Memo to: CEOs

Business is at a crossroads. Capitalism is facing a crisis. All of us who believe in business -- from CEOs to business-school professors -- must recognize that we have contributed to this crisis. The problem is simple, yet profound: We are all captives of five half-truths that shape the way we think about business and the way we do business. As a result, we may be in the process of destroying the very thing we cherish.

Enron. Andersen. Global Crossing. These business catastrophes are merely the tip of the black iceberg. Under the surface lies a culture that is increasingly defined by selfishness. To some extent, that is natural: We all want to succeed, to strive, to achieve. But carried to the extreme, the glorification of greed is causing a disconnect between the interests of the few and the well-being of the many. Consequently, the public's confidence in business and in large-scale institutions has been shaken.

Recovery is in the air. But so are feelings of deep distress on the part of anxious workers, a call for controls on the part of angry elected officials, and a palpable fear radiating from investors whose life savings may be at risk.

As business leaders and academics, we need to challenge what we do and what we teach. For some years now, we've been captured by a questionable set of beliefs -- assumptions about business that are, at best, half-truths. Here, then, are the five half-truths of business.

1. We're only in it for ourselves. Think of this as the first law of business: In our finance classes, we are teaching a view of the world that says that each of us is obsessively self-interested and intent on maximizing personal gain. Economic Man, we tell our students, has one goal: more. And to get more, each of us is willing to do anything.

It is, of course, a half-truth. To some extent, we are all self-interested. And today, perhaps more than ever, there are plenty of people -- business leaders, financiers, consultants, athletes, professors -- who are willing to sell their integrity for a price. There are people who just want more and who are willing to do whatever it takes -- and take whatever they can get.

But not everyone is self-interested all of the time, out for all that they can get. There are still CEOs who won't sacrifice long-term interests for short-term gains, financiers who walk away from unethical deals, consultants who level with their clients no matter what, athletes who won't endorse useless products, and professors who refuse to bend the truth as expert witnesses. These are people for whom integrity and self-respect are basic values -- absolute needs -- that are not open to negotiation.

Beyond outer material goods lies an inner sense of good. Beyond calculation lies judgment. In fact, that is the essence of real leadership and responsible management: the ability to judge the difference between short-term calculable gains and deeply rooted core values.

But here's the problem: The half-truth of Economic Man drives a wedge of distrust into society. If we truly believe that each of us is nothing more than a calculator, then we become a society of calculations. Business simply won't work if each of us is only in it for ourselves. While we need to have individual initiative, we survive in a context of social engagement.

2. Corporations exist to maximize shareholder value. If there is a mantra that CEOs today have learned to repeat almost mindlessly, this is it. Analysts, the media, and institutional stock traders rate, reprimand, and reward companies and their CEOs based on this single standard of performance.

What's remarkable about the current worship at the altar of shareholder value is that it's a reversal of our prior beliefs and behaviors. We used to say that corporations exist to serve society. After all, that was why they were originally granted charters -- and why those charters could be revoked. We used to recognize corporations as both economic and social institutions -- as organizations that were designed to serve a balanced set of stakeholders, not just the narrow economic interests of the shareholders.

In fact, for years, the CEOs of the 200 largest companies in the United States promoted this view most vocally. Your predecessors of the Business Roundtable regularly asserted a balanced philosophy of corporate responsibility. Here's what they wrote in their statement on corporate responsibility from 1981: "Balancing the shareholder's expectations of maximum return against other priorities is one of the fundamental problems confronting corporate management. The shareholder must receive a good return but the legitimate concerns of other constituencies (customers, employees, communities, suppliers, and society at large) also must have the appropriate attention."