Article by Hywel Ball, Ernst & Young LLP
Image by Ales Krivec on Unsplash
Organizations that effectively anchor their approach to long-term value are best positioned to benefit from the value they create.
Imagine being in an industry that has no choice but to transform itself or be transformed. It may be quicker to list industries that don’t face this choice.
Virtually all companies are being buffeted by changing market conditions and technological disruption; new regulations and shifting consumer tastes. Amid this volatility, it’s no wonder shareholders increasingly want to know how businesses plan to thrive in the long-term in an everchanging world.
Yet that’s not the only demand on leaders. We increasingly want authenticity from the organizations we work for, buy from, and invest in. We need to know what companies stand for, and why.
This pressure has only increased as technology empowers more stakeholders to speak up and influence markets. In particular, the millennial generation representing around a quarter of the world’s population is responsible for bringing a greater focus on purpose, both as consumers and employees¹ and Gen Z is further amplifying those demands.
So, where do leaders and organizations begin? As one of management’s most influential thinkers, Peter Drucker believed that if you can’t measure it, you can’t improve it. A company’s purpose and long-term strategy should reinforce each other, but that requires a clearly articulated purpose and a long-term strategy founded on strong metrics. It’s a four-step process: