I remember reading an essay from Economist Milton Friedman in my Econ 101 class in college. There was one line that was clear and unbending.
“There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” -Milton Friedman, New York Times Magazine, 1970
This has been arguably the prevailing ethos in American business for decades. Times change, however.
Yesterday, The Business Roundtable, a group of 181 chief executive officers from major U.S. corporations, issued a statement with a new definition of the “purpose of a corporation.”
This was the result of a year-long reexamination on the purpose of business and posited a new definition which includes:
What is noteworthy, is that CEOs like JPMorgan Chase’s Jamie Dimon, Johnson & Johnson’s Alex Gorsky, and GM’s Mary Barra are telling publications, like Fortune Magazine, this is not simply aspirational but how they are currently running their business today.
With an expanded company purpose comes an expanded view of value. Gone are the days where customer-supplier value is solely expressed in financial calculations like ROI or TCO. Taking its place will be a more comprehensive value framework to address the new purpose of a corporation. Dimensions that have always existed such as functional value, personal employee value, relationship value, and community value will now become even more important to structure.
As such, Ecosystems has been working to introduce a new value approach that aligns more closely to the new purpose of a corporation. Learn more here.