Solving the Problem of ‘Business As Usual’

On October 15, lawyers filed what may be the first lawsuit charging that vape-maker JUUL is responsible for the death of teenager Daniel Wakefield, who was found unresponsive on his family’s living room couch by his father. JUUL has denied targeting teenagers with its marketing; however, the Federal Trade Commission is investigating them for just that.

This lawsuit comes just a month after a string of media companies including CNN, CBS, and Viacom said they would stop carrying ads from vaping companies. Public health experts are increasingly alarmed about the numerous reports of lung injury associated with e-cigarettes. JUUL announced it would stop advertising in the United States…. And yet their billboards remain prominent and visible in Canada and elsewhere, signalling not at all subtly that JUUL is in it for the money. Not their customers’ health.

Let me say it more starkly: they’re being sued for killing a minor, and yet they continue to advertise their product to the public.

The ethical argument for responsible business is elementary.

Alongside a great many like-minded colleagues, Blackrock’s Larry Fink has advised his fellow CEOs, “the world needs your leadership.” One wonders how such a missive might have landed with outgoing JUUL CEO Kevin Burns.

It’s easy to pick on JUUL right now, so blatant and brutal is their ambivalence to their customers’ health and welfare, but they’re not that unusual: On January 1, Whole Foods will end healthcare coverage for more than 1,900 part-time staff, despite the astronomically high profits of parent company Amazon. Earlier this year in Canada, engineering firm SNC-Lavalin stood accused of fraud and corruption related to more than $48 million paid to government officials in Libya.

Is this really how we want to allow companies to behave?

Not only do stories like these make for ugly headlines and lead to good businesses being tarred with the same brush of mistrust, they also add up to damage at a societal level. In the United States, one analysis found that over the last 20 years wealth increased among ‘the 1%’ by an “eye-popping” $21 trillion. Meanwhile, “the bottom 50 percent actually saw its net worth decrease by $900 billion over the same period.” Massive wealth concentration for the few, erosion of the societally stabilizing middle class, and rampant, negative net worth for the working class. To put this more starkly: “the three wealthiest people in America have as much wealth as the bottom 50 percent.”

Is this really how we want society to look?

We’re by no means the first to say that business must behave differently. (So must governments, but that’s an exploration for another post.) This was the central argument of Occupy Wall Street, the movement that coined ‘the 1%.’ It’s also central to the work of B Lab, the non-profit behind the rapidly growing B Corp Certification and legislation in dozens of jurisdictions for Benefit Corporations, a new corporate form that embeds responsibility not only to shareholders, but also to workers, customers, good governance, and the environment.

It’s also at the heart of Larry Fink’s argument that “every company needs a framework to navigate this difficult landscape, and that it must begin with a clear embodiment of your company’s purpose in your business model and corporate strategy.” He generated enormous press with this exhortation to corporate purpose. Yet many CEOs continue to struggle with what that means, exactly. It starts with a simple question:

Why should your business exist at all?

How does that question land for you? Does it feel vaguely accusatory? If so, why? Is your answer clear and ready? Or does the question give you pause? Whatever your reaction, consider this: every organization has an impact on community and life. Smart organizations recognize this, include it in conversations about strategy, and strive to make that impact a positive one.

The business argument for responsibility starts with a broader definition of ‘value.’

To answer this question, consider two others: If your organization closed its doors tomorrow, who would miss you? Think not only of the obvious customers who would have to get by without your products and services, but also about your diverse stakeholders. The staff you employ. Your suppliers. Second, why would they miss you? Is it only about profits? Chances are there’s more to it than that…. Camaraderie or a sense of belonging, perhaps? Public engagement in a way that leaves benefits on the communities where your staff and customers live? Positive environmental impacts—essential leadership as we endure the climate emergency.

Answer that why question, and you’re likely to unlock insights into your organizational purpose. Perhaps it builds on your founders’ sense of their own, personal purpose. Perhaps it responds to a clear and growing need in the world. Whatever the case, it will expand your definition of the value you deliver, going beyond the merely transactional toward the truly transformational.

And let’s face it, a transformation is needed…. The deep divides of inequity, the massive chasm between rich and poor, and the climate emergency each are symptoms of a capitalism that doesn’t serve or support, but rather extracts and exacerbates challenges in society.

Companies that continue to drive these divides will not survive as the economy evolves. Already their leaders are vilified—as they should be. They suffer in the market for talent, too, with decreased engagement and increased turnover. And if it’s still purely profits that motivate you, consider this: Altria Group, JUUL’s biggest investor, lost over $30 billion in market valuation in the weeks after the FDA launched their investigation.

It’s time for a change. As B Lab says, we need ‘business to be a force for good.’ Start by defining your purpose—the raison d’etre that drives your profits. Build your strategy on that foundation. Audacious? Maybe. But it’s where the future is taking us…. Let’s be audacious, together….

 

Mike Rowlands is President & CEO at Junxion Strategy, a company that exists ‘to accelerate the shift to the next economy.’ Reach him via [email protected].

Comments 1

  1. Len Laycock

    The opposite of “Business as a force for good” is business as force for bad. Corporations that worsen Climate Breakdown ( ie. are a force for bad), must change their business models very, very quickly, or wind down their operations. If they don’t, or won’t, they must be quickly taxed out of existence. If they persist, their recalcitrant Boards and CEOs must be heavily fined, personally. If that doesn’t change their minds, jail ’em. Writing this, I’m well aware this sounds severe. But I have a strong sense they won’t change without a vicious fight; and, the consequences we collectively face on account of their bad behaviours is exponentially harsher that my comment.

    We have about ten years left to effect truly revolutionary changes. I don’t think enough folks are ready for what’s ahead. Consider: Many laws and regulations will have to change, fast. A society wide Critical Path to effect necessary changes must be detailed out, set in motion, benchmarked, monitored for progress quarterly, legislation similar to The War Measures Act will be required, and broad buy-in must be achieved. A tall order. Realistically, my prescription is unlikely to be filled. Being ‘unlikely’ means there is a high probability that societal norms will break down faster the our climate breaks down. Imagine some rolling combination of the French and Russian Revolutions + WW 1 + Spanish Flu of 1919 + The Great Depression + Massive Migrations + Natural Disasters + The Collapse of The Insurance Industry + Species Extinctions + The End of Democracy + Food Shortages + Crop Failures = I Don’t Want Think About That Will Look Like! ; but I’m sure I don’t want anything even close to it. Now, contrast that nightmare against forcing perhaps less than one hundred or so of the world’s worst carbon emitters to change their business models immediately, or go directly to jail. My prescription doesn’t sound so harsh now.

    Don’t mistake me for a pessimist. I’m busy working on solutions. A transition remains possible if we all, are fierce and determined. As Scarlett remarked upon looking at ruins of Tara, ” After all, tomorrow is another day!”. ; )

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