Dell, IBM, Cisco and a host of other major technology companies have just radically redefined their purpose.
All three companies are members of the business Roundtable and influential US Group that periodically publishes a document titled “Statement on the Purpose of a Corporation”.
Past versions of the document all emphasised creating shareholder value as a company's primary purpose. Whether achieved through increases to the share price or by paying fat dividends, satisfying shareholders regulatory purpose of running a business.
But the new version of the statement of purpose document changes that and says “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.”
That commitment is explained in five points:
- Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
- Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
- Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
- Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
- Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.
Analyst firm Gartner weighed in on the new document, with vice president and fellow emeritus in the Gartner for general managers program Mark P. McDonald writing: “Publishing this statement formalises the reality of competition in a digital world. Executives, politicians and other leaders cannot lose site that in recognising multiple stakeholders we are not demoting anyone. This is particularly important in the case of shareholders who were the “only child’ but now are just a member of a bigger family.”
"Adopting an ‘either or’ view creates a zero sum game to the detriment of all stakeholders. There is much to be gained by formally recognising the needs of customers, employees, suppliers and communities. These groups should be, and often are, considered in business decisions. I welcome the broader definition. It reflects reality. It should not become a rational to curtail, control or otherwise compromise our societal and economic growth. That would harm all stakeholders and benefit no one.”
The revised statement certainly looks promising for the channel given its emphasis on promoting the interests of partners. But the statement is non-binding and lacks legislative force. Companies that do the wrong things by shareholders will still find themselves receiving nasty please explains from regulators.
But at least some big vendors have taken a stand.
The full Statement and its signatories can be found here (pdf). Those who have not signed may be as interesting as those that have.