Today’s sharpest business executives “don’t want to spend their life creating ‘shareholder value.’ That’s not their purpose in life. . . . They want to have a purpose. They want their company to stand for something that matters – to be ‘moving the needle’ on something important.” Just a few years ago, the idea of a business professor suggesting that shareholder value is not the be-all and end-all of corporate life might have seemed unthinkable. Yet a renowned Harvard strategist, visiting the World Bank last week, analyzed the private sector’s current woes and offered a way both to repair public faith in business and to constructively “reinvent capitalism.”
Creating enduring value – not just for a company’s stockholders, but for all of society’s stakeholders – requires companies to reconsider the logic of how they do business, said Michael Porter of Harvard Business School, a pioneer in the field of corporate strategy. Business leaders, said Porter, should focus on creating win-win outcomes that strengthen society as well as satisfy the profit motive. They can do so by reaching out to serve broader constituencies and by being attentive to long-term social impact.