I was fortunate to attend a thought provoking seminar by Professor Ed Freeman, a Business Ethics professor from Darden business school in the USA. He shared the concept of ‘responsible capitalism’ as the new narrative for how business should be done in the 21st century.
This concept centres around the following ideas:
A great business is about creating stakeholder value – If businesses want to succeed, businesses must benefit different stakeholder groups – employees, communities, suppliers, customers, unions etc. For example, suppliers who are partners – you make each other better, employees who are motivated by making a difference, being good citizens in the community
Making money is not the purpose of a business, it is the outcome. – entrepeneurs start businesses because they want to change the world, not because they want to make money. It is purpose led businesses that will win.
Business is about creating value not making trade-offs. Our creative imagination is the infinite resource – enabling and developing this in people is critical.
Business is set in society and societal relationships. Therefore, the ‘old story’ driven by self-interest does not align.
Life exists in the short-term. Yet too often, we look to the long term. Our efforts should be focused on making things work in the here and now and maintaining that.
People are complicated. Many people believe that the best way to motivate is with rewards like money—the carrot-and-stick approach. True motivation—autonomy, mastery, and purpose.
My practical takeaways were the following:
- Businesses must have a clear, ethical purpose which is not about making money!
- People must live this purpose and values, not just recite the mission statement.
- Business processes, practices and systems must be aligned to the overall purpose
- Help employees understand how to live the business’s purpose and values. What does being ‘ethical’ look like in practice?
- Accept that humans are falliable and make mistakes – provide feedback to each other to help embed ethical behaviours
- When mistakes are made, focus on how you respond to the incident rather than the damage that has been done. Responding in an humble and ethical manner, making efforts to apply the learnings and grow from the experience is what is important.
- Create value for employees through being an employer of choice. Measure and manage stress so people’s wellbeing is not compromised and they can bring their best selves to work.