I’m not sure that happiness is our goal. Being happy is a temporary state of mind and not something that we’d expect to be a permanent, 24/7 thing. To be permanently happy is unrealistic, and if we could achieve it we’d lose our ability to appreciate the range and texture of emotions that make up the human condition.

Do you agree? Disagree? Is there a better way to look at ‘happiness’?

I focus on things that lead to life satisfaction – not in isolation – but relative to the amount of energy I have to put into them. That’s my key indicator of wellbeing.

What’s yours?

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It’s about tapping into their insight – learning in a short space of time what may have taken that person a lifetime to amass. I can think of a couple of examples:

• The book How to Make Gravy by singer / songwriter Paul Kelly gives the backstory behind his songwriting process. It wasn’t a page turner, but every now and then he serves up something really, really interesting about the songwriting process.
• The Australian TV show, Gruen Planet, where advertising professionals help us unpack what is going on in the commercials that we see all the time. My kids love it too, because it gives them insight into an otherwise mysterious world.
• Coffee with Rod. Yesterday, I sat down with Rod, who has worked in or with government for most of his life. In one hour, he gave me insight into working with government that I would have taken years to figure out.

Insight is one of the most valuable assets we possess. What is your special area of insight, and is this an untapped asset of yours?

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It sums up the concept of leadership nicely. I also came across this Harvard Business Review article by Gary Hamel and Polly LaBarre that rams it home:

“…too many leadership experts still fail to distinguish between the practice of leadership and the exercise of bureaucratic power. In order to engage in a conversation about leadership, you have to assume you have no power — that you aren’t “in charge” of anything and that you can’t sanction those who are unwilling to do your bidding. If, given this starting point, you can mobilize others and accomplish amazing things, then you’re a leader. If you can’t, well then, you’re a bureaucrat.”

If we take stock of the people in our personal, work and community lives who we regard as leaders, I suspect they’d fit this description; and by adopting this definition we find that leadership is accessible to us all, rather than a select few.

Is leadership a behaviour that is an untapped asset of yours?

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Professor Michael Porter is a committed capitalist, and about as hardline as you can get. So why has he seemingly dive-bombed out of the clouds to champion the role and obligations of business in society? Why does he get excited about Nestle’s support of rural development, Cisco’s partnering with public institutions to provide online curricula, teacher training and professional development for instructors and Wal-Mart’s supply chain re-invention, cutting energy costs, emissions and engaging with local suppliers?

Start thinking about ‘Shared Value’

The answer lies in business model innovation: it’s the way companies will get ahead and create real business value in the future and, at the same time, address society’s pressing needs. This type of innovation is called ‘Shared Value’ and it is increasingly being applied to improve competitive positioning and financial performance. This may come across as idle curiosity that hardly warrants keeping a fund trustee awake at night. However, it is likely to spawn new conversations about the effectiveness of trustee boards.

I’ve just returned from Boston and four days of intensive work discussing Shared Value implementation with companies and practitioners from all around the world, including Colombia, India, Philippines, Canada, Czech Republic, Brazil, Australia, Italy, Hong Kong, Singapore, US, UK, Costa Rica, Mexico, Korea, Japan and Chile. We rubbed shoulders with Professor Michael Porter, Mark Kramer of FSG and the Chairman of Nestle, Peter Brabeck-Letmathe, at the Global Shared Value Summit. It marked a pivotal moment in the development of the Shared Value field (refer sharedvalue.org or an article of mine if the topic is completely new to you).

Where corporate social responsibility is mostly about licence-to-operate or meeting basic community standards, Shared Value is about creating value for both business (financial) and society (impact). It’s proactive, not reactive. For example, pharmaceutical company Novo Nordisk embarked on physician training and patient education on diabetes in China many years ago. It estimates that it has improved patient life years of those who use its products and services by 80%, while increasing its market share from below 40% to 63% in the second largest insulin market in the world.

This highlights that it’s not ‘touchy-feely’ stuff: it can lead to market dominance. In fact, you might say this is just good business, where long-term plans are executed well. It is, but we all know that the investment chain is deeply flawed, and analysts struggle to understand and attribute value to these strategies before the earnings are proven, which means that capital is allocated inefficiently.

Too much attention on short-terms

Nestle Chairman Peter Brabeck-Letmathe noted that he refuses to publish quarterly earnings because one quarter has little bearing on the likelihood of his company living up to its market Price/Earnings ratio. He went further, and cited investment analysts as the root of the short-termist problem. Michael Porter and Mark Kramer, who wrote their seminal paper entitled Creating Shared Value in 2011, agree that vast improvements in the capital supply chain are required. At the Global Summit, Porter revealed that he and Kramer intend to challenge investment managers in a paper due out in early 2014.

In Australia, APRA statistics show that 74% of superannuation fund members have more than 15 years to retirement, and the majority of this group has more than 30 years to go. In theory, this is the average investment horizon that fund trustees should be adopting. But we all know, even if we don’t say it in public, that trustees become quite preoccupied with this year’s earnings rate, and fund comparisons are typically done on 3, 5 or sometimes 7-year timeframes. Have you ever heard vigorous debate about 20-year earnings? And then, to make matters worse, by the time the money gets in the hands of investment managers, annual bonus potential is flashing so brightly that the investment horizon for liquid, traded investments is more like 1-3 years at best. I know, because I’ve worked in the system and was partly complicit with it.

I have sympathy for companies that get hauled into a short-term earnings mindset, because flaws in the structure of our investment chain push them in this direction. Mike Hirst, managing director of Bendigo and Adelaide Bank, bravely took a stand against analysts in 2011, citing the same issue as Brabeck-Lemathe of Nestle. At the time, it was a mere blip in the investment conversation and then everyone merrily resumed business as usual.

Here’s the crux of the issue. For all of the back-patting that goes on in the world of Environmental, Social and Governance (ESG) issues, have fund trustees really addressed the core problem of misaligned interests between their members’ investment requirements and the incentives of investment managers? There is a lot of puffery, but little substance. When is a manager going to be fired for having a short-term incentive system and replaced with one that has a longer-term system? A handful of investment managers have addressed this, with seven year bonus assessment periods as an example, but they are the exception. It should be priority number one.

In relation to Shared Value, we are seeing a groundswell of interest and application of the concept from innovative companies and this trend is set to continue. It will be a process of internal challenge and discovery for many of them. As yet, there is no prescriptive set of rules, but there are principles and methods that they can use to evaluate their core assets, needs and challenges. They will find where the key social intersection points exist and create strategies that drive financial results in concert with a positive societal impact.

Targetting investors and trustees

From a financial performance perspective, expect to see companies who get this right markedly outperform their peers. And because it takes time to get it right – Nestle is in its seventh year of implementation – the advantages created will be sustained for longer periods of time. It’s hard to copy overnight. My main prediction is that, in the next 10 years, we will see the dispersion of company returns increase significantly and there will be many fast and slow declines.

We will have to wait and see how deeply Porter and Kramer sink their teeth into the investment community. I suspect they will soon realise that the best way to influence investment managers is through their major clients, being superannuation and pension fund trustees. It is likely to start a new and exciting level of dialogue that will bring institutional shareholders closer to leaders in business innovation. However, it will also be confronting to those who are comfortable with the status quo.

Phil Preston is a speaker, facilitator and innovation practitioner, and is a former global credit research head at Colonial First State Global Asset Management.

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However, philanthropy on its own is not enough. Even though giving is supposedly at record high levels, we still have lots of problems in the world. This is the message that all participants at the Global Shared Value Summit agreed upon last week, including the likes of the Rockefeller Foundation.

What may surprise you is that they also endorsed a new form of business and community engagement – called Shared Value – where business has a commercial incentive to bring resources, innovation and scale to our pressing societal needs.

Each of us individually may have the capacity to donate funds, or we may not; regardless, let’s take philanthropy to the next level and become more active participants. Here’s three ways that you can make a difference:

1. Connect with your local community – doing a small job reliably and well for a club or association that you are associated with provides a boost to everyone else and will help you get results together.
2. Value your existing contributions – if you help look after an elderly or disabled person or another type of activity that is less formal or under the radar, it has immense value! Be proud of it and acknowledge others doing the same thing – don’t think that you are not contributing.
3. Challenge your workplace – how can you go beyond workplace giving and the odd volunteering day to make a sustained impact? This is where Shared Value comes to the fore – if the business you work for can help more people and make more money in the process then it will keep helping more people…

And finally, don’t stop giving to organisations that you support, see the three points above as extensions of your own giving platform.

Is your ability to rise above philanthropy an untapped asset of yours?

PS. I’m reaching out to find people who are willing to discuss the challenges they face in trying to engage more with their local community, as research for the book I’m writing. Please contact me, comment or reply if you have something to add.

PPS. I am running webinars next week to explain how Shared Value can be applied in business and harnessed by charities and government.

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We rubbed shoulders with the likes of Harvard’s Professor Michael Porter, Mark Kramer of FSG and the Chairman of Nestle, Peter Brabeck-Letmathe, and that’s just the tip of the iceberg. This is a pivotal moment in the development of this field – you may like to refer to sharedvalue.org or this article of mine that Porter re-tweeted last year, if the topic is quite new to you.

It’s impossible to summarise everything in one go, but here’s three big take-aways for the business, government and the NGO sectors:

1. Meaning

For a business to have real purpose and be resilient to future shocks, it helps to identify it’s role in improving society. This approach underpins sustained profitability; if profitability is the primary short-term goal, then there is a risk that the business model fails overnight.

Nestle adopted “shared value” as a formal strategic initiative in 2006; however Chairman Peter Brabeck-Letmathe remarked that shared value is now the strategy. It has transformed from being a food and beverage company to one that seeks to improve nutrition, access to water and develop rural economies. Nike was once a footwear company, it now sees itself as a health and well-being player. Thermo-Fisher saw itself as a scientific company, it now sees its role as building a healthier and safer world.

On my table at the global summit, four companies talk about their evolution in the way that they define their purpose. They were all at different stages – for different reasons – and still had some way to go, but the point is that they were all conscious of the need to bring clarity.

2. Measurement

How do we measure if and when shared value is created? There are two sets of indicators that need to be present: those that prove business value and those that evidence social value. This is not always easy and sometimes proxies are required.

Novo Nordisk sells diabetes-related products and has a strong presence in China. It estimates that it has improved patient life years of those who use its products and services by 80%, while increasing its market share from below 40% to 63% in the second largest insulin market in the world. The strategy was underpinned by physician training and patient education.

We will hear a lot more about measurement in years to come and the Shared Value Initiative provides a community of practice to develop expertise and serve as a repository for case studies.

3. Momentum

The global summit started two years ago and the first meeting was a small collective of North American businesses. This year, 225 places were filled and many were turned away. The companies in the room were very large, significant and mostly multi-national players. But not just that, we saw great representation from the NGO, development agency and government sectors. If you want to dispel any myths about the quality of management in the non-business sectors, tap into what Judith Rodin of the Rockefeller Foundation, Neal Keny-Guyer of Mercy Corps or Peter Singer from Grand Challenges Canada are doing and saying in this space. By the end of it, our heads were spinning.

It has become a truly global, cross-sector conversation. Where NGOs were once adversaries of business, they are now becoming partners. This is not because they have traded their values or mission, it is because they have come to the realisation that philanthropy is not enough; if we want to make real change in the world, the power of business is required in order to do what it does best: bring innovation and scale to the real needs in our society.

Where to from here?

Implementing shared value is a process of internal challenge and discovery. As yet there is no prescriptive rule book, but there are principles and processes that we can use to evaluate the core assets, needs and challenges of any business, find where the key social intersection points exist and create strategies that drive financial results for business and positive impact for society.

All I can say is that I love being a part of the evolution of this discipline.

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Anyway, bringing a network of global practitioners together from scratch is not an easy task and invariably someone noted that success is “1% inspiration and 99% perspiration”, which is cliched and also very true.

Today, we heard from one of GE’s communications advisors, who talked about the plan hatched by CEO, Jeffrey Immelt, and executed from 2004 to take his company into clean energy and healthy living. At the time, GE was under severe pressure for its pollution of the Hudson River (New York).

The strategy has transformed GE in a short space of time, with the advent of  its ecomagination and healthymagination divisions. What’s more, it required a massive change in its culture, previously described as inward focused and secretive.

It’s relatively easy to come up with an idea, but it isn’t worth anything unless we can implement it. That’s where the 99% perspiration comes in. And if we are doing something new or going into unchartered waters, it’s going to feel more like 99.9%.

Perhaps implementation is an untapped asset or strength of yours?

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• You fundraised your heart out for the community organisation you belong to and get criticised (behind your back) for not doing it well enough
• You spent half a day preparing a slap up dinner for your family and they woofed it down and promptly left without even lending a hand to do the washing up!
• At work, you have incurred the wrath of others who have licence to throw ideas around but no responsibility for implementing them

It’s an issue I’ve been thinking and hearing about a lot lately. What’s the trick to becoming appreciated? There’s no magic, instant fix, but you can build bridges and become more appreciated through better communication with those who are in your impact zone using these three tips:

1. Tell them what happened - break down what you did into steps or stages so that they know how much time and effort went into it. A fundraising barbecue requires scheduling, a roster of workers, ordering food, picking up food, setting up, packing up, utensils, gas bottles, a float, food preparation, storage, signage etc etc. It’s more than they think if all they do is walk past.
2. Convey the benefits – let them know how they benefited from your input; people generally don’t ignore what you do, they just don’t analyse it in detail; do the work for them! When you ran the barbecue and raised $450, did they realise it was funding the purchase of books that would improve their children’s education?
3. Talk about the challenges – tell them about the obstacles you had to overcome; this gives you a chance to use stories about the event and increase their engagement with what you have achieved, as well as subtly encouraging them to help next time. For example, how did you cope with the fact that three parents who said they’d do a shift on the barbecue never showed up…?

If you are an organiser, you are an asset to the people you touch with your efforts. When we feel unappreciated, let’s put our bitterness aside, get on the front foot by taking control and making the case ourselves!

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As passionate parents, we huddle in behind the kids to hear what the coach has to say. We are expecting a mix of positional changes and reminders such as “go hard at the ball” or “run into space and receive”. But we get none of that.

Thommo, the coach, asks the kids to put up their hand if they haven’t had a touch of the ball yet!? One player hasn’t had any touches or kicks, and Thommo says: “Our mission is to get the ball to Omara”. As simple as that. Whether that was the master stroke that turned the game, I’m not sure, but Omara starts having an increased presence up forward and helps create several goals. The team effects a 40 point turnaround and wins the match!

As a coach in Thommo’s situation, it takes guts to adopt a strategy that is based on team involvement, but it goes to show, working on the engine helps the car perform. The same lessons apply to the organisations we work with and for.

Do you have Thommo’s gift?

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Do you find there are some things that you are a bit ‘OCD’ about and others where you couldn’t care less? I used to play in a band, and marvelled at the lengths that band member, John, would go to get a song ‘right’. He was much more of a perfectionist than me.

Conversely, if I’m asked to do a briefing or keynote speech, I feel like there’s always something I could be doing better and I really enjoy the challenge of finding where those improvements can be made.

I think it comes down to passion – when you are passionate about something you tend to act like a perfectionist. For John it is music; for me it is presenting. What is it for you?

Identifying when do you behave like a perfectionist may help you uncover untapped assets – your true passions.

PS. I’d love to hear when you act like a perfectionist! Leave a comment please. I’m also passionate about improving business and community connections, a concept known as Shared Value. Here’s a short video if you want to know more.

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