Reimagining a corporate world where people & planet are placed at the heart of leadership decisions

When you hear the phrase ‘big business’ or ‘global corporations’ what is the first thing that comes to mind? I’m guessing it’s not kindness, compassion or empathy.

I would like you to now imagine a corporate world where leaders place the wellbeing of people & the planet at the heart of their decisions and imagine how different the world could be. It is this world that I would like to talk to you about today.

My name is Dr David Cooke. I am the author of the book, Kind Business: Values Create Value, and I spent 35 years working within global multi-nationals within the technology sector. During this time, I saw the good, the bad, the beautiful and the ugly of the business world; and while being inspired by the good, I must admit that at the other end of the scale some of the bad management practices that I observed just didn’t make any sense to me.

If I were to attempt to analyse the poor practices, I would say that what I saw being exhibited was a narrow focus on the company’s short term share price, and its next dividend to investors. We can call this shareholder primacy. However, there is a concept, characterised by a much broader vision, which we can call stakeholder primacy, where the business seeks to have a positive impact on multiple parties.

I attribute the former largely to poor leadership, with managers being myopically focussed purely on the short term, while lacking the vision to build sustainable businesses for the long term.

Now a debate has raged for some time around whether companies can in fact be good and profitable at the same time, and whether they have any moral or ethical responsibility to contribute positively to society; beyond simply providing goods & services and paying wages &  taxes. And over the last 50 years one of the most frequently quoted commentators on this topic has been Nobel Prize winning economist Milton Friedman: who stated:

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

This mantra led to decades of extreme short termism on the part of our captains of industry. It was certainly adopted by Jack Welch, the global CEO of General Electric, arguably the most revered corporate leader of the 80’s and ‘90’s.

So, we can perhaps see the potential for harm to society when business has an isolationist attitude, that they are separate from society, as opposed to being a part of it; but are there also negative consequences for the companies themselves, when they adopt this mindset?

McKinsey consulting would appear to have the answer to this question. It emerged from a fascinating study known as the McKinsey Longevity Report which detailed the average lifespan of companies on the Standard & Poors 500 index in the U.S. It demonstrated that in:

o   1958 – the average company lifespan was 61 years

o   2023 – the average company lifespan was less than 18 years

o   2027 – 75 per cent of the companies on the S&P 500 today will have disappeared

Short term thinking is the curse of the capitalist system, and an obsession with growth and market dominance and short-term profit maximisation, is leading to business sowing the seeds of its own demise. In other words, capitalism appears to be virtually eating itself.

I mentioned that I had also observed ‘the good’ that companies can do, and I have been privileged to observe senior decision makers who have earnt the right to truly be called leaders, people who lead with vision and compassion and concern for people and planet.

Paul Polman is one such leader. During his time as the global CEO of Anglo Dutch conglomerate Unilever Polman championed an agenda of looking after the wellbeing of those who worked there and an agenda of sustainability across the entire company, demonstrating his commitment to both people and planet. You may have purchased some of their products over the years. Dove soap, Lux, Rexona, Sunlight or perhaps enjoyed a Magnum or Cornetto or a Ben & Jerry’s ice cream.

Polman delivered financial returns more than double the average of the FTSE index. He is a leader of extraordinary vision concerned with both the internal and external footprint of the company. He asks every business leader to ask themselves a deeply profound question:

·       ‘Is the world a better place because my company is in it?’

You may also like to take a moment to think about one of Polman’s other questions:

·  What if companies operated in the service of their employees, not just their shareholders?’  

Interestingly, although both Milton Friedman and Jack Welch may seem poles apart from leaders like Polman, at the end of the day their philosophies may not actually have been so different.

People have seized on certain quotes by Friedman, while ignoring others, such as:

“It may well be in the long-term interests of a corporation to devote resources to providing amenities to its community, or to improving its government. That may make it easier to attract desirable employees, it may reduce the wages bill … and have other desirable effects (for the company)”.

In short Friedman was saying, ‘If it makes good business sense to be a good business, then go ahead and be a good business.’

In the case of Jack Welch, post his corporate career and following the Global Financial Crisis he experienced something of a complete turnaround which can perhaps be described as the late dawning of wisdom.  Welch said,

‘… (a focus) purely on maximizing shareholder value is the dumbest idea in the world.’

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During the last eight years of my corporate career, I had the privilege of leading a technology company here in Australia. That company was Konica Minolta a global Japanese firm founded some 150 years ago which operates in the printing, scanning and document management sector.

In 2013 we held our annual conference to start the Japanese financial year, and as the current Managing Director was due to be replaced it was assumed that one of the Japanese people from head office, attending the conference, would be announced as the new MD, as had been the case for the previous 40 years.

However, the most senior person in attendance surprised everyone when he announced that I was to be the new head of the company; at the time I was the GM of Sales. I walked up on stage, turned to the audience of some 300 employees and channel partners, and said:

“I want us to all work together to build a company that CARES. That cares about the people who work here, that cares about our customers and that cares about our community.”

The next day when the conference was over, I walked into the office for the first time as managing director, and of course the real work began. The first thing I did was to l write to everybody in the company, as many had not been present at the conference.

Now I had never been a managing director before, and I imagine if I had consulted a textbook on leadership, it may have advocated instilling the troops with confidence that the right person had been appointed and that I knew exactly what I was doing.

However, I took a different approach, arguably one that showed vulnerability, and perhaps even humility. I said to them, that there was only one problem with my vision statement and that was that “I don’t know how to achieve it, and I need your help.” I said, “I need you to tell me what needs to change in this company; I need you to share your ideas with me.”

 So, we sent out a questionnaire and over 90% of people responded to that voluntary survey. And there were questions asking people to rate the company against certain criteria, but also free text fields where they could enter suggestions, and we got 800 suggestions from these people.

One of the first lessons that I learnt as a new MD was just how transformational it can be for a company’s culture when the most senior person seeks the ideas of others and creates an environment of psychological safety, whereby ideas can percolate up.

In the words of social demographer Hugh McKay ‘Everyone’s greatest need is to be heard,’ & I learnt that to listen is one of the most powerful practices that a leader can engage in.

One of the requests that surfaced from the majority of people was that people wanted the company to have more purpose. Specifically working with charity partners, putting in place volunteering days off and salary matched giving programs, in the same way that many other companies already had. So, we commenced this process by asking them to vote in three categories, which were Social, Environmental, and Health and they chose, The Smith Family, Land Care and BCNA. We later added a Humanitarian category and supported the work of a Cambodia charity rescuing young women from regional villages who had been trafficked.

The latter came about after visiting Cambodia and seeing this work first-hand. There is an expression in the human rights world which is ‘once you know you can’t unknow and once you’ve seen you can’t unsee’ and so we immediately added this fourth category to our partnership program.  

Now I would like to share a short story with you of an incident that I found particularly moving. That story is that after I had been in the role for a while, I invited everyone who had worked in the company for 25 years or more to come to Sydney, and I took them out for dinner. Simply to say, "Thank you for your loyalty to the company”.

At the end of the meal, one man said, "Could I please say something?" He was a very quiet man who had not spoken all night. He stood up, in this public restaurant, and he made what I imagine was the first speech that he had ever made in his life. And what he said was:

"For over 25 years, I have never told anybody where I worked. I just did not see the point. I came to work, and I did a fair day's work for a fair day's pay, and that's how I fed my family." He then said, "but now, I tell every single person I meet that I work for Konica Minolta. Why? Because I feel so proud to work for a company that would care about young women in Cambodia that had been trafficked into a life of sexual slavery."

The engagement dial, for that man, had gone from disengaged to fully engaged, and in fact it had kept going. He had become a loyal, public advocate and champion for our company. That was the positive, unintended, consequence of seeking to help some of the most vulnerable members of our society, young women who were powerless and voiceless.

In all my time in the corporate world I never saw any initiative that was as powerful in providing motivation, and a sense of purpose and belonging for people, than when a company decides to focus on the wellbeing of people, both inside and outside the organisation.

We grew that business every year for 10 years between the GFC and Covid in a declining global market, where the printing of business documents was rapidly disappearing.

One man summed up the reason beautifully upon awarding us a major technology contract following a rigorous tender process. He said,

“We previously assessed companies bidding for our business on the basis of product, price and service. Now we have moved beyond simply what it is you are trying to sell us, and we look at who you are. In doing so we determined that you are a company with good values that align with ours and we believe we are a really good fit for each other.” Such a powerful statement; “we assess who you are.”

Ultimately, businesses exist for people: the people who work within them, invest in them, and buy from them - and these people care about the impact companies have on society as a whole, and their impact on the human rights of others; and those good businesses, and their shareholders will be rewarded. So, I have become a great advocate for the philosophy that "When a business does good, that business will do well"