Larry Fink’s Letter to CEOs makes for a really good read. Coming out at the outset of the year, this letter from the CEO of BlackRock gets noticed widely, in business, government and in the social sector. And as BlackRock makes significant strides in incorporating sustainability thinking into their organisation, it provides CEOs around the world with a broad lens to view what matters most to investors. Over time, it became a call for purpose and ethics, in business, as well.
This January, Larry Fink’s message to CEOs centered around one particular word – Accelerate…as he notes, “As more and more investors choose to tilt their investments towards sustainability-focused companies, the tectonic shift we are seeing will accelerate further. And because this will have such a dramatic impact on how capital is allocated, every management team and board will need to consider how this will impact their company’s stock.”
But how do we accelerate towards a future that is more sustainable, equitable and human-centred, amidst such technological disruption? While we do not profess to know the answer – in fact, in conversation with a globally-renowned expert in digital transformation recently, we found broad consensus that we are all learning, here are five (5) aspects of acceleration, where we know for sure that we are changing not merely what we focus on, but how organisations operate. In short, a transformation of the business.
1. Acceleration demands adaptive mindsets – our ability to recognise when our lens of the world no longer serves us and adopt a new lens, test our underlying beliefs and recognise (sometimes, rather often) that our assumptions no longer hold. In his letter, Larry urges us to take a hard look at how we can promote equality in the world, not just our workforces. He urges us to practice an open mindset, to look more broadly and to invite others to participate with us in creating value. Luckily, the science around shifting mindsets has been growing at quite a pace and with it, the ability of leaders to shift their mindset beyond the individual, in teams and their organisations.
2. Acceleration requires new options – re-shaping existing options for growth and transformation, as our underlying assumptions are changing, is a mere act of packaging and building an investment thesis around these would not hold muster with investors. Larry asks us to use the acceleration of climate change both to minimize the risk, and to generate new business, by discovering new ones. Our ability to generate new strategic options, be they contrary to current business models, ownership of resources and ways of working, has become essential and organisations that have invested in such a capability are reaping the rewards (an example – some of you might remember our perspective on Moderna and its ability to ask bold ‘What If’ questions, as it develops a portfolio of potential innovations on its platform, in a previous edition
of this weekly inspiration).
3. Acceleration requires extraordinary focus– This month we celebrate the Agile manifesto’s 25 year anniversary, and during this time, management innovation has flourished around the principles it espouses – and is making its mark around the executive office. Take Objectives & Key Results (OKRs) as an example – a management system designed to generate extraordinary focus and help accelerate execution, of what matters most. It first took shape in the 1980’s, under Andy Grove’s leadership at Intel. Adopted (at scale) by Google and used across industries, it has helped generate extraordinary focus around the organisation’s purpose and how this purpose is used, in the core business, to generate value. Expect these approaches to grow in application, generating coherence and extraordinary focus, in the years to come…
4. Acceleration requires data – and we must seek data well beyond the usual places. We are seeing the accelerated use of external information, standardised across platforms, for decision-making. Take for example, the frequent scanning and monitoring of one’s ecosystem for new trends, weak signals, even wild cards, and how these may help us adapt our strategy and its execution. As sustainability permeates investment thinking, Larry Fink calls for a single global disclosure standard for all companies, and the quality and verifiability of data will play an important role there.
5. Acceleration of learning – perhaps more than any other area we’ve observed, the acceleration which Larry Fink is speaking of, has brought about experimentation and peer-learning at an unprecedented scale. This goes beyond the use of learning platforms and how accessible these are becoming. We are all learning how the climate transition presents a historic investment opportunity, and so we are seeing, in our own work, teams that are able to design, test and iterate across functional boundaries, with customers and industry peers. The development of vaccines under new partnership models and the evolution of sustainable finance are but two examples, where acceleration has made us re-examine how and with whom we learn.
The past year has presented us with an existential crisis – in fact, several of these have been playing out. It made us aware of how fragile we are, how connected we must remain to emerge stronger from these crises and build the future we all deserve.
Have a good weekend everyone!
Saar Ben-Attar (Chief Instigator)
Larry Fink’s 2021 Letter to CEOs