It's been a big travel month, speaking in Phoenix at GreenBiz--where oxymoronic ideas like "Sustainable Beef" took the stage; in Evanston, IL to drill down on who's really in charge here? --a provocative exchange of views at the Kellogg School of Management, and in Minneapolis for Law and Business Day at the Nobel Peace Prize Forum.
The bottom line? Business is recognized as the best game in town for systems change.
This doesn't mean businesses act alone--far from it. There is still a significant need for both oversight of business and key partners, yet business leading on complex problems is the new normal, whether you are concerned about another Rana Plaza or species extinction. NGOs play multiple roles from campaigner, to auditor, to boots-on-the-ground partner, and sometimes all three--a testament to the weakness of government, which has been slow to regulate, and thus, to reward innovation and align incentives in the private sector.
This governance gap #CorpGovGap and balancing act was one of the key ideas explored on a chilly day in Evanston at a conference co-hosted by The Kellogg School of Management at Northwestern and the Aspen Institute Business and Society Program. Conversations about of the motivations for--and limits of--business self-policing allowed business executives to mix it up with campaigners, policy gurus and sector-hoppers.
One visible trend visible at both Kellogg and GreenBiz is that NGOs now recruit talent from the ranks of large public companies to increase capacity to consult back to businesses working to make headway on messy problems--from the safety of the food system to the design and implementation of global labor standards.
The fact that Apple is moving production capacity to multiple suppliers to reduce the single source risk that exploded when the iPhone became identified with labor abuse makes clear just how real these problems are. As one battle-weary executive at the Kellogg conference noted, "Legal compliance isn't enough -- forget fair and start thinking real."
Schools like Kellogg solve two problems when they convene a conference like this one. First, they connect faculty to real, live case examples of nitty-gritty business problems and complex tradeoffs to pursue in research and teaching. Second, they respond to student demand for course content relevant to a job in consumer-facing and resource dependent business, or to consult on business strategy and brand value. PwC, for example, has built a significant practice advising on strategy when stable access to natural resources become key costs of doing business. These businesses and professional service firms are ahead of academia in adapting to this brave new world.
Real change is taking place in business schools. That doesn't mean everyone is happy about it. In a throwback to another era, the Manhattan Institute for Policy Research is now helping set up "Adam Smith" societies for students in biz schools, and entities with a stake in the old economy are offering steep financial incentives for schools that hew to the ideology of "free enterprise."
Given that these societies will be meeting on university campuses, one can always hope that they will have reading lists, including a full sampling of Adam Smith himself. Given the degree to which his name has become synonymous with unfettered markets, it's easy to forget that Smith actually believed in regulation--he supported laws banning usurious interest rates, for example. He also thought it was important for humans to move beyond selfishness and show concern for others, as he argued at length in his Theory of Moral Sentiments.
From where I sit, there is no turning back the clock. As the boundaries between sectors continue to blur, it's a good time to both review bedrock theory and carefully observe how it intersects with, and is influenced by, current business practice. Business schools can play a critical role in this transition--which I think Adam Smith would fully appreciate: business working to respond to changing tastes and demands from consumers, employees and citizens, in pursuit of solving real problems and filling a market need.