In boardrooms and executive suites around the world, business leaders - those people who are truly leading and not just managing their companies - are writing a new chapter of capitalism. The new chapter seeks to preserve (and expand) the gains in quality of life, longevity, health and well-being and prosperity that are the best results of this economic system while working to ensure that those benefits are universally shared and they do not come at the expense of the Earth's vast - but finite - natural resources. These business leaders not only understand that these gaps threaten to reverse the gains that we have achieved.
Capitalism's new chapter must preserve those elements that have driven successes while learning and applying the lessons from the past. But for those who question whether capitalism itself is fundamentally at odds with a vision for corporate responsibility and a sustainable future, it is well to remember that capitalism has brought more benefits to more people than any other economic system conceived or tried. That is why what we need to do is write a new chapter and not write a whole new book.
One such leader is Indra Nooyi, Chairman & CEO of PepsiCo, a global company that continues to evolve its food and beverage portfolio, and one that is well regarded as an environmental steward and a leading employer.
I recently had the pleasure of hearing her speak at the BSR Conference in New York where she presented a powerful vision of what this new chapter would look like, how it would be written and by whom.
"This next chapter of capitalism is where the performance of the private sector is in harmony with the progress of society. A chapter in which value is created for the benefit of all, which brings me to this question ... who will write this next chapter of capitalism?"
"The next chapter will be written by all of us- the next generation of executives, subject matter experts, academics and investors, commentators, regulators, non-profit leaders. Everybody has to come together to write this next chapter of capitalism. This next chapter cannot be written by just one person, one institution or one sector because the goal of capitalism is to create value ... financial, societal, scientific or otherwise ... for everyone in society. We know that value is there. We just need to turn the page ... We need to build a sustainable future."
Writing the New Chapter
Perhaps the reason that Mrs. Nooyi's analogy of 'writing a new chapter' resonated with me is due to my own experience with writing. Whenever I write, there is always a balance between covering the subject completely and doing it in a way that is compelling and interesting. This balance is one that many writers, including myself, find difficult.
"We're sitting on this goldmine; this wonderful instrument called capitalism," explained Mrs. Nooyi. "Let's really write the next chapter, so that we don't read these articles about inequality and environmental issues and just sit back and do nothing about it."
"Don't mistake one thing. We are focused on performance. We are delivering short term, top tier financial returns," said Mrs. Nooyi. "But what we do judiciously is balance the level of performance we deliver in the short term so we can keep going for a long time."
This is a key point: understanding that sometimes managing the level and duration of performance remains a delicate balance, and this often requires difficult, but necessary decisions.
"What CEOs have to do to effect change is tough work, so there is nothing called 'the omnipotent CEO'. What we have is a pulpit. We have a platform from which we can talk about issues. We have a company where we can effect change. However hard it is, we can effect change. We can be role models," explained Mrs. Nooyi
Clearly her approach it is not about adding an addendum to the current chapter; "I wanted to change how we made money, not what we did with the money we earned." She asks the ultimate question; "Should we drive short term performance to dizzying levels at the expense of the long term?"
Her vision is clear, PepsiCo will be "(t)he company that models that you can actually focus on the short and the long term and comes out ahead. That's what we're trying to do."
This is a sentiment that comes from a sense of legacy, something one often sees in family-owned businesses (or businesses where the founder remains a spiritual if not physical presence within the organization). In these companies the idea of stewarding something that was built and passed to them - and that they will one day pass down to subsequent generations - comes naturally. But for leaders who are often in the c-suite for tenures measured (and rewarded) in months, it may be hard to have this mindset. That is why it is encouraging to see that the 'revolving door' in the c-suite seems to be slowing down, with the length of CEO tenure increasing. Whether this is part of the new chapter or simply an anomaly due to economic realities remains to be seen.
Editing the New Chapter
Again, from my personal experience, it is very hard to edit my own work. For me there is no substitute for a good, impartial, intelligent editor. And we're going to need one. And we're going to need one.
Why? Because we must also be prepared to edit what we have already written. As Mrs. Nooyi (and others at the conference pointed out) there is an overwhelming preponderance of reports, scorecards and metrics defining and evaluating companies today. This confuses our stakeholders (consumers, communities, etc.) as well as the companies themselves. The only way to address this, to follow the analogy, is that we need to simplify the text. That means we may have to abandon our favorite scorecards, perhaps even replacing all of them with one that serves as a global consensus for what truly constitutes a responsible and sustainable business.
But in the end, this new chapter still leverages the unique power of capitalism. Mrs. Nooyi believes that it will be "a chapter in which the performance of the private sector is in harmony with the progress of society...to build a sustainable future...but only if all members of society - business, government, nonprofit - come together to do their part."