Positive Impact Blog

Thought provoking insights for change makers

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The Need to redefine the purpose of Business

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In future, organizations no longer represent a place of work for a disconnected workforce who left their hearts and soul at home and work solely for their own personal benefit and enrichment.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.


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The need for a different state of mind – moving beyond capitalism

A succession of global economic crises provoked by a dysfunctional financial sector, national as well as regional co-dependencies of debt and currencies fluctuations have demonstrated that we cannot count on the invisible hand to steer markets. They no longer behave as they should. A call for a new form of capitalism replacing the neo-classic approach has highlighted alternatives such as conscious capitalism.

The underlying question is one of trust. We don’t trust the systems we have built, we know that we cannot create what is best for the world within the existing structures, and we are afraid of stepping outside of the existing boundaries of what is known and established. We don’t trust in our own ability to create. Futurist[1] and systemic thinkers have demonstrated to what degree we are unable to develop solutions while at the same time recognizing all unintended consequences of such solutions. While it is questionable if the current financial system was created without an understanding of the extent of its implications[2], it is safe to assume that in an increasingly complex world, we will be less and less able to foresee the consequences of the actions we will take. We have entered into a mode of experimentation, yet we have not admitted this and continue pretending what we do is responsible action.

What we need is to assume a different state of mind. The French expression “état d’esprit” reflects this better, a state of Spirit rather than a state of (mental) mind. A state in which we are connected with the world, where we are in resonance with the world, so that we can create from within that source of unlimited potential, what is right for the large good. Everything we were taught and told has resulted in a fundamental disconnection from this Source, resulting in a situation where we – the most evolved race on the planet – feel like victims caught in overwhelmingly powerful and complex system within which we at best survive. It is us who have created these systems and it is us who will need to adapt or replace these systems to create something that is adequate for all living members of our planet. There are some major obstacles on this path, power, survival instincts and fear not the least of them, yet unless we – as a human race – overcome these, we will continue co-creating a world that serves only a very small minority, while destroying our habitat and creating suffering for a large majority of our fellow global citizens.

Conscious capitalism is one of many expression of such an elevated state of Spirit. It redefines the role of business beyond serving solely the shareholders as defined in the agency theory and Friedman’s claim that “the business of business is business”. It expands business’ role to serve society and the planet by embracing a more holistic and balanced responsibility towards all stakeholders. Supporting this claim, some demand that organizations become “a human community of belonging”[3].

The Inside Job Movie

[1]        Joel Baker: “The implication wheel”

[2]        Charles H. Ferguson: “The inside job”, documentary film, 2010

[3]        Dr. Roger Steare, Case Business School, London

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Social and environmental changes are demanding new solutions in the coming decade

The world is at a turning point. Social and environmental changes are demanding new solutions in the coming decades. In 2007, humanity’s footprint exceeded the earth’s bio capacity by 50%. By 2025, we will need the equivalent of 2 planets to sustain the consumption pattern of global citizens. Business is considered to be part of the problem, yet business leaders often don’t know how to embrace a sustainable and responsible approach to getting things done.
Business schools play a critical role in assuring that the world has leaders in business and beyond who are capable of understanding, embracing and addressing the challenges the world faces today and in the coming decades. New challenges require new competences. New competences arise from assuming new perspectives and envisioning new solutions. New challenges also require new leadership skills. Subject expertise needs to be complemented with the ability to drive change and implement new solutions across organizational boundaries.

BSL takes these challenges very seriously. We consider it our key responsibility to drive innovation in business education towards a sustainable and responsible leadership in business and any other organizations active in the global scene today. As a co-founder of the World Business School Council for Sustainable Business (WBSCSB), we work on a radically new vision for what business education should or could look like in the future. The 50+20 Project, a collaborative effort of the WBSCSB, GRLI and PRME involves more than a dozen engaged thought leaders and deans from around the world, seeking to deliver both a vision as well as emerging new practices. BSL and the University of St. Gallen are launching a new executive Diploma in Sustainable Business as of September 2011, one of the concrete emerging actions to achieve this objective (more under programs).
We are open to collaborate with any interested organization, from business education to business to civil society and thought leaders in other relevant domains. Please feel free to contact me if you see how we can do better, how we can work together to make this world a better place.