Better, faster, cheaper is no longer enough.

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The threat and opportunity of society’s new expectations of business.

Guest post by Quentin Millington, Founder at Marble Brook.

Making money is no longer enough to keep a company in business. Organisations have a role in lessening the climate and social problems we face. To thrive, leadership teams must align what they do with society’s evolving standards of good versus harm.

For decades now, and with the blessing of Milton Friedman – the 1970s economist who was obsessed with shareholder value, companies have been left alone to make money and generate returns for investors. As for how this money was made, the standard in most industries has not been high.

Image by Adam Derewecki from Pixabay

Provided they did not break the law, abuse their employees or harm their customers, companies were free to operate in a bubble of products, customers and profits. Few individuals had expectations that for-profit organisations ‘do good’ – that was the job of charities.

And citizens typically looked toward governments for solutions to big questions such as health, security and employment. Today, however, people are more and more aware of how business is reshaping the world we live in. Most of us see that trade brought wealth and opportunity.

But we also recognise how relentless growth has created real harm. Industrialisation brought greenhouse gases; capitalism has fuelled unhealthy lifestyles and a widening gap between rich and poor.

Business and environment are inseparable

One has only to pick up a newspaper to see how the corporate bubble – in which businesses make products, which they sell to customers, whose money yields profits – is inseparable from our natural and social worlds. All businesses coexist with Nature and consume and / or add to Earth’s resources. Similarly, the products companies offer are made by, and for, people – they help to make societies and individual experiences what they are, for good or bad.

Image by Chris LeBoutillier from Pixabay

In the past, changes within the natural and social ecosystems hardly disturbed the day-to-day work of maximising profits. Now, these two ecosystems are starting to exert ruthless influence over commercial fortunes.

Nature and society are in turmoil

Earth is struggling. At the current rate, global warming will reach 1.5 ̊C above pre-industrial levels between 2030 and 2052 (IPCC). Even 1.5 degrees will lead to dying oceans and draining freshwater, wildfires and floods, hunger and heat-related death, along with conflict and economic decline. Society also faces uncertainty. The widening gap between rich and poor sees families struggle to put food on the table.

As extremism tears apart Western democracies, political chaos becomes the norm. Institutions and trust are crumbling and social unrest rises in their place. Technology is re-shaping our entire world, but few outside the coders of Silicon Valley have a say in its direction. The erosion of privacy threatens our freedoms as individuals. Even our personal well-being is suffering: consumer lifestyles pose risks to both physical and mental health.

Society is redefining ‘business scandal’

These problems – some, crises already – are conspiring with greater levels of public awareness to create new expectations of business. These demands are tough, widespread and varied: a new standard of good versus harm is emerging. For example, on 20th September, employees of many companies joined the Global Climate Strike.

Image by IADE-Michoko from Pixabay

Among these were people who worked for Amazon, where internal pressure likely accelerated the company’s pledge to reduce its dependence on fossil fuels. The Federal Trade Commission’s recent US$5 billion settlement with Facebook is a penalty for the company’s violation of its 2012 order. The fine also represents society’s longstanding displeasure at how the social media giant has handled individuals’ privacy in its pursuit of advertising revenues.

We are all familiar with scandals such as Volkswagen’s ‘Dieselgate’. Companies used to find themselves in the headlines when fraud was committed or established laws broken. Now, however, business is pilloried for being on the wrong side of society’s new expectations.

Companies must think beyond money

To thrive in the future, companies have to think beyond money. The bubble of products and profits has been burst by anxiety and crisis in wider environments from which business cannot escape. Traditional approaches to strategic planning – where executives teams sought clever ways to make better, faster and cheaper products – will fail in this new world of increased transparency and accountability.

Business will have to adopt a wiser and less narrow conception of ‘value’. Impact on society and the planet now matter as much as the financials. A longer-term perspective is needed: directing too much energy to quarterly returns is to risk doing the wrong thing.

Reimagine the future of business

Evolving expectations are a chance for companies that want to do good and a threat to those still willing to cause harm. Strong executive teams – those that are flexible and intelligent enough to reimagine why they are in business – will prosper in this tough new world.

Marble Brook provides insights to large corporates on what society expects of them, challenging executive teams to reimagine the value their businesses create.

Their work positions firms to make money over the long term and also lessen the climate and societal threats to everyone’s future – issues where stakeholders increasingly hold companies to account.

The team is optimistic about a world where a business stands for both prosperity and well-being. For more information visit Marble Brook.

About the author

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Strategy and leadership adviser to complex organisations – Quentin is a former Chief Operating Officer in global banking. He brings firsthand leadership experience to the tough questions that businesses now face. Proficient in Chinese, Quentin has lived in New York, Hong Kong and Taipei. He is a member of the Advisory Board of English National Opera and a Fellow of the Royal Society of Arts (FRSA).