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Conscious capitalism

January 19th, 2011 2 comments

What is it? It can be simply described as how to run your business in this current capitalistic circumstance successfully by maintaining your consciousness toward your stakeholders (upss..this is simply my thought about this idea :D ). To make it works, you need some requirements below.

  1. You need ability to operate and maintain businesses run under recognized laws and regulations
  2. Recognize the stakeholder model: customer, employees, investors, suppliers, larger communities and the environment are all interdependent. Remember that you operate the business in such a way that it’s not a zero-sum game.
  3. You need conscious leadership, a servant leadership that he or she always tries to serve the organization and its purpose.
  4. You have to create conscious culture, a culture that allows the organization to fulfill its higher purpose, implements the stakeholder model and enables conscious leadership to flourish.

* as explained by Mackey,  a 32 years CEO and cofounder of Whole Food Market in Harvard Business Review, January-February 2011*

Categories: Out of the boxes Tags:

Creating shared value: What businesses can do to reshape ‘unfriendly’ capitalism

January 19th, 2011 Comments off

The writing below is quoted from the latest edition of Harvard Business Review,January-February 2011. I intend to post it here to share the eagerness of Michael E. Porter and Mark R. Kramer to introduce ‘Shared Value’. This new idea is valuable to rethink about link between business and social environmental. Let us think about ‘shared value’.

Business is caught in a vicious circle. Companies remain trapped in an outdated approach to value creation over the past few decades by continuing to view value creation narrowly, optimizing short-term financial performance, missing the most important customer needs and ignoring the broader influences that determine longer-term success. How could companies overlook the well-being of their customers, the depletion of natural resources vital to their business, the viability of key suppliers, or the economic distress of the communities in which they produce and sell? How could companies think that simply shifting activities to locations with ever lower wages was a sustainable ‘solution’ to competitive advantages? Government and civil society have often exacerbated the problem by attempting to address social weaknesses at the expenses of business. The presumed grad-offs between economy efficiency and social progress has been institutionalized in decades of policy choices.

Companies must take the lead in bringing business and society back together. The recognition is there among sophisticated business and thought leaders, and promising elements of a new model are emerging. Yet there is a lack an overall framework for guiding these efforts, and most companies remain stuck in a social responsibility mind set in which societal issues are at the periphery, not the core.

The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Business must reconnect company success with social progress. Shared value is not social responsibility, philanthropy or even sustainability, but a new way to achieve economic success. It is not in the margin of what companies do but at the center. However, recognition of the transformative power of shared value is still in its genesis. Realizing it will require leaders and managers to develop new skills and knowledge, such as appreciation of societal needs, a greater understanding of the true bases of company productivity, and the ability to collaborate across profit/nonprofit boundaries. And government must learn how to regulate in ways that enable shared value rather than work against it.

Capitalism is an unparalleled vehicle for meeting human needs, improving efficiency, creating jobs, and building wealth. But a narrow conception of capitalism has prevented business from harnessing its full potential to meet society’s broader challenges. The opportunities have been there all along but have been overlooked. Businesses acting as businesses, not as charitable donors, are the most powerful force for addressing the pressing issues we face. The moment for a new conception of capitalism is now, society’s needs are large and growing, while customers, employees and a new generation of young people are asking business to step up.

The purpose of the corporation must be redefined as creating shared value, not just profit per se. This will drive the next wave of innovation and productivity growth in the global economy. It will also reshape capitalism and its relationship to society. Perhaps most important of all, learning how to create shared value is our best chance to legitimize business again.

Reference:

Michael E. Porter and Mark R. Kramer. 2011. The Big Idea: Creating shared value. Harvard Business Review, January-February 2011.

Categories: Research Tags:

News from RI

January 15th, 2011 Comments off

Latest news quoted from responsible-investor.com

  1. Boston Common Asset Management, the US-based sustainable asset manager, has dumped Cisco Systems’ shares over the Internet technology firm’s due to weak human rights risk management and poor response to investor concerns. Boston Common’s decision to divest comes after years of campaigning Cisco for greater transparency and accountability on key human rights and business development concerns. Boston Common, a leading activist investor and a member of the United Nations Principles of Responsible Investment, has led a 20m-share investor coalition which has been engaging the company on its human rights record.
  2. Organisation for Economic Cooperation and Development (OECD) has called Japan’s giant Government Pension Investment Fund  to integrate environmental, social and governance (ESG) factors on its investment  policy. As the world’s largest pool of pension assets at JPY120trn (€1.1trn, $1.4trn), the fund has ability to to influence the domestic economy and financial stability and to enhance attempts to maintain sustainability.

It shows that encouragement to incorporate social and environmental consideration into firm’s business policy has been increased seriously. How do the business schools prepare to face that such changes?

Categories: Out of the boxes Tags: