Issue link: https://www.e-digitaleditions.com/i/55680
The purpose of business is to maximize shareholder value. But the definition of 'shareholder value' may now encompass a broader set of factors than traditional capitalist views take into account. that businesses find ways to design and source products so that they use less land, energy, and water." For UPS, "climate change" isn't just about carbon emis- sions. It's also about realizing that issues in one part of the world can directly affect businesses in another. For busi- ness leaders, global understanding is more than cultural sensitivity—it also must take into account how the realities on the ground in markets around the globe must influence the decisions they make. "People often come to us with the belief that, 'If it works in New York, it will work in Mumbai.' But that's just not the case. They often lack understanding of what's happen- ing in the rest of the world," says Abney. "One of the things that we think makes a difference, believe it or not, is wheth- er graduates have passports when they enter the business world. When they've taken part in an exchange program and spent a quarter or a year abroad, they have experience that is incredibly valuable in the global economy." "It's critical that the next genera- tion of business leaders be trained to understand the effects that govern- ment policies, rules, and laws can have on business. I try to tell the busi- ness community that the consequences of legislation are more far-reaching than just taxes. They can affect the cost of doing business, the way of doing business. Busi- ness is better off helping to develop the law, rather than reacting to laws after they're passed." —U.S. Senator Johnny Isakson, R-Georgia success depends on long-term strategy and foresight, not short-term movements in stock price, says Thomas. "If business schools develop that broader view of the dynamics of the global marketplace and how business must operate within it, they'll be send- ing us much more well- rounded employees." 5. Focus on global complexities. Business programs should make travel, language study, and cross-cultural network- ing top priorities, says David Abney of UPS. "Foreign language is an advantage—I tell young people that Mandarin would be my first choice," he adds. "Students really need to understand the differences they'll face in different countries." 6. Teach line-of-sight sustainability. Adopt- ing sustainable business practices for their own sake is not good busi- ness strategy, says Isdell. However, he adds, sus- tainability strategies that connect directly to an organization's long-term interests make solid busi- ness sense and should be an integral part of the business curriculum. What Defines 'Shareholder Value'? Although connected capitalism may mean different things to different companies, these executives believe they have settled the debate about whether business should maxi- mize profit or serve society. They agree: The purpose of business is to maximize shareholder value. That concept has always been a fundamental tenet of capitalism. But they also agree that the definition of "shareholder value" may now encompass a much broader set of factors than traditional capitalist views take into account. For Thomas of Rayonier, maximizing value for share- holders requires attending to the needs of three other stake- holders as well: employees, customers, and communities. "Our customers deserve good service and quality prod- ucts. Our employees deserve a gainful place to work and fair compensation. Our communities expect us to operate responsibly—my company uses the water, land, and air, but those don't belong to us. The community permits us to use them," Thomas says. Is the traditional model of capitalism inherently flawed? No, say these leaders. But they stress that capi- talism must grow and change with the business environ- ment. Connected capitalism could be the next incarna- tion. It's a model that they believe will help them keep their businesses relevant to society, protect their profits by preserving resources, and attract the best and bright- est employees who want careers that coincide with their consciences. With that in mind, connected capitalists aren't just maximizing shareholders' long-term returns. They also might be saving the communities that make their businesses possible. ■ z BizEd MAY/JUNE 2010 33