‘The purpose of business is business’’
Milton Friedman (1962)
In the last 20 years income inequality has risen with household wealth of the top 10 per cent of society now more than 100 times the wealth of the poorest 10 per cent; The major institutions, such as central government and banks have been found wanting; trust is at an all time low and financial institutions are seen as a key part of the collapse. The big government institutions of the post war era seem unable to work; the NHS, Social Services and Benefits seem are political hot potatoes. There is a growing need for change in the world.
The neat divisions of public, private and third sector are falling away. Charities are filling the gap left by failing public services. The demographics of society are shifting as the ageing population become simultaneously more dependant and more socially active; with the availability of time, ability and a pension. Young people, saddled with student debt and no hope of home ownership remain living with their parents, insecure and frustrated, with diminished job prospects.
Social media hold individuals and governments to account; this rise of the ‘connected society’ drives the need for better conversation rather than state control. In this era of fiscal austerity, the moral volume is turned up.
To date some organisations have responded through Corporate Social Responsibility initiatives, each with a laudable purpose and demonstrating how organisations can improve their world. In the new world order this is no longer enough. Organisations are being challenged to rethink their essential purpose. The narrowness of self interest and share holder value replaced with a wider social activism and moral purpose.
Corporate Social Responsibility is no longer relevant and instead is replaced with a new understanding of the world that drives the moral and social purpose of an organisation. No longer is it enough to focus on our customers; it is about recognising the wider number of lives that we touch.
From customers to the lives we touch; from transactions to relationships; from shareholder value to societal value; from short term profit to sustainable profit; from high street presence to community asset; from wealth creation to creation of the common wealth.
How will institutions redefine their role in rebuilding community, stimulating social activism and engagement for the next 100 years.
‘The purpose of business is to create shared value’
Michael Porter 2011