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So, the old story of business is no longer useful.
The good news is that a new story has been emerging for sometime.
There are multiple ways to set business in socienty so that we can make business
better. What are the elements of this new story.
First of all business has to be an integral part of society we got to see it
like that and we have to expect businesses to act that way.
We've got to engage in a conversation, of which hopefully this is a part.
to help, see how businesses can help societies solve their problems.
We've got to stop separating business from ethics.
When business ethics becomes not an oxymoron, a contradiction but a pleonasm.
Two words, you put 'em together, they're redundant, like true fact will fix the
problem. We've got to have a more robust idea of
what makes people tick. More than just money and self-interest.
So, let me try and articulate five principles that are important in this new
story. The first principle is that business is
primarily about purpose. Get the purpose right, money and then
profits follow. It's not purpose or profits.
It's purpose and profits. The second principle is that any business
creates and sometimes destroys value, yes for shareholders.
But also for customers, suppliers, employees and communities and society.
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Building and leading a business involved getting these interest going in the same
direction, not in different directions. The third principle is that capitalism
works because we're complex creatures, we have many needs and wants.
We can cooperate to create value for each other.
In fact, anthropologists tell us, this is what makes human beings unique, is our
ability to use language and cooperate with each other.
We act for selfish reasons, but sometimes we act for others as well.
Incentives are important, but so are values.
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The fourth principal, is that most people tell the truth and keep their promises
and act responsibly most of the time. Honestly, the world simply wouldn't work
very well, if this weren't true. We need to expect that behavior in
business. Rather expecting that people are greedy
and self interested all the time. And the final principle is that, business
and capitalism are frankly the greatest system of social cooperation and value
creation we've ever invented. I'm going to say that again because.
That's a little different then the way we normally think about it.
Business is the greatest system of social cooperation we've ever invented.
Competition's important in a free society it gives people options.
But the engine of business and capitalism is how we cooperate together to create
value for each other. We can cooperate together to do things
that no one of us can do alone. We need to tell the story.
Need to expect it of our businesses and our business people and we need to start
businesses that are based on this new story.
The good news is I believe we can see this new story emerging all over the
world, for instance. Think about Finland.
A country I like to, visit. Even in Finland, there are companies
enacting this new story. A company called Auto Combo inaugurate an
acid regeneration plan. They say environmental aspects of our
operations are important to our stake holders.
Nokia a finish company, most reputable company in the [INAUDIBLE] countries
Brazil, Russia India, China. A company called TuuliWatti invested $400
million 400 million euro in wind power generation.
And other Finnish companies are developing new, exciting technology that
put their businesses firmly inside society.
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There's a new story emerging in China. Companies like Tencent, that's a social
media company, Landwasher an environmentally friendly they make water
free flush toilets. Goldwyn Science and Technology that does
offshore wind farms. BGI a company that does genetic
sequencing are part, are just a few of the companies that are trying to
implement again various parts of this new story of making money and making society
better. BYD a company that help pioneer bringing
electricity to public transportation. these buses that they make are tested in
China, South east Asia and Europe in the Hertz Care Rental at the LA airport will
begin to use these these bu, these buses. Green Box is a Chinese car company that
is pioneering safety standards for children's clothing.
Now, all of these companies don't always get everything right.
That's not what I'm saying. I'm not suggesting these are saints and
others are sinners. I'm suggesting they're partially trying
to make money and make society better. And, in the sense, they're leading the
way of this new way to think about business and society.
And of course in, in, in, in the US, companies like FedEx.
pushing energy, efficiency, moving the entire industry to a faster pace to
minimize the environmental impact. A company like REI, an outdoor products
company, through volunteerism their philanthropy and their responsible
business practices. connecting people to the outdoors
promoting the outdoors and natural places to live and play.
Companies like Steinway and Sons, the Piano company, building the world's
largest parabolic solar installation to operate.
an environment that's the perfect community temperature for making pianos.
This is happening all over the world. Even just a few of the examples of the
news story and that's the good news. What I'd like you to talk about in the
discussion forum is, find some headlines from your own country.
About how these new principles of business are being implemented.
What are some examples of companies that are more engaged in your society?
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R. Edward FreemanUniversity Professor; Elis and Signe Olsson Professor of Business Administration
