Developing Leaders With Purpose and Impact

Article Icon Article
Monday, August 16, 2021
By Alejandro Moreno-Salamanca, Cindy Paola Pinzón Ríos
Photo by iStock/Peopleimages
Business schools must forge leaders who have a broad, humanistic view of how their work and their organizations can contribute to a more just society.

Society increasingly is demanding that companies articulate a purpose beyond profit and that they produce a positive societal impact based on that purpose. Particularly in response to the economic crisis caused by COVID-19, communities worldwide are demanding that entrepreneurs and executives become more socially active, going beyond creating jobs and generating wealth. Accordingly, companies are becoming social institutions of special influence in our current historical moment, as they have the power to transform the world by creating a more just social order and contributing to sustainable development.

Business schools must embed a set of purpose-driven principles into their DNA if they are to develop purpose-driven leaders who are passionate about having societal impact. Schools must orient all of their key activities—strategic planning, curricular development, research, teaching, and assurance of learning—toward a culture of contribution and service to society. With this holistic approach, business schools can instill in their students a strong sense of empowerment to effect social change through organizational leadership.

The tenets of purpose-driven leadership should be incorporated into all subjects of the business school curriculum—not just focused areas like ethics, sustainability, and social enterprise. Likewise, these principles can transcend the boundaries of the classroom. Not only can professors teach service activities within the curriculum, but they also can encourage students to incorporate such activities into their daily lives. Through volunteer work and social service activities students learn hands-on about contributing to society and can experience the impact at a personal level.

We offer nine curricular principles that we believe can help schools meet the imperative of training leaders based on business purpose and positive impact.

9 Tenets of Purpose-Driven Leadership

1. Looking beyond profits for power. The classic theory of economics argues that a company exists and endures to the extent that it reduces transaction costs and bureaucracy. But is the company, then, simply the sum of its assets? Profits are just one element that enables companies’ sustainability. Companies can also be viewed as communities of people who work together toward a common purpose, where the concept of the group is elevated above ownership and profit. Judy Samuelson, founder of the Aspen Institute’s Business and Society Program, suggests that the real value of a company is not found in its financial statements but in its reputation, in the trust it generates, and in its ability to attract and retain talent. So while a company must create wealth, this is not its exclusive purpose.

Perhaps in today's social order, companies are the social institutions with the greatest capability for influence and social impact.

2. Placing service at the center of work. Work is a process of delivering value to people; therefore individuals are giving themselves in their work. The decision to serve others has an impact not only on who is served but also on who serves. The work improves the worker, as it is an instrument used by people to offer the best of themselves to others.

Work is a mechanism for delivering value to the world. Individuals who choose to serve others not only offer the best of themselves to others, but also improve themselves. Sustainable companies place service at the center of their business purpose. Thus, the business purpose stems from the desire to serve people, and its consequence—not its end—is to obtain a high market value for the company.

The decision to serve others has an impact not only on who is served but also on who serves.

3. Meeting real needs with useful goods and services. Leaders must ask whether a company’s product or service is satisfying an actual need experienced by customers, whether it is enriching them as human beings. They must further ask whether the form of production is sustainable, and whether environmental impacts are mitigated. This question is highly relevant because it is difficult to unite and engage employees in a company when its goods do not contribute to the global ecosystem in a positive way.

4. Caring for people and promoting human dignity. Business managers who wish to lead with a transcendent purpose should reflect on whether their companies promote social conditions that truly develop and respect human beings. John Rawls, in his classic book Theory of Justice, argues that the best way to “legislate” and design a job is for “legislators” to act as though they had to accept the rule they established. Rawls proposes that, to create a just society, individuals commit themselves to general principles that they agree upon from behind a “veil of ignorance,” where they have no knowledge of others’ personal characteristics and circumstances.

5. Seeking the common good. Contributing to the common good means that one cares for and promotes the dignity of people and seeks conditions of social order for that purpose. Leaders focused on the common good have true power to lead with transcendent purpose. Business leaders should question the way things have traditionally worked and seek new and better ways of doing things. They should work to establish policies, processes, and working conditions that enable people to flourish in their respective communities.

6. Leading with subsidiarity to help develop others. The principle of subsidiarity holds that individuals establish personal responsibility for handling matters, independent from a greater, centralized authority. In a subsidiary approach, each person gives what they owe—not only for organizational efficiency but for individual growth. Subsidiarity in a company empowers people as key agents of change, leading to autonomy. It also contributes to bringing out people’s individual capabilities and gifts to ensure a positive impact.

Subsidiarity in a company empowers people as key agents of change, leading to autonomy.

7. Displaying managerial prudence. To exercise prudence is to understand that what a manager perceives is not necessarily what happens, because objective reality exists outside of ourselves. Business leaders must be able to listen to and understand different perspectives and respond with reason. A prudent manager listens genuinely, sees with 360-degree vision, and decides firmly, seeking to correct the root cause of a business problem and always aiming to promote people and the common good.

8. Managing with moral imagination. Leaders with moral imagination are clear about the desired good in a business objective. Rather than focusing on risks and difficulties in their company’s plans, they constructively co-create alternatives that advance moral good without jeopardizing their own integrity or the company’s sustainability. Moral imagination enables leaders to find new ways of doing things, to break paradigms, to identify new opportunities, and to change the world.

9. Leading positively and with purpose. Business leaders who aspire to lead with transcendent purpose must reflect deeply on their understanding of what a company is and what it aims to achieve through its work. They develop an understanding of their personal purpose because it stems from their own identities. This approach to leadership answers the question, “Why is it done?” rather than “What is done?” The discovery of a purpose makes leaders’ lives meaningful and enables them to lead genuinely and positively based on that purpose.

Socially Conscious Leaders

To reach the next generation of leaders, according to Samuelson, we must expand the traditional panorama. It is expected that learners will leave the business school knowing about markets and finance and other business basics. But today’s graduates must also understand their important social responsibilities as leaders and how their actions impact the lives of others and society.

For business schools to develop professionals who lead with purpose and humanely serve the needs of their environment, they must holistically incorporate the above tenets into their programs and practices, their teaching and research. Students who pass through their classrooms will discover the potential for positive impact that their future professions hold. As a consequence, they will decide to lead based on an organizational purpose that goes beyond the mere generation of profits.

Alejandro Moreno-Salamanca
Dean and Professor, INALDE Business School
Cindy Paola Pinzón Ríos
Researcher and Quality Coordinator, INALDE Business School
Subscribe to LINK, AACSB's weekly newsletter!
AACSB LINK—Leading Insights, News, and Knowledge—is an email newsletter that brings members and subscribers the newest, most relevant information in global business education.