Finding Purpose and Managing Stakeholders: The New Story of Business

Summary

The speaker reflects on the evolving perception of business, emphasizing the need for a new narrative where purpose and profits coexist. He critiques the outdated view of business as solely profit-driven and advocates for a holistic approach that includes stakeholders, ethics, and humanity. He highlights the potential for business to address global challenges like inequality and climate change. By adopting this new mindset, the speaker believes businesses can be both financially successful and socially responsible, ultimately creating a better world.

Takeaways

• 😀 Stakeholders have become increasingly important, although the speaker believes people are focusing on them for the wrong reasons.
• 💡 The speaker's academic journey started with idealism, earning a PhD in philosophy and ending up in business ethics, often met with skepticism.
• 🔄 Business is undergoing a conceptual revolution, with a shift from solely profit-driven models to a more purpose-driven approach.
• 💼 Business isn't just about profits—it's about purpose as well, similar to how red blood cells are necessary for life but not the purpose of living.
• 💰 The speaker emphasizes that profits are essential for business, but maximizing shareholder value should not be the sole focus.
• 🌍 Business is embedded in society and must address relationships with institutions like healthcare, education, and government, while also considering environmental impacts.
• 👥 Stakeholder and shareholder value can coexist, as businesses create value not just for investors but for customers, suppliers, employees, and communities.
• 🤝 Businesspeople should be seen as complex human beings, driven by more than just self-interest, blending personal, moral, and economic motives.
• ⚖️ Business and ethics must be intertwined. As long as business ethics is a joke, real progress is unlikely.
• 🔑 The speaker concludes with optimism, suggesting that business can solve societal problems like inequality, climate change, and democratic challenges, as long as we strive for a better version of it.

Q & A

What does the speaker believe about the current perception of stakeholders?

The speaker believes that while stakeholders are now receiving attention, it might be for the wrong reasons. However, they have been discussing stakeholders for 40 years, even when no one cared initially.

Why did the speaker pursue a postdoctoral position at Wharton?

The speaker ended up at Wharton because their girlfriend (now wife of 42 years) was there, demonstrating a personal reason behind their professional move.

What conceptual revolution does the speaker believe we are on the cusp of?

The speaker believes we are on the verge of a conceptual revolution about business, which, if done correctly, could lead to one of the greatest ages for humankind.

What is the 'old story' of business, according to the speaker?

The 'old story' of business is that it’s primarily about money and profits, with a focus on outcompeting others and maximizing shareholder value.

How does the speaker critique the common view of business ethics?

The speaker humorously notes that when they mention teaching business ethics, people often laugh, reflecting the stereotype that business ethics is an oxymoron, much like 'jumbo shrimp.'

What are some of the movements the speaker highlights that are reshaping business thinking?

The speaker mentions several movements, including CSR (Corporate Social Responsibility), philanthropy, sustainability, social entrepreneurship, Just Capital, inclusive capitalism, conscious capitalism, and ESG (Environmental, Social, and Governance) investing.

What does the speaker believe about the purpose of business?

The speaker argues that the purpose of business is not just to maximize shareholder value, comparing it to how the purpose of life isn’t just to make red blood cells. Purpose and profits must coexist.

How does the speaker view profits in relation to business?

The speaker acknowledges that businesses need profits to survive, but argues against the idea that making profits is the sole purpose of business. Profits and purpose must go hand-in-hand.

What are the five key principles the speaker outlines for the new way of thinking about business?

The five key principles are: Purpose and profits, stakeholders and shareholders, society and markets, humanity and economics, and business and ethics.

Does the speaker believe managing a business with these principles guarantees success?

The speaker asserts that there is no guarantee of success, but many studies have shown that it is possible to be financially successful while managing according to these principles. While not easy, it is worthwhile.