Common
Purpose:
Realigning Business,
Economies, and
Society….PART 3
Observations for Achieving Realignment
As we reflect on this situation, it is critical not to lose sight
of the progress and positive impact each of the three drivers has had. We
should not throw the baby out with the bathwater. Well-managed market economies
have consistently delivered economic growth and social progress more
successfully than the alternatives, and can continue to do so.
A globalized world is a reality. Issues (and opportunities) will
not respect national boundaries. Technology, disease, security, migration,
ideas, and our environment are relevant for all countries; they require
sustained engagement on a cross-border basis. GDP growth and financial performance
are essential to provide the resources to address the needs of our broader
society. And people will continue to demand the benefits of technology. We
cannot romanticize about going back to a world before we were globally
interdependent, financially intertwined, and technology enabled.
Instead, there is an urgent need to revisit the very purpose of
the economy — an engine to match human needs and opportunities. At its best, an
economy is a dynamic and evolving framework of rules, habits, agreements, behaviors,
and practices that facilitates meeting the needs of people and their
communities, and engages human skill and effort, as well as technology and
capital, to do so. We also need to consider how emerging technologies can help
us reimagine ways to meet human needs, those we have been incapable of
addressing in a traditional manner.
It will be hard to bring about this change. In the first place,
the three critical drivers have created an interdependent system that must be
addressed in its entirety if we are going to alter our current course. Seventy
years of success has created a highly interdependent web of regulation,
business practices, and institutions based on assumptions about the proper form
of globalization, financial metrics, and technology. Changing one strand of the
web will not work; the others will act as a force of inertia. Any change needs
to take place at a broader level — involving the whole system in which
institutions are embedded. Only then can we influence both behaviors and outcomes
so that they align with a reframed system.
In the second place, change entails managing a set of dualities.
In the recent past we have tended to seek the answer in a choice between
apparent opposites: one measure or many, globalization or localization, technology
or people. Many of the observations below suggest that we need to take a more
sophisticated approach by reflecting this duality. For example, human needs
must be met — progress must be made — on a local basis, albeit in a global
context. This duality — global and local — applies to the other drivers also.
Taking all this into account, here are some observations as a
starting point for discussion:
1. Economic growth is not
universally benign. One fundamental assumption of economic theory for at least
the last 70 years has been that social progress follows economic growth as
traditionally measured. We must now recognize that this is not necessarily
true. We must intentionally target acceptable societal outcomes, leveraging
market economies to do so.
2. Both financial (GDP) and
societal target outcomes should be explicitly framed. This
necessitates a key role for government and citizens in articulating goals that
reflect the needs of local communities, cities, and regions, as well as
countries as a whole. Not all needs are equal. Basic human needs must be
prioritized, consistent with the concept of a hierarchy of needs.
3. We need to devote more
energy to creating thriving communities. Human needs are best
identified and managed at a local level. Cities, towns, and villages are the
places where social progress and economic success most naturally meet. We need
to create conditions for these communities to thrive, with business as a key
part of the ecosystem.
4. We need to leverage the
full potential of market economies in a globalized environment. Better
outcomes are needed at all levels: regional, national, metropolitan, and local
community levels. A key role for government is to create the conditions
necessary for localities to address opportunities and challenges effectively
and to create the institutional framework that will encourage the economic
engine to match human needs and opportunities.
5. Governments and
businesses should engage to develop policies that align business outcomes with
broader objectives — especially in the context of global businesses operating
locally, reflecting their license to operate and broader purpose. The very
wealthy also have a role to play in deploying their capital and influence to
promote broader societal success.
6. Single measures of
success do not accurately represent complex systems for long. Financial
performance is an essential element underpinning any market economy, but it
cannot be the only measure of performance or success in a globalized economy.
Other, broader measures, reflecting target outcomes in societal terms, must
also be considered. We need to focus on managing the duality of GDP growth (at
a national level) and shareholder returns (at a firm level) along with meeting
a broader set of societal and personal needs. Reporting at both a macroeconomic
and corporate level must reflect financial and societal objectives.
7. “Average” success is not
enough. It is not sufficient to target overall progress for a
country or a region or the world, because results can vary significantly from
one community or one country to the next.
8. Technology is
indifferent to its impact on people. There is a growing
risk that technology will harm the livelihoods and well-being of an ever-larger
swathe of people, whether through displacement of jobs, due to robotics and
machine intelligence, social isolation, or disruption of communities. This need
not be true. Emerging technologies can help meet human needs in new ways that
create new industries and unforeseen types of new jobs. This will require an
evolution of global and local financial and economic systems to create the
conditions that will allow this to happen. In addition, technological change is
most likely to be adopted effectively in those parts of the world already
advantaged over the last few decades. As a result, finding ways to support the
growth of the most disadvantaged areas becomes even more critical.
9. We need to focus on
education to deliver the right skills for the future. This
will require direct engagement between governments and businesses to match
people’s needs with opportunities, particularly in a technology-enabled
environment.
Anyone reading this article is a citizen, and is likely worried
about the future of their country and the ones they are close to. Given the
pressing nature of the issues raised here, we hope that readers will reflect on
the diagnosis and observations we suggest and engage their organizations and
communities to address the growing challenges. It is important to recognize how
frameworks developed over the last 70 years have in some circumstances led to
troubling consequences. We urge you to focus on the issues as they exist now
and some of the above observations about how to address them.
A healthy economy needs a healthy society, just as a healthy
society needs a healthy economy. This is one of the defining lessons of the
period since the end of World War II. It has long served business and
policymakers well to create the conditions for this commonality of interest.
Now is the time for the system to be realigned, once again as throughout human
history, around greater commonality of purpose
by Colm
Kelly and Blair
Sheppard
https://www.strategy-business.com/article/Common-Purpose-Realigning-Business-Economies-and-Society?gko=f1919&utm_source=itw&utm_medium=20170606&utm_campaign=resp
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