Earth 5.0: Total Societal Impact instead of Shareholder Value

„The business of business is business.“ This famous quote is attributed to the US economist and Nobel laureate Milton Friedman (1912 to 2006). Even today, the saying is still regarded by many entrepreneurs as an ideological retreat if they want to conduct their business as free as possible from social obligations.

The influential economist Friedman, who preached the free market, accused dissenters of „pure and unadulterated socialism. In the New York Times in 1970 he wrote: „Business people who talk like that are ignorant puppets of the intellectual forces that have undermined the foundations of a free society in recent decades.

But the days of such name-calling are over. It should have been clear as early as 1972 that the advocates of radical market liberalism are on the wrong track. At that time, the Club of Rome published its groundbreaking study „The Limits to Growth“. And since then it was basically clear that the continual destruction of the environment, the exploitation of resources and the growth of the world population would lead straight to crises that threatened the very existence of the world.

We need a second planet
It is precisely these crises that we are experiencing today: humanity lives beyond its means and consumes far more resources than the planet can renew. In sober terms, we already need a second planet if all people are to be fed and consumption habits are to be maintained or even increased. We Germans cultivate a lifestyle that actually requires three planets. The Americans produce, travel and consume as if there were five planets. The world’s population is growing rapidly, and the new middle classes in developing and emerging countries are expected to see further growth in production and consumption. Mankind is running unchecked into ruin. At the same time, politicians and companies are overburdened to cope with global crises such as climate change, refugee movements and inequality – not to mention wars, ethnic and religious conflicts.

Many entrepreneurs – and also their employees – still find it difficult to stand by their social and ecological responsibility – yes, to acknowledge it at all. According to an international study by management consultants Deloitte, only 57 percent of employees and 53 percent of managers consider it one of the three most important tasks of a company to market products and services that have a positive impact on society.

Podcast: Karl-Heinz Land published a „wake-up call“ in the magazine Managerseminare under the title „Im Dienst des Menschen“. Here you can listen to the article.

Of course you can argue about whether the glass is half full or half empty and what the companies‘ contribution to society should or can actually be. However, there is no arguing that the role of companies is changing in a world where everything is connected – climate change and hunger, value creation and poverty, consumption and resource use, economic success and deep social instability.

Business for the benefit of society
The greater the problems, the more people feel them, the greater the pressure will be to measure the success of companies in the future by the positive contribution they make to society. It should be noted that this positive contribution does not only mean measures with which companies do good outside their business model, for example by setting up a foundation or in the broad field of Corporate Social Responsibility (CSR). Rather, it will be a matter of generating the highest possible „Total Societal Impact“ in the core business itself.

Total Societal Impact, or TSI for short, is a concept presented by the management consultancy Boston Consulting Group (BCG) in 2017. The intended and „comprehensive impact on society“ arises as soon as a company addresses socially relevant issues directly with its products and services. This includes, for example, offers that concretely and demonstrably improve people’s health care or care situation or that are particularly sustainable and healthy. However, the concept of the TSI goes further: A company’s ethical guidelines and corporate culture should be in harmony with the values of a society. The TSI is reflected in the quality of the jobs that a company creates and in its management principles. It is reflected in the way a company treats data and the way it conserves natural resources. It shows s

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By |2019-01-25T09:48:01+00:00Januar 19th, 2019|
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