Observations on earth

The antidote to dinosaur economist Milton Friedman

August 2020       By Martin Johnston

Why out-dated values have fuelled today's business sphere

It was 50 years ago that American Economist Milton Friedman made his infamous statement on business and society:

There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits’

Four decades have passed since that misguided notion was released on the world. And now we’re waking up – asking, have we really moved on? Are ethics and integrity integrated within business enough to genuinely lay corporate capitalism without a conscience to rest?

The journey of corporate consciousness has been a long and arduous one. But we’re now turning a corner. Ironically, thanks to COVID, we’ve been taught in order to transform, we must reach a new level of consciousness, where businesses are transparent and society is ready to see with new eyes.

When CSR was coined, it meant well. And when it was renamed again to Social Impact – and again, to Sustainability, it still meant well. The end-goal was always to do better for society and show how everyday people were dependent on businesses for great products and services, and those businesses relied on everyday people to grow.

But along the way, corporate rigidity clashed with the authentic aims and many saw it as a disingenuous bolt-on, for businesses wanting to tick-box. Wages rose, big companies grew richer and back down the chain, the people who were supposed to be helped and encouraged by the scheme, felt disregarded and worthless.

Society came up with its own names for the scheme – from Corporate Greed to Greenwashing, business and society never felt so divided and bitterness followed. Fast-forward a few decades and the COVID-19 pandemic has brought it all back to the surface.

Society came up with its own names for the scheme – from Corporate Greed to Greenwashing, business and society never felt so divided and bitterness followed.

Drop the mask

Businesses have always created value for society. It’s just that Joe Public doesn’t have a seat in the boardroom, so it’s always hidden from view.

Masking true business ethos has never been a smart move. But now, more than ever, people are realising the link between their own health and the sustainability of the planet we share. When we’re in sync, our relationship is strengthened and the human race can run efficiently. Our physical and mental wellbeing are enhanced, and business health can reach its prime too.

The pandemic has shown that we need to adapt, take stock of the way we’ve been operating and optimise it, for the greater good. Both business and society need to reunite. Each have spent too long in isolation and now it’s time for reconciliation.

People want businesses to have their back. And businesses want people to back them. It’s a two-way street, rather than a CSR dead-end.

Once both are aligned, people will start to feel stable again, and the economy will lift from behind the dark, uncertain cloud. People could stop thinking ‘is it time to get back to normal?’ ‘should I save harder?’ ‘what about my job?’ ‘how will the future look?’ and everyone can work towards the same goals – personal and business growth, satisfaction and prosperity.

What now?

The social, political and natural chaos of 2020 has left so many feeling fearful, in every sense of life – from practical everyday tasks to doubts about the future and ‘the new norm’.

Rather than disconnecting, we should reconnect. Reconnect the idea that we’re part of a common shared humanity – reconnect the notion that the financial markets should want to serve society, not the other way around. And reconnect the thought that inaction is always going to be costlier than action – the longer we sit stagnant, the harder it will be to pull ourselves out of a hole.

The unwritten contract companies hold with their customers needs a refresh. It needs to read and ring true. Value beyond the balance sheets needs demonstrating and marketing jargon needs axing. Internally and externally, people need to be on the same page, speaking the same language.

The best way to do that is through clear, confident communications. Branding is important, but highlighting the work you do to benefit the wider community is what will get people really resonating with you and trusting your authenticity.

Authentic businesses that ride the fluctuations of financial markets and are able to make their voices heard through social upheaval have always contributed to their communities.

Make sustainability count and no one cares what you abbreviate it to – they simply, just care.

Further reading