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The Business of Building a Better World

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The Business of Building a Better World

The Leadership Revolution That Is Changing Everything

Berrett-Koehler,

15 min read
7 take-aways
Audio & text

What's inside?

This passionately rendered collection of essays sketches socially and environmentally conscious business models for the future.


Editorial Rating

9

Qualities

  • Bold
  • Visionary
  • Concrete Examples

Recommendation

In this collection of 17 essays authored by 29 prominent scholars and executives, editors David Cooperrider and Audrey Selian present business leaders with a multi-pronged, urgent call to action. They argue passionately that business contributed to the existential crises facing the planet, and it must be part of the solution. Their forward-looking insights push beyond the purely conceptual realm of emerging management theory. They chart a path toward humane, collaborative, sustainable business models that support people and planet – while turning a healthy profit.

Take-Aways

  • Business helped bring humanity to the brink of disaster. It can and must be part of the solution.
  • For too long, firms have lived by the “shareholder-is-everything” doctrine.
  • Pushback has accelerated among environmentalists, consumers and business leaders.
  • Revolutionary change has upended and reinvented the world in the past; it must again.
  • A strong economy needs healthy businesses. Worthy firms contribute to a thriving society.
  • Firms that do good, do better.
  • The world needs multiple, massive solutions – now.

Summary

Business helped bring humanity to the brink of disaster. It can and must be part of the solution.

The survival of the species depends on decisions made by today’s citizens, governments and businesses. Unfortunately, the global business world continues to feature scant diversity of gender, appearance, age or thought at senior levels. It perpetuates the status quo and rarely benefits society or the planet. Executive suites and boardrooms still mostly feature older, white men who perform social responsibility theater – virtue signaling – while engaging in business practices that degrade people, natural resources and the environment. 

“We are the only species that is on a suicidal path of systematically destroying its own habitat.” (Professor and co-founder of Conscious Capitalism, Raj Sisodia)

Wealth inequality has only grown more extreme during the COVID-19 pandemic. Despite widespread acknowledgment that current ways of doing business can’t continue, even self-identified champions of environmental and social causes, like BlackRock, continue to invest in dirty energy. Fully 181 leaders of the world’s largest firms – members of the Business Roundtable – signed a pledge to pursue stakeholder rather than shareholder capitalism in 2019. But a year later, most had not met their promises, and their companies maintained a less progressive agenda than comparable firms that had not signed the pledge.

As social, political and economic problems mount, the foundations of capitalism and democracy have come under scrutiny and might collapse if deep changes don’t occur. Already, the majority of young adults aged 23-38 in the United States say they would prefer to live in a socialist or even communist country over the capitalist society of their upbringing.

“People do not resist change; they resist being changed.” (Award-winning author Nadya Zhexembayeva and Professor David Cooperrider)

Despite global agreements and corporate pledges, climate change has proceeded unchecked and is worsening. CEOs still earn hundreds of times more than their average employees; 90% of profits still go to shareholders; the top 1% controls almost half of all wealth; administrative assistants still pay more tax, in relative terms, that their billionaire bosses; elections go to the highest corporate bidders; workers suffer slavery-like exploitation throughout much of the world; a million species face extinction; and more than a quarter of 18-24 year-olds in the United States seriously consider killing themselves.

For too long, firms have lived by the “shareholder-is-everything” doctrine.

In his famous 1970 essay in The New York Times, University of Chicago economist Milton Friedman advised CEOs that their sole responsibility was to maximize profits for shareholders, and, in return, the whole of society would benefit. Friedman and his followers argued that civic-minded investors, executives and boards would distribute a generous portion of their wealth through charitable giving that, in turn, would increase prosperity for all. This premise has since been widely criticized, including by prominent CEOs. In 2009, Jack Welch called it “the dumbest idea in the world.” Billionaire investor Ray Dalio recently proclaimed himself a capitalist, while admitting that “capitalism is broken.” 

“As governments have become increasingly dysfunctional around the world, the role of corporations in solving the world’s problems has become irrefutable.” (Harvard Business School Lecturer Mark R. Kramer)

Friedman’s single-minded – arguably pathological – outlook removed humanity from business. Throughout history, numerous business models have removed humanity from their core, including slavery; at-will work, and assembly lines. As history demonstrates, however, inhuman business models prove to be unsustainable over the long term. Fair, high-trust organizations emphasize collaboration to bring out the best in people and, unlike dehumanizing work models, drive long-term, sustainable growth.

Pushback has accelerated among environmentalists, consumers and business leaders.

Cheap talk and feel-good summits won’t save the planet. Increasingly, people realize that only accountability, well-designed incentives, direct action and real consequences for offenders will drive the changes needed. Inadequate response to environmental and social challenges – including during the COVID-19 pandemic – sparked a profound mind-set shift and backlash among consumers, citizens and business leaders worldwide.

“The historic shift from an economy focused on shareholder return to one that balances the interests of stakeholders is well underway and accelerating.” (Co-founders of the B-corporation movement, Bart Houlahan and Andrew Kassoy)

Consumers increasingly demand fair treatment of employees, suppliers and other stakeholders. The great majority of consumers across demographics say they would reject brands whose owners defile the planet or exploit workers. Investors have shifted fully 25% of their funds to social and environmentally sustainable companies.

B-Corporations, now in the thousands worldwide, seek to generate returns for a wider range of stakeholders. These firms set standards around environmental and social performance and, on average, outperform comparable traditional corporations. Coalitions of companies have formed to combat global warming and address other social problems. The ranks of “conscious capitalists” have swelled, seeking the means to do well by doing good. To save capitalism, democracy and the planet, much more of this is needed.

Revolutionary change has upended and reinvented the world in the past; it must again.

To prevent calamity, the world requires much more than sustainability. Survival demands “exponential solutions” – immediate, combined, multinational and multi-sectoral action along the lines of a global Marshall Plan. Organizations must elevate their ambitions around clean energy and minimizing carbon footprints. They must surpass sustainability targets and internally-focused emissions-reduction goals to embrace external activism. By becoming more virtuous, businesses can contribute to a re-emergent society and planet. 

“Flourishing is more ambitious than sustainability because it is not anchored in mundane notions of continuity; it is instead about a world for which we all yearn.” (PhD candidate Udayan Dhar and Professor Ronald Fry)

Inside organizations, this means creating work environments founded on caring, kindness and purpose that inspires and engages workers. Externally, it means assembling and inspiring a thriving, committed chain of stakeholders: customers, suppliers, investors, and local and international communities. Business leaders must build authentic, caring environments. To do so, they must embrace their role as community leaders and find common cause with other firms to form coalitions that lead the charge, using their influence and resources to help reinvent and save humanity.

A strong economy needs healthy businesses. Worthy firms contribute to a thriving society.

Old business models no longer apply. Volatility, uncertainty and the general pace of change means most firms must reinvent or disrupt themselves two to three times each decade. To thrive in this environment, organizations, their leaders and their workforce must create, innovate and embrace change by making it fundamental to their culture – a core competency. This requires collaborative, adaptable and gritty employees. Top-down, command-and-control leadership that manages through fear can never nurture this type of workforce. Work must offer purpose, meaning, connection and joy; providing joy makes firms far more attractive to talent, more adaptable, more capable of fast change and more competitive.

“A vision of love may be the only way for us to change the trajectory of humankind.” (Author Michele Hunt)

Leaders should move past employee engagement toward genuine love and spirituality. At furniture company Herman Miller, for example, CEO Max DePree fills break rooms with fresh flowers and gives speeches encouraging his employees to love each other. Love and joy are “palpable” in the culture, and the company has received numerous management accolades; it is widely considered one of the best US companies to work for and has been named “the best managed company in the world.” Similarly, Conversant Solutions, a leadership and organizational development company, defines love as a core organizing principle and leadership value.

Positive Impact Companies (PICs) embrace a similar mind-set, as does Ørsted, a Danish energy firm that moved off fossil fuels and supplies its customers entirely with green energy. PICs believe in a higher consciousness for companies. They commit themselves to the UN’s 17 Sustainable Development Goals (SDGs) and – believing in the interconnectedness of all things – go beyond the SDGs to embrace care and compassion.

Change has gone from important to critical; most governments acknowledge this truth. Fully 193 nations signed on to the UN’s 2015 SDGs, as they recognized the need for a more humanistic, environmentally-conscious future. Yet climate disasters already cost billions; health care systems, particularly in the United States, waste trillions treating preventable conditions; and disparities in living standards and wealth continue to grow.

Governments can’t fix the world on their own. Like politicians, business leaders must step up, look outside their firms, leave their comfort zones, question conventional ways of doing business, learn continuously and drive positive change – for humanity first, then profits. 

Firms that do good, do better.

Of course, businesses need profits, but by doing good, experts agree, profits will follow. Those profits should go not only to shareholders but to investments in employees, the community, R&D, the environment and social causes.

Firms that adopt the UN’s SDGs and/or operate as B-corps tend to perform better financially than their counterparts. They experience improvements in creativity and innovation. These companies often feature leaders who extend their activism into the community, think and plan for the long-term, practice recycling throughout their supply chains, collaborate with other firms and governments and leverage their influence and resources to drive change internally and externally. They practice open, trusting dialogue with stakeholders, using tools like appreciative inquiry, which emphasize positivity, strengths, synergies and the discovery of shared meaning.

“Throughout the COVID-19 crisis, it has become abundantly clear: Investment for good is a good investment, as sustainable investments have proven to be more resilient.” (Author and member of Thinkers50, Marga Hoek)

Environmental, Social and Governance (ESG) investing has mushroomed into a multitrillion-dollar opportunity. By prioritizing SDG goals, organizations can unlock massive growth opportunities without wreaking further devastation on the planet. Many companies like global retailer, Gap, Inc., for example, focus on SDG 5: gender equality. McKinsey research indicates the market impact of services and products that focus on gender parity could amount to $28 trillion – or 26% of yearly global GDP by 2025.

By reducing food waste – SDG 2: zero hunger – which accounts for almost half of all food produced in the United States and much of Europe, nations could save billions and feed the world’s hungry. Innovative companies are looking to do just that. The start-up, Copia, for example, collects food left over from business meetings and delivers it to local charities, offering tax benefits to companies who make donations. Dutch consultancy Q-point has created a data collection and estimation service for food planning and purchasing to help restaurants avoid buying more food than they need.

The world needs multiple, massive solutions – now.

New technologies, a growing, widespread willingness to shun offending brands and generations of socially and environmentally conscious young people will accelerate positive emerging trends. Climate change remains the greatest challenge of our time. The world population continues to grow, along with expectations for better living standards. Within a few decades, the demand for food, energy, health care and education will double.

“We’re going to need a whole lot more of everything, and we’re going to need it soon.” (CEO Naveen Jain with award-winning author John Schroeter)

This demands imagination and action. Combined action can make an enormous difference, as evidenced in governments’ response to COVID-19; even though the response was rife with mistakes, the pandemic did demonstrate how firms and governments can come together to address a global crisis quickly. 

As you contemplate new ideas, products and initiatives, ask yourself how many people’s lives they might impact. Go big – aim to help at least a billion people. If people don’t think you’re crazy, aim even higher; aim for exponential impact – the world demands it. Take, for example, sequencing the human genome, which cost $1,000 per person about a decade ago. If you had projected into the future then, you may have predicted the cost would drop dramatically – it’s about $10 today. The human genome example illustrates how seemingly improbable ideas can prove not only viable, but wildly profitable – if you have the foresight to get involved early on.

The point? Thinking about the possible moves you one step closer to creating it. Break free from conventional wisdom to dream without limits.

About the Authors

David L. Cooperrider, PhD, is a Distinguished University Professor at Case Western Reserve University and holds two chaired professorships at the Weatherhead School of Management: Char and Chuck Fowler Professor of Business as an Agent of World Benefit and the Covia - David L. Cooperrider Professorship in Appreciative Inquiry. Audrey Selian runs Artha Impact, an environmental and socially responsible investing firm. She holds a PhD in Technology Policy and Development Studies from The Fletcher School at Tufts University.

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