I have been inspired listening to R. Edward Freeman, Professor at the Darden Business School, University of Virginia talking about the virtues of ‘conscious capitalism’. He talks about a new emerging narrative challenging the dominant, traditional view of what business is for and how it should be conducted.
Professor Freeman talks about business creating value for customers, employees, suppliers and communities as well as shareholders … and the greater the value for all stakeholders, the more successful the business! Business and capitalism, he argues, represent the greatest system of social co-operation and value creation ever invented. Competition is important in a free society as it creates options. But the engine of capitalism is value creation.
Some really strong messages here for social enterprises and local communities across the land!
Listening to the Professor, it is tempting to reduce the ingredients of ethical business down to a polarisation between shareholder value and stakeholder value. Should we see it as a choice effectively between making money for a privileged few on one hand and, on the other, seeking out the best interests of all those involved and affected by a particular business activity?
Certainly it is easy enough to dismiss the idea of creating value for a small number of shareholders as pretty uninspiring and somewhat unimaginative. But should the idea of creating value for all stakeholders associated with a company – customers, employees, suppliers and communities – be seen as unusual? After all, is it anything more than a stylised expression of the kind of mutuality and positive social interaction which makes us human?
Possibly not. But it is inspiring to consider that business and ethics, rather than being ‘mutually compromising’are actually ‘mutually reinforcing’!
All businesses might usefully take a leaf out of John Lewis’s book, the Partnership’s declared ultimate purpose being “the happiness of all members, through their worthwhile and satisfying employment in a successful business”.
So let us be inspired – let us seek and create stakeholder value and in the process inspire ourselves and others still further to be all the more human – and do business for good as well as do good business!