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What’s the real purpose of companies? They tell us through their behavior, not through their words. And it won’t be long before business leaders are forced to catch up with employee and consumer expectations.

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Featured contributions

  • It will be interesting to see how companies measure success now that the Business Roundtable has challenged them to think differently about purpose. From my perspective, those that follow purpose like a north star and make decisions that go beyond the bottom line, will be positioned to win.

  • The purpose of corporations is being increasingly challenged. It can't merely be for shareholder returns. The Business Roundtable dropped shareholder primacy in August as the debate intensifies. Perhaps we are indeed all becoming Japanese, for when I arrived there in the 1990s they told me that the shareholder

    The purpose of corporations is being increasingly challenged. It can't merely be for shareholder returns. The Business Roundtable dropped shareholder primacy in August as the debate intensifies. Perhaps we are indeed all becoming Japanese, for when I arrived there in the 1990s they told me that the shareholder wasn't the most important stakeholder, to the shock of my investor friends. Maybe we are returning to old values.

    Roger Martin has said that there is a real market, where goods and services are made and traded, and an expectations market which looks further out and makes bets on what things will look like in the future. In the world of sports, these 2 markets are separate. But in the business world business managers often overtly intervene in the expectations market. For example by doing share buy backs in order to push the stock price higher. In a world of shareholder primacy, US companies have been putting all the gains from recent corporate tax cuts into buybacks instead of investment or employee wages which was allegedly the policymakers goal for the cuts. Western society is starting to acknowledge that there are other stakeholders apart from shareholders (and the board of directors who have a vested interested in doing buybacks to push up short term share prices). In a world of changing employee and consumer tastes and demands - whilst the economy appears unfair to many - I would expect these debates to continue.

  • Companies don't exist in a vacuum, They benefit from the social and regulatory structures we create. They are inherently more than just shareholder value creation machines - I think it will be better for ALL stakeholders when this broader stakeholder value model becomes mainstream again (thanks Friedman...)

More contributions

  • The foxes have guarded the henhouse for decades. And now they try to convince us hens this arrangement is a win-win value creator because they are a new breed of fox.

  • This stuff isn’t really new. In the 1990s, we called it Sustainability - the focus on “triple bottom line” expressed as a commitment to environmental impacts, social benefits and financial performance of the company. What does appear to be evolving is a transition from using environmental and social

    This stuff isn’t really new. In the 1990s, we called it Sustainability - the focus on “triple bottom line” expressed as a commitment to environmental impacts, social benefits and financial performance of the company. What does appear to be evolving is a transition from using environmental and social metrics to demonstrate compliance to efforts to integrate these more directly into monetized future values. Not sure this is a positive development - not everything can be monetized by market values very well. For example, the market value for ecosystem services like clean air and water provided by natural processes is 2x that of the total Gross World Product. But markets tend to assign minuscule values to impacts to those functions caused by industrial outputs.

  • Whatever management says it can always be overidden by board of directors and shareholder owners.

    Unless management can control enough shares ignoring the people who are taking primary risk is a guarantee of failure.

    Owners have economic expectations that are hopefully tempered with expectations

    Whatever management says it can always be overidden by board of directors and shareholder owners.

    Unless management can control enough shares ignoring the people who are taking primary risk is a guarantee of failure.

    Owners have economic expectations that are hopefully tempered with expectations of good behavior but considering the feeding frenzy for IPOS and the predatory behavior of the trendy companies in the gig economy there are no guarantees.