After leading several successful transformations in Italy, Corrado Passera founded illimity with the aim of identifying and supporting innovative businesses that would be otherwise left without financing. With a wealth of insight on authentic and responsible transformation, Corrado provides insight on what it takes to deliver as a Purposeful Organization.
As a leader, what does purposeful doing mean to you?
Despite being committed to their jobs, many people aren’t able to identify a purpose in what they do. I consider myself a DOer, which means that purpose fuels my activities and decisions. It is about broadening the scope of your activity in order to not only be useful to your company, but also to the larger community.
People are often committed to their jobs but do not necessarily see a purpose in what they do. As a DOer, purpose is a strong booster for your activity because you also have evidence that what you do is useful to you, your company, and the community. Throughout my career I have tried to marry the two components: shareholder perspective and economic results with community purpose evaluation.
Can you tell me a little bit about your professional career and what you do and want to achieve at illimity?
When I was running Olivetti, the company was a symbol of a different style of management. I decided to take on the role of CEO because I could not bear the idea of losing Olivetti to bankruptcy. Although it took tremendous effort to transform an IT company into a telecommunications one, we came out on the other side as a symbol of responsible capitalism.
At the end of the 1990s I stepped in as CEO of Poste Italiane. It was seen as a cliché of Italian inefficiency at that time. I wanted to create an example of value in public-owned companies by transforming the post office through a purpose-led effort. Later, while leading Banca Intesa, I focused on the community purpose of the financial sector. Ideally, banks’ success should be measured by their contribution to the development of a country. With the creation of Banca Prossima, a non-profit bank, we developed one of the most prominent examples of a bank focusing on the social sector.
Last year I founded illimity, a new kind of bank which strives to contribute to better growth in Italy. We focus on companies with potential to grow or be restructured. While other banks don’t provide financial means for these purposes, we do. We aid second tier small and medium-sized enterprises (SMEs) and those who are unlikely to pay (UTP) with our investment. We want to be “utile” (In Italian it means profitable and useful).
When you say illimity aims to help SMEs and UTPs generate profits and be useful to the community, how does illimity measure and assess impact?
We know that many companies in Italy have the potential to grow more but don’t have the financial means to do so. In order to identify the hidden value of companies that have faced hardships in the past, we apply data science techniques to go beyond industry and financial metrics and include past errors.
We measure our impact through the successful restructuring of companies, by creating value and giving them a second chance, we prove that we are not only profitable but useful.
Would you argue that SMEs or family-owned companies are more aligned to their purpose than large corporations?
Purpose is not monopolized by any category of company. There are large companies with a clear purpose and others that are just sharks. There are SMEs with a clear long-term purpose and others that focus on trying to maximize shareholder results.
Today, purpose has become a buzzword. Others are finally joining a movement, of which I consider myself an active participant, that has aimed to prove for the past 30 years that a shareholder-oriented capitalism is ultimately self-destructive.
In the last 20 years, particularly in Anglo-Saxon countries, the debate regarding which kind of economic system we need has been won by the New Liberals. Now we are witnessing a mindset shift to what I and like-minded leaders have emphasized for years. Whether this shift is sincere is yet to be seen.
Are you referring to the letter of the Business Roundtable that was signed by 181 CEOs?
Yes, in the letter they state that our responsibility is not only to our shareholders. It’s like saying water is wet. Frankly, it seems that they are just attempting to cover their backs after decades of behavior ruled by short-term profit targets.
More and more companies claim they will change their bonuses from a 100% performance-based system to a system that also reflects social, environment and governance indicators (ESG). How do you view this discussion?
I am very skeptical, mainly because most companies are still in the initial stages of discussing what framework to use in order to measure ESGs. Until then, the predominant compensation scheme will continue to be driven by shareholder value.
As a word of advice to our broader community, in your opinion, how can we make sure to bring purpose to life?
Purpose in itself is an empty word. We have to fill the concept of purpose with something very real. We have different stakeholders managing a company. There are the shareholders who have given us the capital. There are the employees. There are the suppliers and the community at large. My advice to those shareholder-oriented companies is this: prove that you are investing in your people. Show us how much you put into training, job enrichment, welfare, smart work, and participation in company life. Is your company making your employees richer? Not from an economic point of view but a human point of view. Are you making their lives better? Are we making their family lives possible? Are you guaranteeing gender-equality? These are the questions that need answering and the purpose needs to be emphasized.