Five Key Takeaways From Kindred Assembly With LTSE CEO Eric Ries
Why a Focus on Social Impact Is Not a Trade-Off Against Profitability
In 2021, the case for the purpose-driven business is clearer than ever. Kindred, a membership focused on supporting socially responsible leaders, was formed to provide access to experts, guidance, and community around equity and sustainable leadership. It’s truly exciting to see how far ESG movements have come over the last few years. We’re not the only ones taking note of these cultural shifts. Earlier this month, Eric Ries, CEO of the Long Term Stock Exchange, joined Hayley Romer, Chief Revenue Officer and Publisher at The Atlantic at Kindred Assembly to discuss the first launch of a Stock Exchange in 50 years.
During this Assembly, the panelists discussed how the social pressures brought on by the pandemic increased public demands for justice in many forms, and pressure from customers and other stakeholders shifted investors’ focus away from short-term financial returns. In fact, Eric Ries argues that the long-term view may well be more profitable in the end, and comes along with myriad benefits to our businesses, our culture, and society at large. Below, we unpack some key takeaways from Eric and Hayley’s discussion:
- Aligning an organization’s values and goals pays significant practical dividends in terms of invested capital. From lower stock volatility to higher employee retention, studies show that aligning HR, investor, and brand messaging with the values and core business activities of the brand creates strong returns.
- Pressures from Wall Street continue to push companies towards quarterly results, but focusing on positive social impact is not a trade-off against profitability, especially as companies reconcile the demand for short-term results with long-term planning. Short-term profitability often guides extractive business practices, but these actions destroy value. Companies must reframe their perspective on returns to understand that today’s results are often connected to decisions made years ago.
- As companies adopt a multi-stakeholder approach, the need arises for standards that are binding, and not one-size-fits-all, in order to account for individual governance issues. The Long-Term Stock Exchange’s listing standards provide the flexibility for companies to develop their own policies in response to five broad principles, and to identify the structural commitments they are prepared to make. Key to this process is aligning an organization’s messaging and goals from top to bottom, which pays significant practical dividends in terms of invested capital — from lower stock volatility to higher employee retention.
- The intent to ‘do good’ is no longer sufficient for companies to be considered purpose-driven, and stakeholders are increasingly less tolerant of the idea that companies can compartmentalize social issues. This philosophical shift beyond intent and into action applies to customers, investors, and employees, who all have more agency in how businesses are run and are invested in the harms and benefits of a company’s business practices.
- In an uncertain, quickly-evolving future, the ability of businesses to respond rapidly rather than predictably will be the metric that matters. Regarding the metrics to track when executing the long-term view, Ries noted that short-term accountability metrics will not work with long-term thinking because these measures depend on the ability to forecast an uncertain future.
It’s clear that 2021 represents a paradigm shift for the private sector and our culture as a whole, and we’ll be keeping a close eye on how the Long Term Stock Exchange (and similar long-term focused funds) perform in the months and years to come.
Kindred has a number of exciting Assembly events planned in the coming weeks, including discussions on illuminating gender-non-conforming inclusive workplaces, creating supportive workplaces for BIPOC employees, and aligning your investments with your values. To learn more about our upcoming programming, please reach out to hello@kindredmembers.com.
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