16 Mar 2015Working Paper Summaries

Higher-Ambition CEOs Need Higher-Ambition Boards

by Edward J. Ludwig, Anna Elise Walton and Michael Beer

The unconventional purpose of higher ambition (HA) companies is to create long-term economic and social value (relationships of trust and commitment) for all their stakeholders. Given quarterly earnings pressures, the researchers wanted to learn how these boards differed from traditional boards. Interviews with CEOs and two directors of 14 HA companies revealed that alignment with HA purpose and values, not just business experience and performance, is viewed as essential in CEO and board member selection just as it is in the identification and development of next generation leaders. To our surprise, in all but two companies, these board practices had evolved implicitly.

Author Abstract

Over the past years, forward-looking CEOs have adopted a higher-ambition approach to strategy and leadership. These higher-ambition CEOs are driven by a sense of purpose that goes beyond achieving financial success. They aspire to build organizations that succeed in the marketplace by earning the respect, trust, and, commitment of their people, customers, communities, and investors. Higher-ambition leaders commit to simultaneously meeting financial targets and fulfilling broader needs in society. They are also realistic about the challenges. Our research finds that the board practices of these companies differ significantly from traditional boards.