Does the stakeholder concept work for companies? In chapter 9, two inspiring examples are given: Mærsk (Jim Snabe) and SalesForce (Marc Benioff). Both companies recognized their dependency on core values such as trust and responsibility for their long-term survival. Both examples are nicely described and explained in the book.
Something that caught my attention is that Mærsk has set a strong target on having small and medium-sized customers. Also interesting is Benioff’s attention for homeless people in the neighborhood of his company and his strong stance on data and privacy standards and responsibility.
Indeed the EU’s General Data Protection Regulation (GDPR), given as a positive example, was a huge step in the right direction. Also the inclusion of genome data was innovative. (I’ve published a paper on this subject: Legal constraints on genetic data processing in European grids.) Still it will lead to costs.
Higher costs do not necessarily lead to less profits long-term. Paying taxes and contributing to environmental, social, and governance (ESG) issues results in less risk. This is also seen by investors, including people such as Larry Fink, CEO of BlackRock, one of the biggest investment firms worldwide, who is losing his patience with short-term optimizing.
The chapter ends with an anti-example, Enron, that only inflated revenue and profits in the short run, and ended up badly.
Optimizing for long-term profits can be done by focusing on five aspects listed in this chapter: accepting a level playing field, increasing working conditions and employee well-being, working with local communities, caring for the environment, and paying taxes for the infrastructure the company depends on.
Maybe the authors did cherry-pick their examples to strengthen their advocacy for the stakeholder model, but in general I think it makes sense that companies do exist in an ecosystem and that in the long run, you do better when your surroundings are helpful and willing towards you.
The WFE proposes business metrics to measure ESG goals in numbers, in order to avoid a narrow focus on just profits. These metrics are, in my view, partly common sense, but also partly subject to ideological and cultural viewpoints, as I noted before in my review of chapter 8. Take for example concepts such as “gender”, “underrepresented groups”, “diversity”, “inclusion”, and “climate change” and you get the Woke idea.
Going ideological doesn’t always help in creating a friendly environment for your organization. Take for example the WEF itself, of the main author of this book. These partly ideologically motivated metrics, goals and concepts resulted in major hatred, mistrust and complot theories in various circles, including journalists (I gave an example in my chapter 2 review) and political parties. I myself have joined the WEF book club on Facebook; I guess I’m targeted for the next round of Illuminati cleansing? See the picture below, which I found on the websiteIlluminatieWatcher.
Of course such complot theories are mostly fun, but when you create your own enemies in political parties and under journalist from mainstream newspapers, then your stated goal to symbiotically thrive in society might be far off.
The problem remains that complex scoreboards and metrics that include societal preferences are always ideological or political. There is a real risk for companies to cross the border of their own corporate domain when entering the political domain, especially when this is done on a global level. Political discourse is divisive by its very nature. Organizations should be aware of this when using WEF metrics and concepts – maybe something the WEF itself should also take into account for their own conceptual thinking.
If you want to follow my adventure with this book, just follow this weblog or check my twitterfeed or Facebook timeline with the hashtag
#wefbookclub or the mention
@WEFBookClub for the next few weeks. You might also order the book, and maybe even join the WEF Book Club on Facebook, so you can make this a participatory experience for yourself.
Also check the index page of my review series that I will update as I add blogposts on this subject.