Business Determines Society’s Morality

“How many of you would be interested in learning more about impact investing?” I asked 35 angel investors attending last month’s Angel Lounge at the ATDC.

Once this was a topic I was totally uninterested in, but times change.

Recently, my son David asked if I would edit his superbly written paper on “The Business of Business Is Social Improvement.” It was part of his admissions application to the London School of Economics. David was applying to their executive MBA program focused on Impact Investing.

After reviewing his paper, I said, “Great job, but I need to know something. Do you believe what you wrote?”

He answered with a resounding, “Yes! This is the future of business and the future of investing.”

His thesis is best described in the last paragraph of his paper. Milton Friedman said, “The business of business is profit.”

In today’s business environment, profit is not enough.

A model which incorporates social improvement will not derail the capitalist system. It is a necessary iteration for society to move forward.

Social businesses provide increased value for all stakeholders because of these competitive advantages. The result? Markets will be drawn toward social progress, and lives will be transformed in the process.

When I questioned David, he didn’t budge.

He said, “Consumers will prefer to buy from companies with great products driven by a strategy to change the lives of people for the betterment of society. I believe great products will not be enough.”

I respect David. Because of my respect and his experience, I listened. I also gave further thought to this new business idea.

This is one of the reasons I asked the angel investors at Angel Lounge if this was of interest to them. I was surprised by the number of hands which went up. I am behind the curve on impact investing.

And it keeps coming up.

Yesterday I was meeting with an audiologist. I realized when I am in crowded places like restaurants or conferences, I must work hard to hear what people are saying.

She told me, “The most current research changed how we look at hearing. In the recent past, we focused on the ear when we should have been focused on the brain. The ears don’t hear. The brain hears.”

This led to a discussion of the just-released, state-of-the-art hearing aids. She said, “They connect via Bluetooth seamlessly to the iPhone.”

I said, “I don’t buy Apple products.”

“Why?” she asked.

“Because Tim Cook took a social stand against the state of Wisconsin. He threw all the economic power of Apple behind his personal position. He threatened the governor and told him Apple would never invest in Wisconsin.

“He sells consumer electronics. I don’t think it is the CEOs place to shape social issues.”

She said, “The next generation may not agree with you.”

Then I told her the story about David and his LSE admissions paper.

She said, “I think he is right.”

The influencers of the world changed, and I didn’t even notice.

I missed it completely.

It used to be the church had the power and recognition in society to set the moral agenda. The power switched to the state and federal government beginning in the early 1970s with Roe v. Wade. I believe this was a result of us baby boomers leaving the church while focusing on work and financial success. And we took our kids with us on this journey.

But now, society no longer trusts the government. So who do we admire and trust? The CEO.

Society’s moral agenda is now led by corporations. Powerful and financially well-heeled companies like Apple. These companies will set the moral agenda for the near future. They have the money, brand, trust, and influence in our society. They are most admired by the consumers who support them. And the consumers want them to have a moral agenda. The consumers even expect it.

Just today I opened The Wall Street Journal and there was an article on Patagonia, the sporting goods clothier. It reported on the logoed Patagonia vests being sported around Manhattan. The reporter wrote:

“On weekdays, foot soldiers in New York City’s business-and-finance army parade through Manhattan wearing Patagonia vests embroidered with such names as JPMorgan Chase, Nomura, and BMO Capital. Like a pair of $1,500 John Lobb oxfords, these co-branded power vests can intimidate and draw envy.

“To the dismay of those yearning to be swaddled in one, Patagonia said last week it was keeping new orders of the torso-hugging showpieces reserved for ‘mission-driven companies that prioritize the planet.’”

It is happening.

Now these big, influential companies will only take orders from people who are “doing the right thing” for society and our planet.

We need to ask:

  • Who are these CEOs?
  • Where did they get the moral guidelines they practice?
  • Can we trust them with influencing our moral compass?
  • Is this how I should run my company?
  • Do I need to take a moral stand with my products and services?
  • Will I be forced to take a stand even if I don’t want to?

I don’t know the answers to these questions. But I think the most important question on the list is this:

Where does a CEO get her moral foundation?

There are only two places. One is from ideas and beliefs of our society, and the other is from God. CEOs today demonstrate their foundation through their words and actions.

I believe we are in the midst of a battle for our society’s future morality.

What is right, and what is wrong?

It will not be played out in the church but in the marketplace. It is these CEOs who lead these big brands. They have our trust and admiration. We want to be like them. We want to believe what they believe. They are our leaders.

But one must ask: “Who are they following?”