the hard way that things just take longer to get done. Some of the delay deals with the differences noted above. Sometimes it’s a function of the acute shortage of capital and available executive talent. Sometimes it’s caused by the remarkably fragile ecosystem that surrounds most nonprofit and social initiatives, quite different from the world enjoyed by most business people. And, sometimes it’s because people can get stuck in how they have always done things and their own expectations for performance. Things will take longer, but there is substantial room for improvement, where fact-based decisions, strong execution, greater rigor and discipline in management, clearer aspirations, more engaged boards, and strong management can make remarkable strides in relatively short times (compared to the field).
Keep your ego within “reasonable” check. The private sector strokes you enough to cause swelled heads, but philanthropists are literally deified—and it can be hard to stay grounded and build the filters you need to get truth and “unvarnished” opinion…few will tell the person with the gold that his ideas are bad!
What I’m about to say next shouldn’t generate any sympathy, but perceptions scale directly to your level of wealth. What am I talking about? I couldn’t get over how I was suddenly smarter, more eloquent, invited to more events, and told funnier jokes once I had more zeroes after my name. And, I wasn’t even a geek before (at least I don’t think I was). As my work in philanthropy grew, I would look in the mirror and say, “I’m the same guy I was back in 1985 when all I had was a meager start-up and just enough money to get by (sometimes). So why, to my amazement, have I suddenly become something bigger, more noble, and more important?” I don’t think I’ve changed much, but my net worth has apparently affected the perceptions of others. And, I believe this is a general phenomenon in the field.
Ironically, this change in expectations and perceptions, if gone unrecognized, can be a huge disadvantage to a business entrepreneur’s efforts in the social sector. Many entrepreneurs literally thrive on hard feedback as they test new ideas and early products. If they don’t get constructive and, at times, piercing feedback, they’re apt to take a position or advance a new product or service that will likely miss the market. They’ll be wrong. Business entrepreneurs run this risk many times over in philanthropic efforts. The reason? The lion’s share of the field—nonprofits and foundations alike—are not about to tell major donors, once they have a vested interest, that their ideas don’t cut it and risk “biting the hand that feeds it.” The glaring danger? The well-intended business entrepreneur continues the effort unabated, poorly advised, with a high likelihood of ultimate failure, or even worse, damage to the organization or cause. Having people in your circle of contacts who will tell you “how it is” is invaluable.
Not all business entrepreneur traits transfer well. Some of the characteristics that were effective in the private sector may not work now. In fact, I’ve also learned that some of these traits don’t endear you as a spouse or a parent either. The highly driven nature, the adrenaline kick-in, the brashness that is valued in business settings, the “take it on at all costs” mentality, all have their consequences in a world where relationship, context, and social complexity play such important roles in being effective. The leader of a remarkable global charity told me the story of a high-profile business entrepreneur who approached him to make a major gift. It quickly became apparent that this donor wanted an excessive level of control as a quid pro quo, and the leader wisely demurred. The rest of the story is only believable if you’ve been on the for-profit side with exposure to buy-outs, mergers, and acquisitions. The entrepreneur, unfazed, told him that he was becoming the major supporter of another charity that did similar work globally and conveyed “we’ll run you out of business.” Clearly an exception, but illustrative of how business entrepreneurs bring not only their characteristics but their business values to their philanthropy—for most it works well, but for some it can be their downfall.
Be able to navigate formal and informal systems. Many of the factors vital to success are outside of your immediate control—the multiplicity of stakeholders, the interdependency of “supply chains,” and the expectations society places on nonprofits. These dynamics include governments who purposely underfund services because they are provided by nonprofits; funders who won’t fund operational costs or, even worse, penalize organizations for what they consider high overhead costs without regard to the impact or value being provided; or those who insist that nonprofit professionals should work for lesser compensation because they are “mission-driven.” One of the skills and characteristics that has served our work so well has been having leadership at VPP that is both knowledgeable of and able to navigate the formal and informal systems—political, cultural, social, jurisdictional, and other—that create an ecosystem capable of “organ rejection” to any new approach. In this world, knowing who to involve, organizations to touch, and context issues to address is critical.
Don’t assume “market forces.” Many business entrepreneurs relied on market forces for success in the private sector. But, such reliance may be misplaced, or maybe better said, misjudged in the social sector. Do not make the assumption that the market forces at work in the private sector—or the systems and discipline they introduce—carry over to the social sector. Yet, there are opportunities where entrepreneurial ingenuity may introduce market forces—or, more likely, proxies for market forces—into the nonprofit sector with effective results.
Government funding and programs are important. There is a romantic, idealistic view that we can scale solutions without government funding. In some areas this may be true, and, when possible, we should do all we can to make this a reality. But in areas where public funding approximates from 85 to 95 percent of the available funding, e.g., human services, this is simply not realistic. To drive home the dramatic nature of this point, consider Melinda Gates’ acknowledgment in her keynote speech at the Council on Foundations conference: “If we spent our entire endowment [the Bill and Melinda Gates Foundation], we couldn’t even cover the cost of schooling California’s students for one year. That one state spends more than $50 billion educating its children every year.”
Business entrepreneurs reluctantly come to grips that effectively navigating the labyrinth of government bodies and agencies is critical to their philanthropic and civic efforts and requires specialized knowledge. Ironically, those who were most effective within government markets in their business lives reached that same conclusion.
Move beyond the “Dance of Deceit.” Some worry that the power of philanthropy can corrupt the aspirations of those it aims to help. We all too often see this dance at work: Really great leaders with equally great ideas allow themselves and their ideas to be sidetracked, even taken fully off mission, to capture the resources they need, which then go to something different than either the leader or the donor originally conceived. Foundations are equally responsible because they can be seduced by their power and may not explicitly work to contain it. Mission dilution for the leader and organization can occur as multiple donors each require subtle, but real shifts in the organization’s direction. So aspirations and innovation risk subversion, money is delivered, and the leader can be compromised. Both the leader and the philanthropist run the chance of sub-optimizing the potential of their relationship and the opportunities they could have explored.
Instead, by building a true respect, understanding each other’s respective side, and setting clear expectations of what each one wants and needs, both funder and recipient can come away with great experiences.
Remember your limits. One of the realities of the business world is that when the Peter Principle kicks in and you hit a level above your competence, change will soon be in your future (unless you own most of the stock). Those “checks and balances” are nonexistent in philanthropy and the social sector. Regrettably, this is something I fall prey to all too easily. All I can suggest is to look back on your business life and know where you had to make adjustments and where your skills didn’t match the needs. The same may be true of your work in philanthropy, but no one will remind you. That’s why it is always good to have a true “consigliore” in your inner circle. You may hate what they say when they say it, but if you’re honest, it will make a great difference in the long run for you and your work.
CONCLUSION
The “long boom” as characterized by Schwartz is alive and well. We indeed find ourselves in a truly remarkable period. Business entrepreneurs will have a stunning impact on philanthropy, global issues, and society. In many cases they already have, driving change through political engagement, civic involvement, and through their philanthropy.
Some additional suggestions to entrepreneurs from my own experiences include:
▪ Be meaningful. Satisfy your personal interests and needs, but move beyond your comfort zone to get engaged with the truly formidable challenges facing our society.
▪ Be willing to learn. Seek the advice of others who have gone before you for they can share valuable insights and lessons learned to increase your chance of success.
▪ Be transparent. Let people know what you are doing and the logic and criteria guiding your actions and decisions.
▪ Invite scrutiny. Make yourself and your efforts publicly accountable, and be open to criticism and provocation as a means to becoming more effective.
▪ Be collaborative with purpose. Pay heed to the African proverb, “If you wish to go quickly, go alone, but if you wish to go, far go together.”
▪ Be yourself. But do so with a large dose of empathy and humility. Don’t relegate or delegate away the conviction, energy, and resourcefulness that helped you succeed to others. They may bring a different value set to carrying out your philanthropic purpose.
▪ Have positive impact. Seek actions that lead to systemic change, reshape sectors, and strive for fundamental change to the status quo. Insist on ambitious (but realistic) goals, clarity of mission, raising the “talent bar” with excellent leadership, accountability, and building great institutions that can deliver truly, lasting, relevant change.
As Gardner said, “A door is opened...” The possibilities—and unintended consequences—are limitless. Our challenge is to ensure that the impact we have is positive and lasting. One way we can help ensure our civic and philanthropic endeavors have positive impact is to step back, learn, and adapt to the ways of the world beyond the private sector. The real magic happens when we blend our business expertise and entrepreneurial ways with the lessons of history and the learning of the social sector.
And as we take actions to better the world, always keep in mind a sobering premise: In this arena when we experiment and learn new ways to do things, there is often a direct intervening and influencing of people’s lives—children and families. The stakes become very personal, much higher than what we knew in the private sector.
Let’s hope that those who judge us a hundred years from now will say, “The entrepreneurs and their families of the ‘long boom of 1980 to 2020’ seized a remarkable time in history and were instrumental in making the world a better, safer place.”
Delivered as a Keynote Speech at the Legacy 2007 Conference of the National Philanthropic Trust September 28, 2007
How do you nurture leadership potential in young people to create a better world community? One way is to bring a diverse group of them together in an international education program that offers leaders of tomorrow the opportunity to learn from leaders of today. Given the global challenges our world faces today V and will continue to face into the foreseeable future it is reassuring to see a growing range of international training programs for young leaders that emphasize cross-cultural interaction. But some of them pull away from the pack. The Goldman Sachs Global Leaders Program (GLP) is one of those programs. Since it was launched in 2001, it has given more than 600 hand-picked young people the opportunity to strengthen their leadership skills through an annual week-long curriculum on topics such as global development, international finance and social entrepreneurship. Even more have received US$3000 awards for academic excellence and community work.
The program was created by the Goldman Sachs Foundation and the Institute of International Education, IIE (see text boxes). The two came together to explore how Goldman Sachs could best leverage its leadership skills and values into a strategic philanthropic venture that would make a difference, both to individual students and to broader society.
The global focus was a given from the beginning; with global operations come global responsibility towards building global networks and understanding. Many global companies don't have global philanthropy, says Allan Goodman, president of IIE. This program is designed around a global vision and reaches people from all over the world. That makes it very attractive to us as a partner and as a manager of the program.
The next idea was to tap into a narrow age group: students in the second year of a university undergraduate degree program (usually 19-20 years old). With one year of study under their belt, they have transitioned from secondary to higher education but may not yet have chosen a career direction. The program aims to help them pursue the rest of their education with a greater sense of responsibility and leadership. These students are young enough to still be at the formative stages of their own college experience and professional development planning, explains Stephanie Bell-Rose, founding president of the Goldman Sachs Foundation. We want to influence their direction and raise their aspirations.
For Goodman, this is where Goldman Sachs differentiates itself from many other companies. A lot of corporate philanthropy can be strategic without being courageous. But Goldman Sachs says ewe can find leaders around the world, in diverse societies, and we can find them at very young age, and if we invest in them now they'll be global leaders for the rest of their lives. It would have been very safe for the Goldman Sachs Foundation to pick leaders who are nearing 60, but this program focuses on people who are only in their late teens, and that makes a big difference.
The narrow age focus helps differentiate the GSGLP from others that target "young people" of an older age; for example, the Aspen Institute pursues young men and women between the ages of 30 and 45f, the One World Foundation's Young Leaders Program is for 19-30 year-olds, and the UN's Global Youth Leadership Summit is for 18-30 year-olds.
For the Goldman Sachs GLP, the IIE draws on its partnerships with universities around the world to conduct an annual competition to identify and reward 150 of the most accomplished second-year students from all disciplines. Follow-up interviews select 75 of these students to represent the whole group at the annual Goldman Sachs Global Leadership Institute in New York City in July. At the Institute, students participate in seminars on current international affairs, business, education, development work, and other global issues, and hear from a broad range of highly recognized speakers that have included UN leaders, former prime ministers, corporate executives, civic leaders and media representatives. The students attending the Institute are responsible for communicating their experience back to the other 75 Global Leaders.
Nikhil Pai, a former Goldman Sachs Global Leader, calls the week-long institute a crash course in global leadership and gone of the most influential experiences of my entire life [K] I know I can always look back upon that experience as a source of motivation to achieve my own life's goals. He is now pursuing a career in international health.
All the students also have access to on-line training in leadership development. This was created for Goldman Sachs by Harvard Business School and covers a range of modules on e.g. team development and time management skills that are important for success in the Goldman Sachs environment but also highly useful for young people aspiring to leadership.
With ongoing networking being a key objective of the program, IIE hosts a series of other regular events, such as alumni reunions. Mary McBride of IIE has most recently organized a series of speakers at such events on campuses in South Africa and Brazil. We reach out to current or prospective and alumni students in many different ways, helping them stay connected through on online network and updating them with information on conferences and scholarships they might be interested in.
So far the Global Leaders Program is accessible in 19 countries, through approximately 90 universities that have been selected by IIE. However, the program is expanding, primarily V and perhaps not surprisingly in Asia.
Across so many different countries, how does the program ensure consistent application of the criteria by which students are selected (which include students distinguishing themselves as leaders in their community or school as well as academically)? While the program operates through regional selection processes, run by people familiar with local contexts, IIE works to ensure that each local and regional selection committee understands the vision and aims of the program. Once we get them to buy into the vision that it's not only about good grades or top grades but also about signs of leadership already showing through commitment to social responsibility or community development, then we all have the same vision and the selection becomes much easier, says Goodman. Initially they might have been afraid to pick people who weren't in the top 4 students, but now they understand that we look for other credentials as well. For example, the ability to work together, which is what leaders have to do. So we're able to lift out from the grades and the local situation the students ability to relate to another human being and to an international perspective.
In fact, the high level of qualifications of Goldman Sachs Global Leaders turned out to be nice surprise. Some of these young people have encountered incredible obstacles and overcome and excelled at the highest levels, says Bell-Rose. Some of them have the kind of skill sets you don't expect to find in a single individual, multiple skills sets that have distinguished them within their local and now global environments, as they move through the program. They're mainly 19 year olds and they've done some very interesting things. It's phenomenal to see.
It seems like an obvious talent pool for Goldman Sachs to recruit from, but there is no direct link between the program and Goldman Sachs recruitment or human capital development departments. This is not a recruiting program, says Bell-Rose, and we don't track that kind of measure.
No doubt the Goldman Sachs brand lends a certain gravitas to the program. Even young students recognize the value of a highly professional organization such as Goldman Sachs and its commitment to excellence and leadership, observes Bell-Rose, so we like to think theres a positive dimension associated with the firms brand being a big part of this program.
Aside from the branding and funding, Goldman Sachs brings to the partnership a strong network expertise that complements IIE's own network and educational expertise. The two partners have merged their networks of experienced, successful leaders and their goal of combining academic knowledge and practical experience to create a classroom that is an incubator of socially responsible leadership and achievement.
But how does the program actually define the complex, multi-faceted concept of leadership? Beyond elements such as talent, promise, drive, vision, ethics and courage, the definition is somewhat flexible, catering to high potential youth with varied backgrounds, interests, fields of study and expertise.
We don't seek to prescribe a leadership model to the students,h explains Bell-Rose. The students are given a set of selective inputs to stimulate their thinking around their own evolving definition of leadership and success, and their own capacity for leadership. These young adults are then provided opportunities to be agents of positive change, in many cases helping solve important societal problems. Clearly, it is not solely about teaching the students to be leaders, but increasingly about nurturing their potential for leadership. We want to stimulate their self-examination around which values and contributions can have an overall positive impact on the world.h
The word "impact" is vital to the program, not only in terms of conceptualizing the curriculum but also in measuring its success in the longer term. The students leave the program really pumped up and saying, OK, how can I make a difference? how can I have an impact, says Goodman. That's critical to leadership. Creating value by having an impact. This program finds young leaders who really will make a difference in the next 10 or 15 years and gives them a voice and a platform.
Some of the students are helped along the way through the programs Social Entrepreneurship Fund, launched in 2002. This provides seed funding for a social initiative that the students want to create or develop further. The fund is the real measure of impact, says Goodman. Projects that have been awarded funding include the creation of a community school in rural India, an anti-malaria program in Nigeria, a business-start-up program to help Macedonian women at risk of poverty, and a scholarship program for children orphaned by AIDS in Thailand.
It is an elite group of students from top universities who become Goldman Sachs Global Leaders. By keeping the GSGLP within the remit of IIE's network of higher education institutions, IIE and the Goldman Sachs Foundation believe they can best leverage their individual competencies to achieve the programs mission.
There's a growing need for enlightened leaders who can operate across cultural differences and geographic boundaries. Creating leadership in the next generation has to happen across the globe. We canft just focus on western countries. We want to help build ties across the next generation of leaders, so that their own understanding and appreciation of circumstances in countries outside of their own will enrich their ability to lead on global scale,h says Bell-Rose.
If the function of leadership is to produce more leaders, not more followers, then the IIE and Goldman Sachs appear to have come up with a good formula.
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Dr Helena Barton is the founder and CEO of Corporate Context, a consultancy specializing in strategic analysis and communication of companies' intangible value. https://www.corporatecontext.com
For more information on the Goldman Sachs Global Leader Program, please visit https://www.iie.org/global_leaders.
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The Goldman Sachs Foundation is a global philanthropic organization funded by The Goldman Sachs Group, Inc. The Foundation's mission is to promote excellence and innovation in education and improve the academic performance and lifelong productivity of young people worldwide. It achieves this mission through a combination of strategic partnerships, grants, loans, and the deployment of professional talent from Goldman Sachs. Funded in 1999, the Foundation has awarded grants in excess of $94 million since its inception, providing opportunities for young people in more than 20 countries. For more information on the Foundation, visit www2.goldmansachs.com/foundation
The Institute of International Education is the world leader in the international exchange of people and ideas. Its expertise enables institutions and individuals to build capacity in their home countries and regions. IIE designs and implements over 200 programs of study and training for students, educators, young professionals and trainees from all sectors with funding from government and private sources. These programs include the Fulbright Student and Scholar programs and the Humphrey Fellowships, administered for the Department of State, and the People, Energy, and Development project administered for the U.S. Agency for International Development, as well as corporate training and scholarship programs. IIE also conducts policy research and provides advice and counseling on international educational opportunities abroad. The Institute of International Education has a network of 22 offices worldwide, over 800 college and university members, and more than 5,000 volunteers. To see the impact of IIE's work around the world, visit https://www.iie.org/impact.
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The list below sets out Goldman Sachs' nine leadership principles.
1. Act with a Profound Sense of Integrity and Fairness. The daily stewardship and embodiment of these values--as highlighted in our Business Principles--is the primary responsibility of all leaders at Goldman Sachs. Integrity and fairness lie at the core of our firm's heritage, our services to our clients and our cultural strength Leaders at all levels of the firm must uphold these values in their daily decisions and actions and instill them in their people as well.
2. Deliver Business Results Through Commercial Excellence and People Development. Commercial excellence is the lifeblood of the firm and a key source of leadership credibility. Outstanding leaders create profitability not only through business development and client service but also through recruiting, coaching, developing and retaining the best people. Leaders develop leaders, and leadership demands consistent and purposeful investment of time with our people.
3. Build Strong Client and Other External Relationships. The success of our firm depends on the quality of our relationships with a broad group of influential clients and leaders around the world. Our best leaders successfully develop long-term relationships across multiple cultures. They succeed through outstanding client service as well as playing leadership roles in external business and community groups.
4. Drive Teamwork Within and Between Businesses. Teamwork and dedication to the firm's greatest good are competitive advantages. Leaders maintain a strong network of relationships across the firm. They cross-market the firm's products and services and actively share ideas and talent across divisional, departmental, regional, and hierarchical boundaries.
5. Foster Learning, Innovation, and Change. Leaders welcome and drive change. They constantly extract the learning from their own failures and successes as well as those of others--both internal and external to Goldman Sachs. They build on our past success but also take the entrepreneurial risks necessary to innovate and grow our business.
6. Debate Freely, Decide Swiftly, and Commit. Leaders challenge the status quo and have the courage to express and allow disagreement. However, they drive issues toward decisions, and embrace decisions once they have been made.
7. Promote Meritocracy by Welcoming and Leveraging Differences. Our clients and employees comprise a heterogeneous group of successful, influential men and women from all cultures, races and ethnicities. Leaders create meritocracies that recognize and reward the diverse people and talents the firm requires to succeed around the world. They ensure that all employees have opportunities, free from artificial barriers, to rapidly advance to the utmost of their abilities.
8. Develop Strategy and Execute. Leaders develop and articulate a clear vision and strategy for their business and set concrete goals toward realizing their strategy. They move quickly, make tough decisions and show excellent judgement. Finally, they are relentless in prioritizing actions and executing to the highest standards.
9. Create Trust and Credibility Through Honest Communication. Our best leaders communicate fully, directly and candidly, and they follow with action. They are also good listeners. Above all, they recognize that the power of their personal example is greater than the power of their words.
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SOURCE: "Leading Organizational Learning: Harnessing the Power of Knowledge" (2004) Marshall Goldsmith, Howard Morgan and Alexander J. Ogg (eds), USA: Jossey-Bass
Companies in almost every sector of American business say they embrace Corporate Social Responsibility (CSR) not only because it's the right thing to do, but because it strengthens their brands. They also recognize that a stronger brand is a more valuable one, which is especially important since the U.S. Financial Accounting Standards Board (FASB) has, just this year, issued standards for reporting how much brands and other intangible assets are worth. As Laurance Allen, the founder of Value News Network, says, "[FASBfs actions] will clearly accelerate the integration of intangibles into mainstream financial analysis, directly affecting share price." The problem is, no one has been able to show exactly what impact a strong CSR commitment and implementation have on brands, let alone measure it. Until now.
For the first time, Holding Associates, together with CoreBrand, KLD, and its client sponsor, developed a way to measure CSRfs value to brands. By merging CoreBrandfs data on brand value and its components with KLD's socially responsible investment ratings, we were able to explore how much of a brandfs value is attributable to its socially responsible actions. As part of the project, we recommended testing our hypothesis of CSRfs impact on brand value through a CoreBrand/KLD data merge. Merging brand valuation data from the CoreBrandfs Brand Power database and rating data from KLDfs research, the team determined that, among the 456 companies for which the partners had sufficient data to perform the analysis, not only is the impact on brand of CSR measurable , but it also appears to be growing.
CoreBrand analyzed two years of data, 2003 and 2006, and found that in 2006, CSR represented s small but significant percentage of a brandfs value. The analysis of 2003 data confirmed these results. Even more compelling, it appears that the percentage of brand value represented by CSR is trending up. At the same time, all other identifiable contributors to corporate brand value V advertising, market cap, and the industry in which a company competes aX appear to be flat or declining
Another interesting finding was that the relationship between brand and CSR was strongest for familiarity, not for favorability. That is, if a company is well known in its community, its CSR activities will strengthen its brand more than they would if the company were less well known. The implication is that CSRfs impact is strongest with customers who are already familiar with the company, enhancing relationships with existing clients or consumers. A buyer must already understand a brandfs personality X perhaps have incorporated the brand into her life and even identity aX for her to value the brandfs place in and contribution to society at large.
While favorability was less affected by CSR, the study did show a relationship between CSR and one aspect of CoreBrandfs favorability metrics, the investment potential of the brand. That is, brands that are stronger in CSR are seen as a better investment than brands whose performance in CSR is not as well rated. Consumers generally make purchase decisions on quality and price not on CSR actions, as research by Cone, the Boston cause-branding firm, bears out. In Conefs 2004 study, consumers value product quality (98%) and price (97%) over support of a social issue (80%). Clearly CSR is not a primary purchase motivator, and so in 2007, Cone changed the survey design to show the effect of social issues as a differentiating factor between two brands of equal price and quality, reinforcing our finding that CSR is most effective with those who already are familiar with the brand.
We also analyzed which of KLDfs seven categories of social responsibility has the most impact on brand value. Given all the press over the last few years about environmentalism, the team assumed that would be the strongest driver of brand, but it was not. In fact, environmentalism was only weakly correlated to favorability, only slightly enhancing the perception of management. KLDfs categories of CSR that have the most impact on brand value appear to be the more traditional factors such as corporate governance and diversity. This is in keeping with the finding that the greatest impact of CSR/brand integration is with investors, as both issues directly affect a companyfs risk profile and therefore stock price.
However intriguing the early results of the Holding Associates/CoreBrand/KLD project, they are just the beginning. Brand and reputation experts still need to look at issues such as benchmarks for industry segments and individual companies; how public perceptions of corporate citizenship compare with expert ratings of performance on citizenship; and most important to the sustainability of CSR efforts and the holy grail of brand/CSR integration efforts, the financial value of CSR as measured by its impact on brand valuation. Then, finally, will we have actionable metrics on which to gauge the success of CSR and develop rational funding strategies. Cost-cutting rationale for CSR from, for example energy savings, is only one measure of CSRfs benefit. The opportunity side, enhancing brand value, could end up being even more profitable.
Companies in almost every sector of American business say they embrace Corporate Social Responsibility (CSR) not only because it's the right thing to do, but because it strengthens their brands. They also recognize that a stronger brand is a more valuable one, which is especially important since the U.S. Financial Accounting Standards Board (FASB) has, just this year, issued standards for reporting how much brands and other intangible assets are worth. As Laurance Allen, the founder of Value News Network, says, "[FASBfs actions] will clearly accelerate the integration of intangibles into mainstream financial analysis, directly affecting share price." The problem is, no one has been able to show exactly what impact a strong CSR commitment and implementation have on brands, let alone measure it. Until now.
For the first time, Holding Associates, together with CoreBrand, KLD, and its client sponsor, developed a way to measure CSRfs value to brands. By merging CoreBrandfs data on brand value and its components with KLD's socially responsible investment ratings, we were able to explore how much of a brandfs value is attributable to its socially responsible actions. As part of the project, we recommended testing our hypothesis of CSRfs impact on brand value through a CoreBrand/KLD data merge. Merging brand valuation data from the CoreBrandfs Brand Power database and rating data from KLDfs research, the team determined that, among the 456 companies for which the partners had sufficient data to perform the analysis, not only is the impact on brand of CSR measurable , but it also appears to be growing.
CoreBrand analyzed two years of data, 2003 and 2006, and found that in 2006, CSR represented s small but significant percentage of a brandfs value. The analysis of 2003 data confirmed these results. Even more compelling, it appears that the percentage of brand value represented by CSR is trending up. At the same time, all other identifiable contributors to corporate brand value V advertising, market cap, and the industry in which a company competes aX appear to be flat or declining
Another interesting finding was that the relationship between brand and CSR was strongest for familiarity, not for favorability. That is, if a company is well known in its community, its CSR activities will strengthen its brand more than they would if the company were less well known. The implication is that CSRfs impact is strongest with customers who are already familiar with the company, enhancing relationships with existing clients or consumers. A buyer must already understand a brandfs personality X perhaps have incorporated the brand into her life and even identity aX for her to value the brandfs place in and contribution to society at large.
While favorability was less affected by CSR, the study did show a relationship between CSR and one aspect of CoreBrandfs favorability metrics, the investment potential of the brand. That is, brands that are stronger in CSR are seen as a better investment than brands whose performance in CSR is not as well rated. Consumers generally make purchase decisions on quality and price not on CSR actions, as research by Cone, the Boston cause-branding firm, bears out. In Conefs 2004 study, consumers value product quality (98%) and price (97%) over support of a social issue (80%). Clearly CSR is not a primary purchase motivator, and so in 2007, Cone changed the survey design to show the effect of social issues as a differentiating factor between two brands of equal price and quality, reinforcing our finding that CSR is most effective with those who already are familiar with the brand.
We also analyzed which of KLDfs seven categories of social responsibility has the most impact on brand value. Given all the press over the last few years about environmentalism, the team assumed that would be the strongest driver of brand, but it was not. In fact, environmentalism was only weakly correlated to favorability, only slightly enhancing the perception of management. KLDfs categories of CSR that have the most impact on brand value appear to be the more traditional factors such as corporate governance and diversity. This is in keeping with the finding that the greatest impact of CSR/brand integration is with investors, as both issues directly affect a companyfs risk profile and therefore stock price.
However intriguing the early results of the Holding Associates/CoreBrand/KLD project, they are just the beginning. Brand and reputation experts still need to look at issues such as benchmarks for industry segments and individual companies; how public perceptions of corporate citizenship compare with expert ratings of performance on citizenship; and most important to the sustainability of CSR efforts and the holy grail of brand/CSR integration efforts, the financial value of CSR as measured by its impact on brand valuation. Then, finally, will we have actionable metrics on which to gauge the success of CSR and develop rational funding strategies. Cost-cutting rationale for CSR from, for example energy savings, is only one measure of CSRfs benefit. The opportunity side, enhancing brand value, could end up being even more profitable.
Companies in almost every sector of American business say they embrace Corporate Social Responsibility (CSR) not only because it's the right thing to do, but because it strengthens their brands. They also recognize that a stronger brand is a more valuable one, which is especially important since the U.S. Financial Accounting Standards Board (FASB) has, just this year, issued standards for reporting how much brands and other intangible assets are worth. Companies in almost every sector of American business say they embrace Corporate Social Responsibility (CSR) not only because it's the right thing to do, but because it strengthens their brands. They also recognize that a stronger brand is a more valuable one, which is especially important since the U.S. Financial Accounting Standards Board (FASB) has, just this year, issued standards for reporting how much brands and other intangible assets are worth. As Laurance Allen, the founder of Value News Network, says, "[FASBfs actions] will clearly accelerate the integration of intangibles into mainstream financial analysis, directly affecting share price." The problem is, no one has been able to show exactly what impact a strong CSR commitment and implementation have on brands, let alone measure it. Until now.
For the first time, Holding Associates, together with CoreBrand, KLD, and its client sponsor, developed a way to measure CSRfs value to brands. By merging CoreBrandfs data on brand value and its components with KLD's socially responsible investment ratings, we were able to explore how much of a brandfs value is attributable to its socially responsible actions. As part of the project, we recommended testing our hypothesis of CSRfs impact on brand value through a CoreBrand/KLD data merge. Merging brand valuation data from the CoreBrandfs Brand Power database and rating data from KLDfs research, the team determined that, among the 456 companies for which the partners had sufficient data to perform the analysis, not only is the impact on brand of CSR measurable , but it also appears to be growing.
CoreBrand analyzed two years of data, 2003 and 2006, and found that in 2006, CSR represented s small but significant percentage of a brandfs value. The analysis of 2003 data confirmed these results. Even more compelling, it appears that the percentage of brand value represented by CSR is trending up. At the same time, all other identifiable contributors to corporate brand value V advertising, market cap, and the industry in which a company competes aX appear to be flat or declining
Another interesting finding was that the relationship between brand and CSR was strongest for familiarity, not for favorability. That is, if a company is well known in its community, its CSR activities will strengthen its brand more than they would if the company were less well known. The implication is that CSRfs impact is strongest with customers who are already familiar with the company, enhancing relationships with existing clients or consumers. A buyer must already understand a brandfs personality X perhaps have incorporated the brand into her life and even identity aX for her to value the brandfs place in and contribution to society at large.
While favorability was less affected by CSR, the study did show a relationship between CSR and one aspect of CoreBrandfs favorability metrics, the investment potential of the brand. That is, brands that are stronger in CSR are seen as a better investment than brands whose performance in CSR is not as well rated. Consumers generally make purchase decisions on quality and price not on CSR actions, as research by Cone, the Boston cause-branding firm, bears out. In Conefs 2004 study, consumers value product quality (98%) and price (97%) over support of a social issue (80%). Clearly CSR is not a primary purchase motivator, and so in 2007, Cone changed the survey design to show the effect of social issues as a differentiating factor between two brands of equal price and quality, reinforcing our finding that CSR is most effective with those who already are familiar with the brand.
We also analyzed which of KLDfs seven categories of social responsibility has the most impact on brand value. Given all the press over the last few years about environmentalism, the team assumed that would be the strongest driver of brand, but it was not. In fact, environmentalism was only weakly correlated to favorability, only slightly enhancing the perception of management. KLDfs categories of CSR that have the most impact on brand value appear to be the more traditional factors such as corporate governance and diversity. This is in keeping with the finding that the greatest impact of CSR/brand integration is with investors, as both issues directly affect a companyfs risk profile and therefore stock price.
However intriguing the early results of the Holding Associates/CoreBrand/KLD project, they are just the beginning. Brand and reputation experts still need to look at issues such as benchmarks for industry segments and individual companies; how public perceptions of corporate citizenship compare with expert ratings of performance on citizenship; and most important to the sustainability of CSR efforts and the holy grail of brand/CSR integration efforts, the financial value of CSR as measured by its impact on brand valuation. Then, finally, will we have actionable metrics on which to gauge the success of CSR and develop rational funding strategies. Cost-cutting rationale for CSR from, for example energy savings, is only one measure of CSRfs benefit. The opportunity side, enhancing brand value, could end up being even more profitable.