September 17, 2006

Times are changing and so are the rules of business. Generation of steady profit and keeping the shareholders happy is no longer the start and the end of the purpose of business. Increasingly, social factor is coming into play. Some view this phenomenon an advent of corporate citizenship and corporate social responsibility (CSR) while others term it as corporate philanthropy. But this trend towards integration of social factor with purpose of business is much broader than corporate citizenship and corporate philanthropy. I prefer calling this trend a move towards "socially oriented capitalism", the only sustainable way of doing business in the long run.

Perhaps time has come for businesses to realize that they cannot exist in isolation of society at large. In coming years, survival and sustenance of businesses will be dependent on how well they empathize with the society and their surroundings. Striking an optimal balance between wealth generation for shareholders, betterment of the society at large, and judicious and sustainable use of natural capital will be the essence of doing business in future.

The problem perhaps lies in the current paradigm of doing business. The current paradigm focuses predominantly on a single parameter – maximization of shareholder’s wealth. In pursuit of this goal, often the business becomes short-sighted and neglects the long term scenarios. The present paradigm follows what Milton Friedmen advocated when he said, “The business of business is business”. But fortunately or unfortunately, this concept of business is soon going to be obsolete and unsustainable. The reason is simple. Single minded pursuit of wealth generation for shareholders often entails ruthless exploitation of natural capital as well as concentration of wealth in a few hands which is detrimental to social inclusiveness. Ruthless exploitation of natural capital means faster depletion of natural resources than its renewal leading to ever decreasing availability of resources for increasingly demanding population. Similarly, concentration of wealth in a few hands prevents diffusion of wealth, a prerequisite for holistic social development.

Tomorrow’s star businesses will be those who proactively make society a business partner. Corporate social responsibility and corporate philanthropy may not do as much good to business as entering into a social partnership with society will.

I feel following are some of the behaviours that will drive the success and sustainability of corporations in coming years:

  1. Society as a shareholder: Time has perhaps come to view society as a shareholder – someone whose interests are at stake and expectation of some economic return is there. The concept of giving back to society must change to sharing the profits with the society just as profits are shared with a shareholder. This sharing should be in the form of proactive investment in well being of the society to make it robust and strong so that the society can invest more in the corporation and a cycle of constant synergistic interaction is there between corporation and the society.
  2. Society as a limitless consumer: The world is a pyramid and currently only the top of the pyramid is considered as a market by corporations. The rest of the pyramid remains like a non-entity for the corporations around the world. And this is based on the assumption that this large segment has no purchasing power hence making them a non-market. This assumption is flawed and this will have to be changed if corporations want to be alive and sustain their growth. For succeeding in future, corporations will have to focus on these markets which seem to have no purchasing power when seen from naked eyes, but which have immense potential as a huge market if seen from third eye. Perhaps, the philosophy of Henry Ford, who raised the salary of his employees to sell his cars, is needed. For tapping into the bottomless market represented by the poverty stricken mass, you need to invest in them, develop them, educate them, help them generate wealth and thereby turn them into a lucrative market.
  3. Corporation as a catalyst for social inclusiveness: More than providing purchasing power, multi-dimensional transformation of the underprivileged society is needed. Apart from money, one needs identity, respect, social standing, love, and belongingness. By some quirk of fate, these are missing from the lives of underprivileged who form the bulk of society. Social inclusiveness is concerned with these softer but vital issues. The corporations of tomorrow will have to address these and act as a catalyst for social inclusiveness. It will be the emotional glue that will bind the corporations with the society to ensure a symbiotic relationship and coexistence.
Ultimately it is a one world. Corporation and society cannot exist separately. For sustained prosperity they have to enter wedlock and live happy ever after!

4 comments

  1. Better Tomorrow For India // September 23, 2006 at 9:31 AM  

    Your thoughts and ideas have the potential to revolutinlise not only the corporate world but the world at large. But the rider is whether the money making corporates will ever have the long range vision and whether the society will have reasons to trust them.
    I have profound doubts about that.
    In the meantime try watching the movie "Corporate".

  2. Anonymous // September 28, 2006 at 8:26 PM  

    Mayank
    have posted an extension to you line of thought on my blog

  3. Anonymous // May 6, 2009 at 9:12 PM  

    The vast majority of website operators don't have the guts to allow this post, anything like it, any searchable lines, or links. They have been deleted more than 90% of the time. The vast majority of syndicated talk radio hosts are screening their calls and won't allow this topic. The vast majority of callers don't have a clue. We are in big trouble. The truth is so Earth shattering, that no public figure has the guts to acknowledge it. Very few have the guts to allow a statement anything like this in their forum. The truth is being suppressed. We are in much more serious trouble than we have been told by any public figure. Don't be fooled by fluctuating economic indicators or short term market stability. The entire foundation of our economy is crumbling. Get ready people. Get your affairs in order. Get your households in order. Get your communities in order. Be prepared. This is no 'correction'. This is no ordinary recession. This won't be just another Great Depression. This will be much worse. Save this post now before it gets deleted.

    Sometimes, I wonder why I bother fighting so hard for the little guy. Whats the point if they are too stupid to listen? Say that reminds me.

    Amazing. The worst economic and cultural crisis of all time will go down in history horribly misunderstood. What a pathetic bunch of ignorant fools we have become. Consumer junkie credit card morons. Perfect little victims.

    Don’t believe one optimistic word from any public figure about the economy or humanity in general. They are part of the problem. Its like a game of Monopoly. In America, the richest 1%, now hold ALMOST 1/2 OF ALL UNITED STATES WEALTH. Unlike ‘lesser’ estimates, this includes all stocks, bonds, cash, offshore accounts, and material assets held by America’s richest 1%. Even that filthy pig Oprah Winfrey acknowledged that it was near 50% in 2006. Naturally, she put her own ‘humanitarian’ spin on it. Calling attention to her own ‘good will’. WHAT A DISGUSTING SELF-CENTERED SELF-PROMOTING HYPOCRITE SLOB. THE RICHEST ONE PERCENT HAVE LITERALLY MADE WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. Don’t fall for any of their 'good will' ‘humanitarian’ CRAP. ITS A SHAM. THESE PEOPLE ARE CAUSING THE SAME PROBLEMS THEY PRETEND TO CARE ABOUT. THE EQUATION THEY STAND FOR ABSOLUTELY CAN NOT WORK. Ask any professor of economics. Money does not grow on trees. The government can’t just print up more on a whim. There are serious concequences for doing so. Regardless, there is always a relative limit to the wealth within ANY economy of ANY size. So when too much wealth accumulates at the top, the currency looses value, the middle class slip further into debt, and the lower class further into poverty. A similar rule applies worldwide. The world’s richest 1% now own over 40% of ALL WORLD WEALTH. This is EVEN AFTER you account for all of this ‘good will’ ‘humanitarian’ BS from celebrities and executives. ITS A SHAM. As they get richer and richer, less wealth is left circulating beneath them. This is the single greatest underlying cause for the current US recession. The middle class can no longer afford to pay all the bills or sustain their share of the economy. Their wealth has been gradually transfered to the richest 1%. One way or another, we suffer because of their incredible greed. We are talking about TRILLIONS of dollars which have been transfered FROM US TO THEM. All over a period of about 30 years. Thats Reaganomics for you. The wealth does not ‘trickle down’ as we were told it would. It just accumulates at the top. Shrinking the middle class and expanding the lower class. Causing a domino effect of socio-economic problems. But the rich will never stop. They just keep getting richer. Leaving even less of the pie for the other 99% of us to share. At the same time, they throw back a few tax deductible crumbs and call themselves 'heros' or ‘humanitarians’. Cashing in on the PR and getting even richer the following year. IT CAN’T WORK THIS WAY. Their bogus efforts

  4. Anonymous // May 6, 2009 at 9:12 PM  

    The vast majority of website operators don't have the guts to allow this post, anything like it, any searchable lines, or links. They have been deleted more than 90% of the time. The vast majority of syndicated talk radio hosts are screening their calls and won't allow this topic. The vast majority of callers don't have a clue. We are in big trouble. The truth is so Earth shattering, that no public figure has the guts to acknowledge it. Very few have the guts to allow a statement anything like this in their forum. The truth is being suppressed. We are in much more serious trouble than we have been told by any public figure. Don't be fooled by fluctuating economic indicators or short term market stability. The entire foundation of our economy is crumbling. Get ready people. Get your affairs in order. Get your households in order. Get your communities in order. Be prepared. This is no 'correction'. This is no ordinary recession. This won't be just another Great Depression. This will be much worse. Save this post now before it gets deleted.

    Sometimes, I wonder why I bother fighting so hard for the little guy. Whats the point if they are too stupid to listen? Say that reminds me.

    Amazing. The worst economic and cultural crisis of all time will go down in history horribly misunderstood. What a pathetic bunch of ignorant fools we have become. Consumer junkie credit card morons. Perfect little victims.

    Don’t believe one optimistic word from any public figure about the economy or humanity in general. They are part of the problem. Its like a game of Monopoly. In America, the richest 1%, now hold ALMOST 1/2 OF ALL UNITED STATES WEALTH. Unlike ‘lesser’ estimates, this includes all stocks, bonds, cash, offshore accounts, and material assets held by America’s richest 1%. Even that filthy pig Oprah Winfrey acknowledged that it was near 50% in 2006. Naturally, she put her own ‘humanitarian’ spin on it. Calling attention to her own ‘good will’. WHAT A DISGUSTING SELF-CENTERED SELF-PROMOTING HYPOCRITE SLOB. THE RICHEST ONE PERCENT HAVE LITERALLY MADE WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. Don’t fall for any of their 'good will' ‘humanitarian’ CRAP. ITS A SHAM. THESE PEOPLE ARE CAUSING THE SAME PROBLEMS THEY PRETEND TO CARE ABOUT. THE EQUATION THEY STAND FOR ABSOLUTELY CAN NOT WORK. Ask any professor of economics. Money does not grow on trees. The government can’t just print up more on a whim. There are serious concequences for doing so. Regardless, there is always a relative limit to the wealth within ANY economy of ANY size. So when too much wealth accumulates at the top, the currency looses value, the middle class slip further into debt, and the lower class further into poverty. A similar rule applies worldwide. The world’s richest 1% now own over 40% of ALL WORLD WEALTH. This is EVEN AFTER you account for all of this ‘good will’ ‘humanitarian’ BS from celebrities and executives. ITS A SHAM. As they get richer and richer, less wealth is left circulating beneath them. This is the single greatest underlying cause for the current US recession. The middle class can no longer afford to pay all the bills or sustain their share of the economy. Their wealth has been gradually transfered to the richest 1%. One way or another, we suffer because of their incredible greed. We are talking about TRILLIONS of dollars which have been transfered FROM US TO THEM. All over a period of about 30 years. Thats Reaganomics for you. The wealth does not ‘trickle down’ as we were told it would. It just accumulates at the top. Shrinking the middle class and expanding the lower class. Causing a domino effect of socio-economic problems. But the rich will never stop. They just keep getting richer. Leaving even less of the pie for the other 99% of us to share. At the same time, they throw back a few tax deductible crumbs and call themselves 'heros' or ‘humanitarians’. Cashing in on the PR and getting even richer the following year. IT CAN’T WORK THIS WAY. Their bogus efforts