Does business need a plan b?
‘Greed is good' was the theme of business in the 80s, but more recently the GFC has led to calls for business to rediscover its moral purpose. Now a group of worldwide leaders including Sir Richard Branson have come together to launch the B Team, which aims to 'put people and planet alongside profit'. Can business save the world? And should we all be working towards more altruistic goals?
Corporations are well-positioned - in some ways better than governments - to be instruments of social policy
For decades, the commonly held wisdom has been that business exists to make a profit. Now a group of international business leaders led by Virgin chief Sir Richard Branson and former Puma boss Jochen Zeitz have come together to challenge this view.
The B Team, as they are known, believe that current business practices have contributed to many of the world’s problems and that business now needs to start developing solutions. Their Plan B agenda seeks to replace the current business model by a new version which ‘puts people and planet alongside profit’.
The B Team have set themselves three key challenges initially – pioneering a new kind of inclusive leadership that is fair, honest, positive and creative; expanding corporate accountability beyond financial gains; and developing new corporate and employee incentive structures.
The launch of the B Team follows the public outrage over the irresponsible behavior which led to the banking crisis. It coincides with an apparent decline in trust in business leaders and wider concerns that the capitalist system may be in need of reform.
Research by the global public relations firm Edelman shows that public trust in business leaders to tell the truth is 32 points lower than global trust in business. Meanwhile only 26 per cent of the public trust ‘business to solve issues in society’.
Arianna Huffington, a member of the B Team and Editor-in-Chief of the Huffington Post Media Group, says change is needed: “Business has become too short-termist, opaque and there has been too much focus on profit rather than purpose. Capitalism must work for all of society and must be sustainable over the long term.”
Paul Polman, a fellow member of the B Team and Chief Executive of Unilever, has said: “Our version of capitalism has reached its sell-by date. Never has the opportunity for business to help shape a more equitable future been so great.”
Associate Professor Jay Weerawardena, an expert in social entrepreneurship at UQ Business School, agrees that Plan B reflects disillusionment with the current system. He believes that Plan B is ambitious in going well beyond the realms of philanthropy and corporate governance. However he warns that it will have to overcome resistance from other corporate colleagues because it conflicts with the current emphasis on shareholder value.
“As the economist Milton Friedman – a well-known critic of CSR – would argue, any ‘socially responsible initiative’ will cost extra money. If the CEO’s actions reduce shareholders’ profits he or she is spending shareholders’ money. If the CEO’s actions lead to increased prices, they are spending customers’ money and if they result in lower wages, they are spending employees’ money.”
However Jay firmly believes in the power of business to deliver change. “Corporations are well-positioned – in some ways better than governments – to be instruments of social policy,” he says. “Firstly, they provide a vast array of goods and services and if they have a sustainability focus, it can result in a better planet.
“Secondly, they possess more knowledge than individuals or governments. Thirdly, corporations have a better understanding of handling trade-offs involved with technology usage. Therefore, if Plan B becomes a success it could have a more positive effect than philanthropy, which is unfocused spending on external causes.”
Whether 14 people can bring all this about is another matter. Sir Richard Branson argues that the B Team will be a nucleus group that will influence heads of state and other opinion formers. The team have made it clear they will be working with social enterprises to deliver their goals, and Jay believes this will be critical to success.
“Social purpose organisations are increasingly expected to deal with many of the world’s problems, such as climate change, inequality and poverty, and lack of access to healthcare, clean water and energy. All of these are people and planet issues. Social enterprises have a wealth of expertise in developing solutions to social problems and can operate in locations like war zones where support structures are lacking.
“By forging a closer working relationship with social enterprises, the B Team can connect the passion of their members with organisations which have the expertise to deliver solutions.”