(Time to read this Blog article is about 60 seconds)
Why does your business exist? What is its purpose and whose interests does it serve? In 1970, the respected American economist, Milton Friedman, stated, “The one and only social responsibility of business is to engage in activities designed to increase its profits.”
In 1997, the influential Business Roundtable, an association of nearly 200 CEOs from America’s largest and most prominent companies, enshrined Friedman’s philosophy in a formal Statement of Corporate Purpose declaring that, “The paramount duty of management and Boards of Directors is to the corporation’s shareholders.”
But times change. On August 19, 2019 the same Business Roundtable announced a new and very different Statement of Purpose for corporations. This new Statement, one year in the making, is 300 words long and shareholders are not mentioned until word 250. See the full statement below.
We commit to:
- Deliver value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
- Invest in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
- Deal fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
- Support the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
- Generate long-term value for shareholders, who provide the capital that allows us to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.
Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.
How might this new thinking from some of America’s top business leaders help you in clarifying the ‘purpose’ of your business in 2020…and beyond?
For info about booking Donald to deliver his bottom-line insights on management, marketing and profitability at an Industry Conference or Corporate Event…or to discus our Business Coaching program, contact us at firstname.lastname@example.org or by phone at 1 (416) 252-3703 in Toronto, Canada.