Losing confidence and changing business are two different things
By Walter Baets
According to the Reputation Institute 2012 survey, South Africans are losing
confidence in the leadership of the private sector. Great. Now we can start to have
the kind of robust debate this country, and the world, so badly needs, about the true
purpose of business. And hopefully this will all amount to something important and
meaningful.
The findings in the Reputation Institute survey tell us two things. Companies can no
longer pretend they don’t have, and aren’t expected to have, a positive role to play in
the general wellbeing of a society. And people are beginning to notice that business
has had, for a crucial part, a negative impact.
It’s almost as if overnight people, have started to see through the cloak of PR and are
now demanding more from business. All of a sudden it’s clear where a large chunk of
the blame lies for the situation we find ourselves in.
The world is in trouble. The seas have been poisoned. Masses of people have been
exploited for the profit of a few. Europe is collapsing. One doesn’t worry that we will
go the way of Zimbabwe anymore; the slow decline into obscurity, where there is still
time to pull up on the stick and pick a spot for a soft landing. No. The worry is that we
go the way of Greece; a sudden draining of blood and complete shutdown followed
by a raging internal combustion leaving nothing but ashes.
People have lost their patience with business and its exclusive focus on shareholder
value. And so the time has come for a serious discussion that, if handled correctly
and if followed by action, could revolutionise business.
The problem with a survey like this is that often it leads to the same discussions
about ethics. And my experience has been that fundamentally, people are ethical at
home, or alone with themselves, but as soon as they enter the business environment
they change. They become unethical because the environment demands it of them.
The corruption is in the design; in the model.
It is therefore important that we change the model. While the Reputation Survey is
based on perception, it is important that businesses do not respond simply by
seeking to shift that. Perception is, after all, a malleable thing with the right marketing
budget. If the discussion goes the usual way and the aim is to change nothing but
perception, then corporate marketing teams will be going mad to green and social
wash what they do. They’ll put forward very agreeable, convincing leaders to sing
about how their respective companies positively influence the socio-economic
standing of a country. But ultimately nothing will change. A few people will be
dragged out in front of the crowd for unethical practice. There will seem to be a shift
in business, but the shareholder will, by design, forever be put ahead of society when
the time comes to enjoy the spoils.
And herein lies the interesting opportunity. If we steer clear of the easily-manipulated
ethics/perception debate, we can start to talk honestly about business, to really look
at it, dissect it, keep it naked in our critical scope and truly figure out what it is, how it
works, what its purpose has been, and what value it brings to the world. Then we can
start to redefine it; change how it works; give it a new purpose; and rethink what we
consider to be “value”.
For me, business today should not be about making money. It should be about
creating value and not just for a favoured few shareholders but for all stakeholders.
That is a huge shift in thinking, and could lead to an astonishing shift in the business
model. The problem is none of us, including business schools, have any idea of what
this alternative really looks like.
It has been called inclusive business, but how would it work? What needs to happen?
Who needs to be involved? How will it be sustained?
The space for innovation in terms of finding new inclusive business models that
actually create value for society at large, and possibly even starts to tackle some of
the tremendous social and environmental problems that confront us, is wide open.
This is the challenge for us now, to define a new road, a new role for business.
If South Africans are losing confidence in business leaders, it’s because they assume
that the right leader will make all the difference. That is true if that leader has come to
dismantle a faulty yet extremely resilient business model, and to explore more
innovative business models that create more value for more people. But it is not true
if that leader is merely there as a PR decoy to make subtle changes in people’s
perceptions of business, while nothing fundamentally changes.
Walter Baets is the Director of the UCT Graduate School of Business.