Monday August 26, 2019 0 comments
By Carl Dierschow
Small Fish Business Coaching
The world just changed its axis. Did you feel it?
Last week, 181 of the country’s biggest CEOs -- representing 15 million employees and $7 trillion in revenues -- came together to refute one of the core principles of business for the last fifty years.
That was Milton Friedman’s 1970 paper, The Social Responsibility of Business is to Increase its Profits. In it, he expanded that title to declare that there was no other responsibility of business than to return profits to its shareholders. Everything else -- customers, employees, societal change -- must be in service to the shareholders.
We are waking up. Finally.
On August 19, Business Roundtable published an earthshaking statement, signed by those 181 CEOs, declaring that they commit that The Purpose of a Corporation to Promote ‘An Economy That Serves All Americans’. Instead of limiting their benefit to just shareholders, they’re now including all stakeholders -- customers, employees, suppliers, communities, and shareholders.
I’ve been arguing for a decade that enlightened companies are taking the lead for delivering broader benefits. To be honest, though, I’ve written off the largest traditional companies as a lost cause. I assumed that they would just never get the concept, so they’d have to be replaced by more enlightened leaders.
That’s happening, no question. But this new statement shows that there are real people many of those traditional companies as well. So there’s hope.
Will they stick to their promises and shift their focus to broader societal benefits? That remains to be seen.
But it does feel like maybe, just maybe, “his heart grew three sizes that day.”
I go into further detail on this topic in my blog -- check it out at www.valuesbased.biz.