The Murray-Darling fish kills and revelations from the Royal Commissions into financial services and aged care have shot climate change and the complementary topic of sustainability to top of mind issues for ordinary Australians. Against this backdrop, Agility Update April is exhorting readers to take the high road and effect a change for good. Two articles offer ideas on how this can be done. The first gives a list of questions to apply to ethical questions that may arise day to day, while the second poses possible solutions for social-minded entrepreneurs and leaders to ensure their ideals can be sustained after their departure. Our third and final article points out an emerging opportunity: ecosystem management. Finally, we wish you and yours a safe and restful break over the coming Easter and ANZAC Day public holidays.
A five-decade study of “virtuous practices” in corporations found that they were all short-lived, seldom surviving through one, or at most two, successions of company leadership. In fact, deliberate cessation of successful, socially desirable practices was practiced particularly in corporations operating in economies characterised by the Anglo-American variety of laissez-faire shareholder capitalism.
There were a few notable exceptions, and these were founded by atypical leaders whose primary ethical value was respect for people. They also developed fully fleshed out business philosophies in which they identified higher purposes for their enterprises than simply making a profit. And, they maintained a commitment to their values through good times and bad, creating sustainable business models that institutionalised virtuous behaviours via organisation structures and governance to maintain a strong corporate culture. But the most significant predicator of virtuous business practices and the key to their sustainability is ownership. When enlightened founders/leaders sell equity to finance growth, enlightened capitalism often falls by the wayside as investors wrest control. Examples include the founding family at Marks & Spencers, Wholefoods and even Unilever.
However, the weaknesses of traditional ownership could be overcome by alternative forms of ownership, such as the trusts, foundations, employee ownership models and benefit corporation charters employed by the notable exceptions e.g. ACIPCO, Lincoln Electric, the John Lewis Partnership, and W.L. Gore. Read more detail and case studies here.
Forward-looking companies may reap enormous benefits through mastering the art of setting up and managing ecosystems to capitalise on their potential power. This Boston Consulting Group (BCG) article based on its extensive research provides a starting point to understanding today’s multi-partner, inter-industry and often multi-national collaborative networks.
BCG’s research into 40 ecosystems revealed 90% of ecosystems involve participants from more than five countries and 77% of ecosystems involve both developed- and emerging–market players; and 83% of digital ecosystems involve partners from more than three industries and 53% from more than five industries. In addition, today’s new digital ecosystems can also feature shorter, more flexible deal structures; and mutual, continuous value creation.
Their analysis of ecosystems across eight industry verticals revealed three primary types of ecosystems:
Read the BCG article for more on characteristics, management principles, value creation model, and key success factors of each. Read also Get Ready for the Chinese Internet’s Next Chapter for examples of how China’s internet giants are using their platforms to offer business solutions.
What questions should you consider before making a decision about an issue with ethical outcomes? MIT Sloan Management Review suggests seven basic queries that leaders should use to make better decisions on tough issues:
Read also a complementary article Can Capitalism Be Fixed? where Oxford economist Paul Collier argues that a disconnect between ethics and economics has left societies torn between “charlatan extremes.” In his new book, The Future of Capitalism (review), he lays out a path to restore the ethical foundations of the free-market system in the U.S. and Europe.
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