CREATING SHARED VALUE
It all started with Milton Friedman, who wrote an article in The New York Times announcing that the sole purpose of business is to make money for its shareholders.
He said that growth should be the entire prerogative.
Milton’s logic stated that a business belongs to its investors; and that everyone who works for a company, ultimately works for those shareholders. And so, for a business to do anything that would cause them to lose on the return of that investment is amoral, an infringement that bordered on criminality.
Milton’s philosophy of business was so widely accepted, he earned the Nobel Prize. But that article was published in 1970 – almost 50 years ago and the whole landscape of business since then has changed.
Sure, there were corporations back then. Some familiar ones that still reside on Fortune 500 lists today – like Boeing, Proctor & Gamble, Kellogg and IBM. However, many no longer stand, although this theory does.
Back when Friedman wrote his article, businesses were first having to deal with the increased competition of a newly globalized economy. Executives got giant bonuses with all the money that was earned, even though employee wellbeing, environmental impact, concerns of customers and society were not prioritized.
Millennials can see that the era of business we are growing up in is unsustainable. We can see the destructive results this growth-at-all-costs model of business has created.
In the wake of globalization, corporations have become transnational entities, existing everywhere and nowhere at the same time. Corporations are one of the most powerful entities on the planet. Some say more powerful than the nation-state itself, because corporate influence spans countries. And since corporate entities are accountable only to their shareholders, everyone else impacted by the creation of a business entity (known as the stakeholders) doesn’t have a voice in the operation.
It’s said that capitalism is going through an upgrade, in part because of the millennial mindset.
We are finding that money isn’t a good enough motivator for young people to stick to working at company. Purpose is a far better one, as well as the freedom to be creative and innovate. We think business should be a force for good and we want to do what we can to ensure that.
According to a study by Pew, only 33 percent of Americans believe that large corporations have a positive impact on the world.
This is one reason why, in an economic time when full time steady employment opportunities are dwindling (and more job responsibilities are moving to benefit-less contracted labor), so many millennials choose to leave their corporate jobs within a year or two of being hired. We want to make a positive difference with our lives, and working within organizations that feel no responsibility to their communities is not how we’re going to accomplish it.
That’s why we predict that conscious capitalist practices that preach the importance of “shared value” will be championed by our generation. And that we will come to find that alliances with stakeholders (rather than shareholders alone) are actually a way to revitalize economic growth. Because this wave of innovation will force companies that have been around for decades to create all new products and markets, redefine the concept of employee productivity (in a way that doesn’t detract from employee wellbeing), and reclaim their power to uplift their communities if they want to appeal to millennial markets and top talent.
Instead of accepting business as a force that causes problems in the world for short-term gains for a few, we believe that it can become the greatest hope of creating solutions in society that will benefit generations to come.