Today I’m discussing the nature of the deep reform that I believe business must lead—nothing less than revamping the entire culture of an organization from ‘short term capitalism to long-term capitalism’. This changes the fundamental ways we manage, and lead corporations as enablers of ‘Corporate Brand Nations’. And this in turn changes how we view business’s value and its role in society.
There are two essential elements to this reform.
First, business and government should change their short-term orientation to revamp incentives and structures in order to focus their organizations longer term (periods of between 5 to 7 years).
Second, executives should maximize corporate value by serving the interests of all major stakeholders—employees, suppliers, customers, communities and the environment.
None of these ideas, or the specific proposals that follow, are new. What is new is the urgency of the challenge. Business leaders today face a choice: Reform capitalism, or let capitalism be reformed for us, through political measures and the pressures of unhappy communities and customers.
The benefits of reform are that it will not only increase trust in the system; it will also strengthen it. Of course reform unleashes the innovation needed to tackle the major societal challenges, pave the way for continued profitability and very importantly restore public faith in business.
This gives rise to ‘purpose driven enterprises….’
These enterprises birth a new cadre of companies that recognize the opportunity to partner with consumers in transforming profit-oriented business into purpose-driven enterprises. These are the companies that appeal to the growing number of socially conscious consumers who want corporations to become genuine about building a better world.
In the South African business context many of these types of enterprises are in the Financial Sector i.e Standard Bank and First National Bank, whilst telecommunications companies like MTN rank similarly.
The rewards for companies and brands are potentially great. Their payoff is the opportunity to become what I call “Corporate Brand Nations” — a new model of business whose market is composed of consumers anywhere in the world, who believe and trust in that brand based on shared values and socially responsible involvement – an excellent example is Coca Cola. Customers globally demonstrate and encourage loyalty to these ‘Corporate Brands’ using Linkedin, Twitter, Facebook, FourSquare, and other social media tools that now empower them to make or break a brand.
Social media has become a powerful tool that consumers are already aggressively using to influence or even force companies into greater social responsibility.
Another example of ‘Corporate Brands’ that incorporate all Stakeholders in brand building is SAB Miller:
“As part of their social responsibility global policy, SAB Miller and its South African subsidiary SAM Ltd – the largest brewing company in the country -, have set 10 sustainable development priorities (including communities, HIV/AIDS, human rights, waste, packaging, responsible drinking, water, energy and carbon, enterprise development and, transparency end ethics) that they pay special attention to and periodically monitor in every one of their affiliates. In South Africa, for example, they have made important improvements in the areas of waste management, communities and, transparency and ethics over the past couple of years. They still are progressing in the areas of responsible drinking and, energy and carbon emissions”.
SAB Millar has responded to rising pressure on businesses to be more socially responsible and rethink value creation as a long-term investment in society. They are a clearly identifiable ‘Corporate Brand Nation’ impacting micro communities and their Global markets.
All Corporate leaders are being asked to make a substantial shift in their thinking about accepted business models.
Once consumers switch to another ‘Corporate brand,’ which they do exponentially faster than at any time in history, the amount of capital that has to be re-invested into the greater community and stakeholders to align that organization, far exceeds the investment required to make the changes now.
Now is the time to meet the challenges for change.