Tag: Values Based Leadership



Written by Joe Dwyer for the 2019 Olin Business magazine

For Dave Peacock, being values-based and data-driven is key to the success of Schnucks Markets in achieving its higher purpose of “nourishing people’s lives.” Peacock, EMBA ’00, is president and COO of Schnucks, a St. Louis-based regional grocery chain with 15,000 employees. Communicating Schnucks’ purpose is vital to the company’s culture, he said. It’s also important in attracting new employees to the company, which hires as many as 5,000 new workers each year.

“We have regular sessions to talk about  the importance of our Midwest family values and how that fits with our purpose of nourishing people’s lives,” he said. At Schnucks, those values speak to a customer-first mentality, the willingness to try new things, a culture of tolerance and hard work and haste to help those in need.

Anjan Thakor and Stuart Bunderston

Peacock also formed a data-focused unit at the company in January, hiring Tom Henry, a member of the board of WashU Olin’s Center for Analytics and Business Insights, to serve as chief data and analytics officer. Henry now leads a 50-person business unit with the mission of “constructing and maintaining a purpose-built information management environment, governed and utilized by teammates at all levels of the enterprise, where trusted and increasingly intelligent insights are produced.”

Meeting consumer demand

Schnucks’ efforts align with growing consumer sentiment. Nearly 80% of Americans say they’re more loyal to purpose-driven brands, according to a 2018 study by public relations agency Cone/Porter Novelli. The same study said more than three-quarters aren’t satisfied with brands that only make money; they expect companies to positively affect society.

That shift is in step with WashU Olin’s brand positioning—to “champion better decision-making by preparing and coaching a new academy of leaders who will change the world, for good.”

The movement dovetails with the work of Olin professors Stuart Bunderson and Anjan Thakor, who are at the forefront of this advancement in business strategy that could help workers achieve professional success and fulfill values-based ambitions in their professional lives.

Bunderson, director of Olin’s Bauer Leadership Center and the George and Carol Bauer Professor of Organizational Ethics and Governance, has published a book about it, The Zookeeper’s Secret; Thakor, along with Robert E. Quinn from the University of Michigan, published a new book in August called The Economics of Higher Purpose and a cover story (“Turning Purpose into Performance”) in the July–August 2018 issue of Harvard Business Review.

Benefits: Dollar signs and beyond

A common theme of Thakor’s and Bunderson’s scholarship indicates that young professionals, and many others, want to work for companies that articulate a greater purpose—improving the world where they can, whether that’s in their local communities or addressing societal issues worldwide.

In addition, their work shows more than anecdotal evidence that purpose-driven organizations generate more worker and customer loyalty. Increasingly, workers are holding their employers more accountable and demanding to see more examples of executing on purpose, according to Thakor.

Those companies with the most clarity in the pursuit of their purpose frequently perform better financially, according to a 2016 study led by The Wharton School.

Thakor and Bunderson, however, also warn of pitfalls in creating a purpose-driven organization. Leaders of purpose-driven companies can’t take on every charity case and could face backlash from employees when workers’ pet projects aren’t a priority. Further, having a purpose doesn’t guarantee financial success, especially for startups.

“Creating a higher purpose is not a tool or tactic to make more money or achieve better financial performance,” said Thakor, the John E. Simon Professor of Finance and the director of doctoral programs at Olin. “Turning purpose into performance is very hard. Emotionally, it takes a lot of effort.”

He stresses that firms must meet two conditions: First, the identified purpose must be authentic, and second, it must be communicated with clarity. Thakor says being authentic is hardest, in part because it goes beyond putting posters on walls and communicating from HR to employees.

Can purpose have a downside?

“Every company now has a statement of principles that is displayed, and most of the time people in an organization understand it has virtually no meaning for the decisions the company makes,” Thakor said. “So, it doesn’t really affect the employees.”

For a purpose-driven company, that’s not the case. Managers and employees are vested in the core values and make decisions based on what they believe supports those core values. As a result, being purpose-driven will have costs and impose constraints.

“That’s especially significant when a company’s competitors are without purpose and have no restrictions,” Bunderson said. “Those competitors are not restrained in the business deals they will pursue. Purpose has to be backed by actions, mission and commitment. The purpose-driven company will say, ‘We won’t do that.’”

While there are hazards in the purpose-driven organization, Bunderson and Thakor agree that the benefits of being purpose-driven outweigh the risks.

There are a couple of ways purpose can help,” Bunderson said. “It’s not just feel-good, and it can be a competitive advantage.”

For example, millennials seek purpose as much as profit in their work, so communicating about a purpose-driven organization can be an advantage when recruiting 20-somethings or MBA students—or when fielding inquiries from recruiters.

For example, millennials seek purpose as much as profit in their work, so communicating about a purpose-driven organization can be an advantage when recruiting 20-somethings or MBA students—or when fielding inquiries from recruiters.

Sue McCollum, JD ’15, said having a values-based purpose, especially during challenging times, engages employees and keeps them moving in a positive direction. McCollum is chairman and CEO of wine and spirits distributor Major Brands Inc.

One of the ways Major Brands does that is through its Safe Home program, offering thousands of free rides home a year to bar patrons in a partnership with ride-hailing service Lyft. “It’s part of our push for social responsibility and accountability that has become really important to our people here, to our suppliers and to our customers,” McCollum said.

The challenge: Establishing purpose

Workers, customers and investors want to be part of something greater than themselves, research has shown. Having a greater purpose, however, has to be more than a mission statement and jargon about respect, teamwork and shared vision, Thakor said. It’s about creating leaders who are prepared to make, and stick with, difficult values-based, data-driven decisions.

The biggest challenge is for leaders to establish a company’s higher purpose, Thakor said.

“Giving to charity is not higher purpose; every company does that,” he said. “It’s not having a mission statement; most companies have those. It’s about going through a group of exercises to discover an authentic purpose that will guide all future business decisions.”

In his book, Thakor cites Apple and Walt Disney Co. as examples    of companies that successfully established their higher purpose. Disney’s purpose in Disneyland was to create “a place for people to find happiness and knowledge.” For Apple, he offers a Steve Jobs quote: “Great companies must have a noble cause. Then it’s the leader’s job to transform that noble cause into such an inspiring vision that it will attract the most talented people in the world to want to join it.”

Once the purpose has been discovered and established, it should carry over into all aspects of the company, from how meetings are run to the people who are hired.

The concept of business leaders making decisions based on values —as well as data—is growing, but isn’t novel. Olin’s strategic pillar focused on creating leaders who make values-based and data- driven decisions has its roots in the business school’s founding.

“We’re talking about issues at the core of what we stand for,” Bunderson said. “In 1915, when William Gephart was making the case for why the university needed a business school, he cited the need to understand complex information (that’s the data part) as well as the need to consider how our decisions affect the broader society (that’s the values part). Being values-based and data-driven is in our DNA.”

Eight Steps to Organizational Change

Anjan Thakor outlines the steps in his book, The Economics of Higher Purpose: Eight Counterintuitive Steps for Creating a Purpose-Driven Organization, co-authored with Robert Quinn, professor emeritus at the University of Michigan’s Ross School of Business and a cofounder of the school’s Center for Positive Organizations.

  1. Envision a purpose-driven organization
  2. Discover the purpose
  3. Meet the need for authenticity
  4. Turn the higher purpose into a constant arbiter
  5. Stimulate learning
  6. Turn midlevel managers into purpose-driven leaders
  7. Connect the people to the purpose
  8. Unleash the positive energizers

More support for purpose

On August 19, 2019, the powerful Business Roundtable lobby—which includes the CEOs of dozens of major US companies—issued a revised “Statement on the Purpose of a Corporation.” The one-page declaration, with 181 signatures, includes a corporate imperative to support and invest in communities and people: “Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”




Olin

The Center for Analytics and Business Insights, along with the Bauer Leadership Center, hosted a seminar March 26-27 on values-based/data-driven decision-making. The seminar, which hosted nearly 50 executives from a variety of local data-centered companies—including Wells Fargo and Teradata—was a huge success.

Seethu Seetharaman led the morning session for participants in a March 26-27 workshop on values-based, data-driven decision-making.

Seethu Seetharaman, director of CABI, kicked off the event with a discussion on hypothesis testing.  Seetharaman, W. Patrick McGinnis Professor of Marketing, brought statistics to life with riddles and brain teasers. With a group filled with professionals working with statistics daily, Seetharaman’s brain teasers still expanded their knowledge and truly kept them on their toes. A quick example of a brain teaser to try at home:

“A light flashes red 75% of the time and green 25% of time. You have to predict what the next flash will be. Is it reasonable to use a biased coin weighted to flip toward red 75% of the time to predict the next flash? Or is it more reasonable to just predict red?”

Seethu Seetharaman and Stuart Bunderson teamed up on the March 26-27 workshop on values-based, data-driven decision-making.
Seethu Seetharaman and Stuart Bunderson teamed up on the March 26-27 workshop on values-based, data-driven decision-making.

The answer is actually no. The likelihood of having the coin and the light flash the same color is slim because there are two separate events. The two events will only align 62.5% of the time, so it’s safer to predict red from the get-go with its 75% probability. 

The first afternoon was followed up by Stuart Bunderson, director of the Bauer Leadership Center. Bunderson, George & Carol Bauer Professor of Organizational Ethics & Governance, discussed values-based decision-making, incorporating values and ethics in business, while backing them with statistical evidence.

Bunderson amusingly warned the data-focused audience, “We are now entering the domain of moral philosophy… we answer which outcomes we should be striving to achieve through discussion and mindful reflection, informed by theoretical frameworks.”

Bunderson continued, asking, “What are values?”

Values are beliefs about preferred “end states.” They can be explicit or implicit, but regardless, represent the fundamental building blocks of an individual’s character or organization’s culture.

Values are all about the why of a business: the how represents tactics and execution, the what are objectives and KPIs, while the core why are values and the mission. The why drives the what and the how.

At the end of the session, Seetharaman’s statistics-heavy lecture paired perfectly with Bunderson’s value-based message. The audience collectively resonated with the idea that a business is firmly, at its core, driven by values.

However values must guide decisions made and then must be secondly backed by statistics. You must be able to understand your KPIs while still keeping true to your business’s mission.




“Data can be used for great good to make a significant positive difference in our communities and our lives… but not without some problems.”

– Naveen Pinjani, Sr. Director Big Data Analytics at Daugherty Business Solutions

At the Data for Good conference on October 5, speaker Naveen Pinjani, along with consultant Jonathan Leek, dynamically kicked off a panel on the Vacancy Collaborative. The Vacancy Collaborative’s mission is to address St. Louis’s vacant property issue and perfectly reflects the conference’s core goal: to celebrate the combination of values-based-leadership and analytics.

Leek knew two things before the creation of the Vacancy Collaborative: He was a skilled data analyst and he wanted to help the community. Knowing this and the brutal fact that about 15 percent of all land in St. Louis is vacant, he put his skills to use.

Addressing this issue has been complicated. Leek asked, “How do we address what we can’t understand?” The data problem presented was that there are city employees who are doing the best they can, but aren’t trained in using and analyzing data. Leek recognized that systems are often put in place by those unfamiliar with data best practices. Along with volunteers, Leek set out to use his data skills to tackle the basics—how many vacant properties/lots exist, where they’re located, and what to prioritize.

Over the past year, the Vacancy Collaborative has combined four data sets, cleaned them up, and defined what each set means. They are on their way to incredible impact. The volunteer aspect of the project comes with its pros and cons; Leek explained its lack of bureaucracy is great, along with the autocratic decision-making process, but there’s a lack of input from domain experts and limited tools, resources and time.

Even with the negatives, the Vacancy Collaborative was able to convince Cindy Riordan, CIO of the city of St. Louis. Riodan said, “The vacancy data lit a spark with our [the City of St. Louis] staff.”

The vacancy issue affects the entire city from crime rates, to public health, to the city budget. The Vacancy Collaborative is now working on refining its web portal and even expanding to new data sets unrelated to vacancy. If you’re interested in reading more, check out STLVacancy.com.

Sarah Podolsky, BSBA ’19, wrote this on behalf of the Bauer Leadership Center. Pictured above: Jonathan Leek, a consultant with Daugherty Business Solutions and volunteer with the Vacancy Project, presents to the Data for Good audience.