Right now, denizens of young corporate leaders and entrepreneurs who are fighting the good fight – getting investors and their corporate leaders on board with new and more sustainable ways to view business – are perking up at the recent words from former GE Chairman and CEO, Jack Welch.
If you have been reading my blog, you have followed my discussions of sustainability as a part of corporate consciousness for the past months. Today, I was pointed towards the latest word from Mr. Welch, publicly stating that it was “a dumb idea” for executives to focus so heavily on quarterly profits and share price gains.
Wait, wasn’t it Welch who originally created the “shareholder value movement” in the early 80s? When and where was this statement made? Click here for the full article in the Financial Times. The big quote was this: “It is a dumb idea,” he said. “The idea that shareholder value is a strategy is insane. It is the product of your combined efforts – from the management to the employees.” Welch also says, “our main constituencies are your employees, your customers and your products.”
Welch’s statement fits perfectly within my view that corporations must shift from a shareholder-centric business model to instead embrace a stakeholder-centric model, which values the relationship to employees, customers, vendors, suppliers and community citizens. Back in November, I wrote a blog entry – “Sustainable Strategy Goes Mainstream” – in which I quoted Jeff Immelt, current Chairman and CEO of GE.
I had just seen Immelt speak at the Business for Social Responsibility conference in New York where he said that he believed the modern corporation (or at least GE) has four major tenants for future operation.; the big take away from his talk was his belief that corporations can and should exist to solve social and environmental issues as a result of their operations, products and services. As a point of interest, the person who sent me the FT article was Jeff Klein, executive director of FLOW Idealism.
FLOW was created by a group of corporate leaders (John Mackey, Whole Foods Market Founder included) who believe just what Immelt stated above. This is the concept of Conscious Capitalism. Quite simply, corporations can and will exist to serve the people who keep them in business. After all, aren’t corporations in existence to provide some product or service for humanity, not the other way around?
A great example is Whole Foods Market’s Whole Planet Foundation which provides $200 (or less) microloans for budding entrepreneurs world-wide (many of whom reside in third world communities). I just learned about the program last month when I was in the Whole Foods in Columbus Circle (NYC) and was asked if I wanted to donate $1 to the cause. This type of program is beyond philanthropy; it is a way that our consumerism can shift communities, changing lives and whole countries. With programs such as the Whole Planet fund, we can begin to return to being world citizens from our most recent role of mere consumers.
It is encouraging to see a corporation take inspiration from the brilliance of Professor Muhammad Yunus, the recipient of a 2006 Nobel Peace Prize for his creation of Bangladesh’s Grameen Bank – a pioneer of microcredit and a tool to empower the poor. Now, GE just lost their AAA rating, so maybe Welch was brought back in to the media arena in order to restore investor confidence, rather than out a true belief in shifting the corporate model. We shall see.
Regardless of intent, his words are bound to have a ricochet effect throughout the corporate world. I look forwarding to watching and listening. How about you?
PS: for those of you wishing to learn more about the concept of Conscious Capitalism, I suggest you check out Michael Strong’s book Be the Solution: How Entrepreneurs and Conscious Capitalists Can Solve All the Worlds Problems or John Mackey’s audio CD called Passion and Purpose: The Power of Conscious Capitalism.