Jock Mendoza-Wilson shares his thoughts on the future of business

In Davos this week, the need for innovation and dynamism and a return to confidence, particularly in slow recovering Europe, were high on the agenda. The role of business in driving this task is key. But, with trust in business and its leaders at a low, just what is the purpose of business and what is its role in society?

It is increasingly recognized that it is impossible to maximize shareholder value in the longer term (whether for a public or private business) without taking into account fully the external issues and consequences of doing business.

Responsible business practices cannot be consigned to some department manager. Good businesses have the concept of responsibility written into the DNA of the business so that a responsible approach, based on a clear value system, is a core element of the decision-making process across the business from supervisory board downwards.

The often quoted mythical concept of the “license to operate” is also now past its sell by date. Basically, it’s a static, legalistic interpretation based on a compliance culture. But, in the real world, stakeholders’ demands and expectations of business have moved on. What they are seeking now is business to have a clear vision of what its responsibilities are, and to continually improve performance as stakeholders raise the bar. This process of continual development, and that overused word “engagement” with stakeholders, builds trust.

For businesses to gain and build trust, society needs to know what business is doing to contribute to society and for business to show leadership. So, if you plan to optimize shareholder value in the long term (and of course you do), then it’s time to start bringing the concept of stakeholder value into the business strategy. This means open and two-way communication with stakeholders and responding with action as well as words. It also means learning to live with and deal with social media platforms, which can quickly be used to turn stakeholders against businesses and turn a manageable issue into an uncomfortable crisis.

In the future stakeholders will look to business to make profits, but also to do something that is socially worthwhile and relevant to its mission and to the communities it is part of. We are likely to see more businesses in the future prosper, but also have a broader social purpose.

Author: Jock Mendoza-Wilson is Director of International and Investor Relations at System Capital Management, a leading financial and industrial group headquartered in Ukraine. He is also Chair of the UN Global Compact in Ukraine.

Image: Pictured a man walking out of a business building in Tokyo REUTERS/Toru Hanai