David Jones: Millennials & Green-Blooded Capitalism
In any broad discussion of socially responsible business, there will be those who say that it is nothing but a short-term, recession-driven fad. Or that no one has succeeded in both being good and making money.
Yet, there is a growing body of evidence that demonstrates that it is a path that many stakeholders want business to go down. Consumers understand they can control companies through their purchasing behavior. They also realize that, in many respects, they have more power and control of companies than they do over governments.
A major global study from Havas found that three-quarters (74 percent) of consumers think that business bears as much responsibility for driving positive social change as governments. This supports my view that Milton Friedman’s assertion in the 1970s that business’s only responsibility is to maximize profits for shareholders, and therefore social responsibility is anti-business, is now obsolete.
For an increasing number of business leaders today, earlier conflicts between doing the right thing and making a profit no longer exist. The erosion of the Friedman argument has come about as a natural evolution, enabled by our growing interconnection, spurred by the economic meltdown, as well as a widening acknowledgement of the plight of our planet and its inhabitants.
The endorsement of business’s wider moral responsibility is reflected in the Giving Pledge, a promise made by 40 billionaires, led by Bill Gates and Warren Buffett, to give at least half of their fortunes to charity. Buffett and Gates are targeting a further 360 billionaires. If they secure pledges from the 400 richest people in the USA, the total pledged would amount to $600 billion.
This is straightforward philanthropy, of course, and arguably provoked by guilt, but it sets a tone for business and business leaders as to how they are supposed to behave. The Millennial generation in particular cares strongly about behavior and also the motivations behind it. They will not be satisfied with charitable donations made in the twilight of stellar careers— they want business to behave better right now. They are not opposed to business making money; they just demand that it is done in the right way. And in fact, in my view, it will become very difficult for a business to succeed and become big if it doesn’t behave the right way from day one.
Millennials believe strongly that we are all in this together and this moral interdependence is one of the keys to competitive advantage in the Age of Damage, a time when businesses that are not socially responsible will suffer as a result of this failure. As the drama unfolded over the Deepwater Horizon oil spills in 2010, it was clear who was to blame, and how BP reacted and handled the crisis became almost as important as what had actually happened.
This aspect will become increasingly significant—more and more, business and its leaders will be judged on their very intentions and how they react to the issues that confront them. For those that get it wrong, social media will prove a very public and powerful people’s court. If this generation of young people can topple previously immovable dictatorships, as we have seen across the Arab world, then imagine what they can do to your brand. With more than three-quarters (80 percent) of consumers believing that they have the responsibility to censure unethical companies by avoiding their products, according to the Havas study, the punishment for those falling short will be harsh.
Democratized information has led to democratized power, and a new balance is at work. But this does not spell the end of successful profitable businesses or indeed the death of capitalism but instead the birth of a new green-blooded capitalism.
Excerpted from Who Cares Wins: Why Good Business Is Better Business (Pearson/FT Publishing, December 2011). Buy the book on Amazon.