The evolving role of business in society
by Ann Lamont. We must use these unusual times to examine the role of business in our society.Tuesday, 26 Jan 2021
by Ann Lamont. We must use these unusual times to examine the role of business in our society. COVID-19 is both a challenge and an opportunity for business to step up and evolve the consciousness with which it operates. In this context, the World Economic Forum has called for a ‘great reset’ to “build a new social contract that honours the dignity of every human being”; and I would argue the dignity of all life, not just human life.
We have seen through the pandemic that many corporates, both in South Africa and globally, have stepped up to help offset some of the pandemic’s impact and in turn, received substantial consumer awareness and support. From L’Oréal producing sanitiser, to Lego providing comics to children in lockdown in Wuhan, we have seen some corporates rise to the needs of the world. This evolving role of business is not new and indeed a growing strategic trend among innovative and successful business has been what is termed a shared value approach.
The definition of shared value as defined by Michael Porter of Harvard Business School, is “policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates”. Shared value is a win-win approach in which both business and society receive a comparable benefit. This approach is colloquially referred to as ‘profit with purpose’.
I am deeply committed to shared value as a business strategy, but as I observe the general discourse around shared value, I am concerned that there are three crucial issues that need to be addressed if we are to evolve this approach to truly create the great reset and more fundamentally unlock businesses potential to shift inequality and planetary sustainability.
Core organisational strategy
The first is that shared value or purpose-led work, as a concept is not something that sits to the side of a business in Corporate Social Investment or outreach which then, in turn, gets flaunted on TV networks to showcase the success of a brand. Shared value, as a strategy, is core to the strategy of an organisation. It means that every aspect of your business needs to look at how it can be leveraged to have a greater social and environmental impact and needs to be looked at holistically with commercial strategy and be integrated into core budgets.
Generally speaking; to leverage business assets in this way is much more effective than leveraging conventional CSI. In the same way that we have evolved beyond having a digital strategy that is separate from the core operations of the business; we need to evolve our way of thinking about purpose and shared value. The world where digital can be separated is over, as is the world in which business has no purpose beyond profit. We live in a world in need of purpose and only those who can truly provide purpose in a way that is integral to strategy will thrive.
Boundaries and ethics
The second issue around a shared values strategy is in setting the boundaries and scope of the ethics an organisation wants to adopt. There are very few businesses, if any, which do not do any harm. In applying a shared value approach, an organisation needs to be truly clear about which ethical boundaries will be put in place and which values applied. For example, a commercial property company needs to question if they will be willing to rent office space to arms companies, tobacco companies, oil companies, or other organisations whose products cause societal harm. Similarly, a bank that is applying a shared values approach would have to consider who they are willing to loan money to.
A significant shared values organisation with whom I have a long association disinvested from all extractive industries. It is all a matter of degree. Adopting a shared values approach cannot be taken lightly and the question of degree needs to be fully discussed, and boundaries created around what will and will not be done. This is not suggesting that the organisation needs to become the moral police, but each organisation needs to decide what its defensible ethical line is. Consumers can tell when brands are being inauthentic. Take the infamous Gillette ad which attempted to address toxic masculinity and ended up receiving substantial backlash given the inconsistency of this ad and other Gillette ads on the subject. What could have been a poignant and needed reflection on the role of men in our society was perceived as a brand trying to cash in on progressive markets immune to its conventional advertising.
Profit with purpose thinking
Lastly, one of the issues in applying shared value or philanthropic giving in general, is that organisations have often made profit off a system that is inherently unfair, or at the very least has been bastardised, and which promotes consumerism, inequality, and growth at all costs. It is interesting, in the context of the COVID-19 pandemic, to see which organisations are willing to fundamentally reconsider how they operate and push the boundaries.
In many respects, it is the leading elite and today’s largest organisations which are leading purpose-driven philanthropy/organisations but equally, it is these organisations which have benefited from a system designed to drive inequality and environmental degradation. In the words of Anand Giridharadas, Winners Take All: The Elite Charade of Changing the World, it is increasingly becoming a discussion which is not about what you give; but rather what organisations, their shareholders and executives are willing to give up. I believe the cutting edge of profit with purpose thinking is going to come from those organisations that will rise to a fundamental reset or a shift in our core economic and political systems. Some have started to do this by reconsidering who and what we value in an organisation through executives taking pay cuts. For the majority however this is simply too complex, and their focus is to do what they can from a shared value perspective within the existing economic systems. I am in no way denigrating this, it is critical, but those organisations that have the courage to address our underlying systems will truly lead the evolution of businesses’ role in society.
As Brian Stauffer wrote in the New York Times, “We can no longer wash our hands of our responsibility for what people do with our products. Yes, profits are important, but so is society. And if our quest for greater profits leaves our world worse off than before, all we will have taught our children is the power of greed. We need a new capitalism.”
Ann Lamont has spent her career supporting individuals, organisations, and society to find solutions to the complex challenges of our times. She has significant business experience and has been an investment banker at Rand Merchant Bank; strategy consultant for Monitor Company; and until recently an Executive Director at EY. She has with partnered recently with DiiVe, a global transformational learning organisation focused on equipping young people with 5IR capabilities and DiiVe Collective, a strategy consultancy focusing on Shared Value. She is a Synergos Senior Fellow and Aspen Global Leadership Network Fellow.
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