In a world thirsty for trusted leadership, Pope Francis cuts a refreshing figure of someone who genuinely leads from principle. Personally humble, he is nonetheless courageously executing an audacious vision for the Roman Catholic Church, one of the world’s oldest institutions, and most in need of reform. Believers, ‘nones,’ and agnostics alike are listening intently to his every word and scrutinizing his every move. Small wonder then, that his “Apostolic Exhortation,” Evangelii Gaudium, is being read so closely.
We expect religious leaders to urge us to do what is “right,” arguing from the high ground of moral authority, as they have done since the dawn of religious proselytizing. It’s no surprise, then, to hear Pope Francis call for a “new political and economic mindset which will help break down the wall of separation between the economy and the common good of society,” while he hails the pursuit of business leadership as a “noble profession.”
But for many, doing the “right” thing is not the business of business. To reach this audience, one has to appeal to the less noble instincts of reason and intellect to motivate behavior—and that is where business leaders must step up and lead where the Pope can only exhort.
I don’t argue the “religion” of global warming with corporate leaders questioning a commitment to pursuing sustainability. I simply advance the logic that good stewardship of the environment and conservative resource management is “good” business and “smart” business. I don’t argue the religion of inclusive human resource policies. I simply assert the “facts” that diverse workforces are more innovative, and innovation drives growth. I don’t argue that open and generous employee engagement is the “right” thing to do. I simply demonstrate that “smart” corporate leaders have more engaged employees who are more highly motivated and efficient.
Today, arguing logic and morality is easier than at any other time in history. We live in a world in which there is the near perfect intersection of “doing well and doing good.”
In a world inexorably connected thanks to the policy liberalizations of the last half-century, turbocharged by incredible leaps of time- and distance-shattering technologies, it is no longer possible (if ever it was) to do well by one’s shareholders if not in the context of doing good to and for the broad community of stakeholders.
As a young strategic planner in the oil industry decades ago, I was instructed that we often needed to do “good” in communities in order to earn the license for the enterprise to do “well” by its bottom line while doing things that were clearly not so good. That proposition.no longer works, if ever it did
Wealth is not an end in itself, but rather an outcome of the generation of value. Business leaders, to be sustainably successful must pursue the creation of great life-enhancing products, consumer-empowering services, and great ideas. Wealth will follow.
John Kay, the founding head of the Saïd Business School, University of Oxford, calls this “obliquity”— by which he means that you cannot find happiness by desperately looking for it: happiness is the result of pursuing those things that genuinely make you happy. Similarly, profitability is the result of pursuing those things that add value. As I would remind my colleagues during my tenure as a CEO, “purpose drives performance.” Performance and profit are the outcome, not the goal.
Capitalism actually has roots closer to this ideal than popular perception would have you believe. The intellectual father of modern capitalism, Adam Smith, is too well remembered for such phrases as “the invisible hand,” coined in his 1776 book The Wealth of Nations, which many consider to be the founding document of free-market capitalism. In truth, Smith’s legacy and assumptions about capitalism have been grossly oversimplified. Smith himself placed greater value on his earlier work (1759), “The Theory of Moral Sentiments,” in which he explores “the ability to think and act morally in the face of pure natural self-interest.” Smith was a dogged advocate of the view that free enterprise absolutely required strong moral and ethical underpinnings and that most market participants needed to be people (to use his words) of “propriety, prudence and benevolence” in order for the system to work properly.
However, modern business leaders are more likely to cite Milton Friedman, a prominent economist who taught at my alma mater, the University of Chicago. In his influential 1962 book Capitalism and Freedom, Friedman wrote that “there is one and only one social responsibility of business: to use its resources to engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception and fraud.” It is reasonable to conclude that Friedman articulated a plea for the “relentless pursuit of profit” (though, within the boundaries of fair and free competition), as an end in itself. But it is under this rubric that we have constructed this “wall between the economy and the common good,” under the guise of fundamental capitalism.
Even in the most orthodox capitalist system, there should be no such “wall” to overcome. There should be no philosophical barriers to making our system work better, to deliver on everyone’s need. As the eminent management guru, Peter Drucker, was fond of saying, good managers do things right, good leaders do the right things.
We need to make the case for both – and then go out every day and do both!
