I have just read Paul Polman’s book, Net Positive: How Courageous Companies Thrive by Giving More Than They Take, written with Andrew Winston. To be honest, it really was as if I were reading a book about the Caux Round Table’s Principles for Business – a book about how to be a moral capitalist. Net Positive and the Caux Round Table Principles are two sides of the same coin.
Thus, I can recommend your reading Paul’s book and buying it too.
Paul provides 5 principles which create an effective decision-making mindset. To use the term “cognitive bias” in a positive way, Paul’s Net Positive Principles create a bias in our thinking which guides analysis and action in certain ways more than others and for the good. His principles echo and dovetail with the 1994 Caux Round Table Principles for Business.
Paul’s Net Positive Principles are:
1. Take ownership of all impacts and consequences, intended or not.
2. Operate for the long-term benefit of business and society.
3. Create positive returns for all stakeholders (Note: these returns do not have to be only monetary).
4. Drive shareholder value as a result, not a goal.
5. Partner to drive systemic change.
In short, Paul and Andrew have opened a window to the mechanics of planning and executing stakeholder capitalism based not on speculation or wishful thinking, but on Paul’s very practical experience.
The requisite moral and intellectual framework for any work which is net positive is a sense of fiduciary duty, of stewardship, of an inner compass that transforms work into vocation, to use Christian thinking (or to life as a khalifa to use Qur’anic thinking).
In the formation of the Caux Round Table Principles for Business, a call for this special personal commitment to responsibility – the self’s orientation towards virtue – reflected 1) Catholic social teachings on respect for human dignity, 2) the Japanese mindset of kyosei or living symbiotically with one’s ecosystem and 3) Protestant emphasis on ministry in this world.
A second gift that Paul and Andrew give us in their book is a management approach to the complexity of full-service net impact accomplishment. Achieving the good over a wide range of activities and impacts is not simple or easy. It takes systems thinking and cross-sector collaboration.
First, consider the problem of what goods and services are to be provided by the firm: public goods or private goods? Is our measurement of the good to be personal or communal? What if one good conflicts with another?
Generally, firms are expected to produce private goods and services for customers who buy them and use them personally. Economists call these private goods “rivalrous,” as they are possessed by an individual and not by many all at once. My car is my car, not yours. My haircut is my haircut, not yours.
On the other hand, public goods and services are called non-rivalrous, as they can be shared by many individuals. An additional consumer does not take away from the enjoyment of previous or future consumers – consider who benefits from clean air and public safety or other benefits of law and order.
Markets work best for private goods, governments for public goods. We buy our private, rivalrous goods with our own money and we pay taxes to the government for it to provide us with public goods.
(Now, we also pay transaction fees to the government for certain services, as if it were a private business – highways, admission to national parks, car registrations – use of which are personal to us, so more in the form of a private good.)
Another complexity is the value notion that people are entitled to private goods, even if they can’t afford them – food, housing, a basic education, clean water, etc. This is a matter, we say, of human rights to enjoyment of social and economic goods and opportunities. These goods and services are called merit goods – they have merit separate from market pricing and availability.
To make thinking about impacts still more complicated, some goods and services are both private and public. For example, education and health. As consumers, we “own” the impacts of and personally benefit from getting educated and having good health. But at the same time, the public benefits indirectly from our being better educated and more healthy. In a time of Covid, our being vaccinated lowers risks for us individually and for those around us. Covid vaccines are a private and a public good.
In addition, there are public and private “bads.” Drinking, smoking, doing hard drugs and gluttony are ‘bad” for us individually and sometimes for those around us. Companies which sell tobacco, guns, excessive opioids, etc. are considered public nuisances and we use law to regulate their operation of private businesses. Pollution and global warming are cases of public “bads” arising from the production and consumption of private goods.
Now, Paul and Andrew argue that private firms should include in their thinking about their net impacts all these different kinds of goods and services. Providing a wide range of public and private goods and avoiding public and private “bads” should be the aim of an enterprise that thinks holistically.
Now, figuring out how a private enterprise can deliver all these goods and services – for many of which there is no private market – can make your head spin and feel like giving up. Who will pay or reward your firm for not producing a public “bad” – government, charities, your generous neighbors?
Paul and Andrew have a management approach to address the challenge of complexity in the provision of goods and services that I have not seen proposed elsewhere: collaboration.
From his experience, Paul advises enterprise collaboration with governments and NGOs/nonprofits. Allocate work according to competence and authority – honor the remit given to each organization, as the Brits say so concisely. He gives some examples of Unilever doing just this to help itself, its shareholders, other stakeholders, society and the world.
This is cross-sector collaboration and it works. But it needs coordination, facilitation and forums (round tables maybe?) for the partners and collaborators to put their heads together, assign the work – division of labor, a la Adam Smith – decide on metrics and set goals. Paul is suggesting that business can take a lead role in bringing partners to the table to each contribute as best they can to providing more “good” public and private goods and services and less “bad” public and private goods and services.
I strongly recommend that you read Paul and Andrew’s book.
Again, you can get it here.