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The Need to redefine the purpose of Business

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Business must embrace a higher purpose than maximizing shareholder value. We must recognize that business needs to engage in a contract with society and the planet, respecting all stakeholders. The business contribution to society is measured by the value it provides to society and what price society is willing (or able) to pay for it.

The purpose of business lies ultimately in the satisfaction of having provided value to somebody and having been recognized for this service. Any employee and any manager, any leader, intimately knows that what really makes your day is the sense of having been of use, of having contributed to something meaningful, a sense of having accomplished something. There is nothing worse than meaningless work, empty of meaning and of importance to nobody.

The need of sense-making for individuals also applies to corporations. As much as an individual’s well-being cannot be enriched with monetary gains, neither can a corporation. The growth frenzy of the past half a century has demonstrated that no matter how high the earnings, it is never enough. There is always an appetite for more. We need to disconnect executive compensation from share performance and relate it to a holistic value generation of a business, i.e. a balanced economic, social and environmental value. We need to create measures that highlight and sanction business that focus on economic value generation at the expense of the society and the environment. Concerned stakeholders need to be able to evaluate a company’s performance holistically, not just financially.

In future, organizations no longer represent a place of work for a disconnected workforce who left their hearts and soul at home and work solely for their own personal benefit and enrichment. As employees transform into co-owners and current business practices are being overhauled, the reflective capacity of organizations enables new strategic options and orientation.

Author: Katrin Muff PhD

Dr. Katrin Muff is Director of the Institute for Business Sustainability in Lucerne, Switzerland and Professor of Practice at the LUISS Business School in Rome, Italy. She consults leaders and boards in business sustainability and strategic transformation, and runs an executive program together with Thomas Dyllick. Her book “Five Superpowers for Co-creators” provides insights about issue-centered multi-stakeholder processes. She brings 20 years of international strategic and general management experience in Europe, Australia, North America and Russia and a decade of leadership in business education. www.KatrinMuff.com

One thought on “The Need to redefine the purpose of Business

  1. Whilst global consciousness has been incessantly emerging over the last decades today I wish to connect Dr Muff’s thoughts with the findings of http://www.triballeadership.net.