Few ideas in our society are more dated or myopic than “the business of business is business.” The famous quote from the otherwise brilliant Milton Friedman has seen its time in the spotlight, but sentiment is evolving to be broader. Like many things left from the 1970s, it’s overdue for a bit of a refresh.
Today, too many people don’t feel that when business does well, they do well. Here in Alberta, a place you’d expect that number to be high, only 49 per cent of people agree that when business does well, we all do well. Most CEOs, though, would fervently disagree. Sitting around the boardroom tables, they feel a real moral imperative to improve the lives of people.
Because the business of business is actually solving the world’s challenges — those of people, planet and profitability.
Every CEO I work with made it to the top of the ladder because he or she wants to make life better for people. Some make it better by helping feed the world, some by ensuring homes stay warm in the winter. Many do it by treating their employees exceptionally well, and offering them the opportunity to build great lives for their families.
A great society is built on a partnership between business, government and people. To create shared prosperity, we need everybody rowing in the same direction.
According to the most recent Trust Barometer, Canadians’ trust in business is increasing, but still running in “neutral” territory. That’s not good enough for most people. They want more. Seventy-six per cent of Canadians want businesses to take a lead in improving economic and social conditions in their communities, in addition to making money. Furthermore, Canadians specifically expect CEOs to lead that charge.
Recently a group of Canada’s chief executives did just that at the Business Council of Canada. In addition to recommending actions that drive investment and employment, they identified several broader aspirations for Canada’s future. They included creating more jobs for Indigenous people, increasing the percentage of women on boards and in C-suites, supporting mental health, developing their employees’ competencies, and encouraging the next generation of innovators and entrepreneurs.
What happened? Some told them to get back to spending their time on the bottom line.
I counter that this is exactly what we should expect of businesses: a focus on shared prosperity.
In fact, their movement is growing. A few months ago the top CEOs of the most famously capitalist country on earth, the United States, collectively rewrote the mantra of a corporation. No longer would it be solely about shareholder value, corporations would collectively commit to articulating purpose and delivering value for all stakeholders: customers, employees, suppliers, communities and investors alike. Movements like Focusing Capital on the Long Term, Coalition for Inclusive Capitalism, The B Team and the B Corp movement all reflect this.
In Alberta this year, a commitment from 40 of the province’s top CEOs led to the creation of the Business Council of Alberta. Its goal? To drive social prosperity just as much as economic wealth here, and by extension, the country as a whole.
Old-fashioned thinking on business’s purpose has led to the greatest fallacy of our time — that we must choose between the economy and the environment. In reality, the solutions to our environmental challenges are found in business and innovation. The economy and the environment can, and must be, mutually supportive.
Yes, business should absolutely make money and create profit. The free market is the greatest force in the history of humanity for generating growth, improving quality of life and reducing poverty.
But no, the business of business is not just business. The business of business is innovating to solve the world’s problems. That means improving the environment, paying fair wages, feeding, clothing, healing, heating and transporting the world’s people.
If we have to rewrite a few business school textbooks, so be it.
Adam Legge is president of the Business Council of Alberta.