Harvard Business review

How Business Coalitions Can Have a Strong Local Impact

In 2010, a coalition of nearly 40 CEOs and institutional leaders, all from small cities and rural areas in West Michigan, joined forces around a regional talent-development effort called Talent2025. In working together, they hoped to be able to do something that none of them could do individually: help West Michigan become a top-20 region for employment.

To achieve that goal, they looked to the model of one of their own: Fred Keller, the CEO of Cascade Engineering, a local plastics-manufacturing company. When Keller founded Cascade, in 1973, his overriding purpose was to help people achieve their potential — with “people” meaning not only employees but also customers, suppliers, and even the citizens of West Michigan, where he had lived and worked his entire life. Profits, he figured, would be the natural consequence of a caring and disciplined business ethos.

In the decades that followed, Keller grew Cascade into what for a time became one of the world’s largest Certified B Corps — that is, a company with a public-benefit purpose backed by legal-board accountability for its social and environmental impacts on workers, communities, and society. That commitment to a people-first approach and to practicing “stakeholder” capitalism at home in their community was what prompted Keller and his Talent2025 peer CEOs to work together.

Today it’s clear they were right to think that way. Now with triple the number of members, Talent2025 businesses employ more than 20 percent of the region’s workforce. They’re using their collective clout to rally other local and state leaders to innovate in three areas: talent development (school readiness and literacy for children, and up-to-date skills training for adults); talent matching (helping companies and regional educators identify and meet employment needs); and lowering barriers to talent participation (strengthening regional childcare and transportation).

From the outset in all of these efforts, Keller encouraged a focus on diversity and inclusion. At Cascade, he worked to build a culture of belonging for people of color, LGBTQ employees, and those with disabilities, and he developed a “second chance” career track to hire and promote individuals returning from prison. His work inspired Talent2025 to produce its CEO Commitment for Diversity and Inclusion, which aims to create a tipping point in the region for welcome a diverse workforce. To date, two-thirds of the group’s members have signed on.

Talent2025 is not alone in these sorts of efforts. During the past decade, CEOs around the country in similar regional groups have embraced a “solidarity” approach to solving local problems by engaging with community leaders in a two-way dialogue about change. Groups cast a wide net around sustainable growth and talent-related issues. Among their varied initiatives, Vital Communities tackles workforce housing shortages in Vermont and New Hampshire; the Partnership for Rhode Island invests in leadership training and on-site health clinics for the poorly performing Providence public schools; the Greater Houston Partnership leads Houston’s energy transition strategy for a more efficient and sustainable low-carbon future; and the Tampa Bay Partnership advocates for carbon-emissions reductions and socially equitable adaptation to sea-level rise. A small number of these efforts have been documented, among them the decades-old Itasca Project, in Minneapolis-Saint Paul.

Five years ago, with the support of the nonprofit Higher Ambition Leadership Alliance, with which we are both affiliated, we decided to learn more about best practices in this burgeoning new collaborative arena. To that end, we interviewed CEOs and directors at more than 40 place-based business coalitions all around the country, and we launched a peer-learning network that meets several times a year. This work has yielded all sorts of information and insights — and, notably, it has allowed us to identify three practices that we recommend regional coalitions follow to maximize their chances of success.

Develop a strategic focus that blends company and community goals.

Because business leaders have no formal power to drive social change, when they want to rally other business leaders and local stakeholders to their mission they have to rely on their powers of persuasion, rooted in their personal credibility, connections, and ability to craft a compelling vision for change.

The first step in doing so is to “map the gifts and gaps,” by gathering data and doing outreach to local stakeholders to establish a shared picture of the community’s unique strengths and needs. That’s what Fred Keller and the founding CEOs of Talent2025 did when they created the West Michigan Talent Assessment and Outlook report. Now in its eighth year, the report covers K-12, higher education, and workforce-development needs for West Michigan’s 1.6 million inhabitants, accompanied by an annual dashboard of regional educational, employment, and labor-force metrics. The group uses the data to drive a range of programs that train people with skills that companies need.

Making the strategic case for local prosperity also means reframing complex social problems as untapped possibilities for strategic innovation. Bob Rivers, the CEO of Eastern Bank, adopted that approach when he launched the Massachusetts Business Coalition for Early Childhood Education. “When I talk about these issues with business leaders,” he says, “I always start with the moral imperative, but I don’t spend much time there, because we might not agree. What really hits home is when business leaders see the synergy with their organization’s strategic objectives.” Rivers and others in the coalition point out that improving access to early childhood education would be not only the right thing to do socially and morally but also the smart thing to do, because it would help local organizations attract and retain talented workers who are parents.

Effective coalition leaders also need to link their high-level vision to on-the-ground action by identifying a small number of tangible, high-leverage goals, selecting a handful of metrics for measuring progress toward them, and communicating relentlessly about progress — a process sometimes known as “sensegiving.”

The CEO Leadership Alliance of Orange County (CLA-OC) is doing so by promoting its region as a hub for tech-enabled talent that is trained in advanced manufacturing, IT, and healthcare technology skills. Like Talent2025, CLA-OC mapped the county’s workforce strengths and gaps by collecting never-before available data on the development, attraction, and retention of talent. The coalition devised five talent-development strategies and set quantitative goals for each, aiming to impact 20,000 students, 75% whom are students of color. CLA-OC links small wins on its goals with regional-level indicators of progress on talent and growth in Orange County’s innovation economy.

Execute on the inside and the outside.

To drive inclusive community prosperity forward, the CEOs involved in regional coalitions have to focus on inclusivity within their own walls. Talent2025 catalyzes positive peer pressure among its members with an annual DEI company benchmarking survey, accompanied by a public commitment to improving at least one of these four areas: governance; senior leadership and management; workforce; and supply chain. Talent2025 supports members with tailored learning sessions on inclusive leadership development and tools for improving organizational DEI practices.

For any regional coalition to succeed in designing new solutions to challenges, multiple stakeholders from different social sectors have to collaborate. And CEOs — by virtue of their seniority, economic power, and personal credibility — have a unique power to bring these many stakeholders to the table. Once assembled, the task is to activate enough collective curiosity in the group to overcome stakeholders’ siloed thinking and tendency to fall back on worn arguments and favored solutions.

In this way, CEO groups can guide stakeholders to agree on a common agenda that transcends political dogma and drives pragmatic solutions forward. The trick is for everybody involved to build trust with the wider stakeholder community and advocate for change that everyone can get behind. Most groups work toward this goal by making clear — through explicit policies — that they will not support or oppose individual candidates for elected office, and that they will advocate only for issues, through legislation and referenda or by lobbying on agency rulings.

When a politically diverse group of CEOs call on state legislatures to provide funding for social projects that are linked to business interests, their combined advocacy can cut through partisan gridlock to drive inclusive prosperity forward.

Design a culture of inclusive and generous leadership.

The best local efforts are fueled by CEOs who are willing to commit to the hard, slow work of social change. The challenge is to create a culture that engages CEOs for the long haul and gives them a platform to make a meaningful contribution and expand their positive legacy. Brad Hewitt, the former chair of Itasca and retired CEO of Thrivent, viewed his leadership job as sustaining a collective culture of generosity and volunteerism to which CEOs would want to contribute their most limited and precious resource: time.

CEOs like to spend time with peers who can think strategically, make decisions fast, commit resources, and exert leadership influence. Maintaining a high-level community of senior leaders in this way has important benefits: It creates positive peer pressure and keeps CEOs interested and engaged. That said, any such community has to ensure that that it is inclusive, because it will be working on issues that require collaboration, buy-in, and trust from many stakeholders. The CEOs in these communities cannot be seen as elite power brokers intent on pushing a narrow business agenda.

To be more inclusive, effective coalitions are doing more to hold themselves accountable to their communities. They have shifted into a humbler listening mode, reaching out into the community to understand what local leaders have been trying to tell them all along. As Peter Frosch, of the Greater Minneapolis Saint Paul Economic Development Partnership, says, “We’ve heard loud and clear from the community: ‘Nothing about us without us.’”

They are also reviewing their membership and governance structures, asking how to preserve the culture of high-level senior leadership that makes them effective while also ensuring that local stakeholders have a voice and some sort of seat at the table. Some groups have created new board seats reserved for younger high-potential leaders to achieve greater gender and racial diversity, as the Boston-based Alliance for Business Leadership has recently done, and as the Tampa Bay Partnership is now putting in place.

In successful coalitions, CEOs directly lead the work. Coalitions can struggle with the tendency to “corporatize” their work — hiring staff to lead initiatives and devolving CEOs from active leaders into funders, which can erode a coalition’s spirit of CEO leadership generosity. To mitigate this risk, Itasca, Talent2025, CLA-OC, and most other successful groups have a few informal rules in place: Projects can move forward only if one or more CEOs step up to lead them, and member meetings must be attended by CEOs, not their representatives. As Hewitt says, “Generosity is taught by example. CEOs need to personally lead the way.”

Coalition staff and boards, for their part, have two important roles to play.

In one, they act as enabling leaders, whose functions include: supporting and growing CEO engagement through frequent personal communication and regular check-ins, engaging in small peer-group conversations and the sharing of case studies; advising member companies on how to boost performance “inside the walls”: and personalizing connections to influential policymakers. They also function as architecting leaders, whose function is to weave a coalition strategy out of the needs of the community, the higher-level goals and priorities of the coalition, and the individual passions of the member CEOs.

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It used to be that when CEOs got involved in community projects, they used the “charity” model, which involved donating money to fix problems. Today, however, an increasing number are embracing the “solidarity” approach, which involves partnering with community leaders in a two-way dialogue about change. In these regional coalitions, they’re inquiring more deeply into how they build on their communities’ strengths, riches, histories, and unique assets. In short, they’re doing everything they can to maximize the potential of a particular place and its people — an idea that Fred Keller remains as committed to today as he was 50 years ago.

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