Open Future NZ "Be the change you want to see in the World"

New Business Memes by John S Veitch

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We've discovered that the principles of the market are not sufficient to control our economy.

We've discovered that the principle of the maximizing shareholder wealth is not sufficient justification for business growth and development.

We've discovered a new business principle; that public service, is an essential purpose for business.

As traditionally understood businesses produce goods and services while protecting the capital assets and the rights of the owners of that capital. This is a simple extension of the divine right of kings to privileged members of the community. External LinkBusinesses and government work together to ensure their mutual success. This narrow view of the world cannot stand, particularly with regard to larger companies.

Any individual person in business is a member of the community in which he or she lives. This membership is real, it's a privilege and it carries with it both rights and responsibilities. The rights and responsibilities of individuals are taken seriously in every community. A handshake is a commitment of more significant personal importance than a contract. People who neglect to honour their handshakes soon lose respect in the community. They may also be accused of criminal acts, and punished by imprisonment (banishment from the community) for breach of contract or for illegal acts.

Companies and company like incorporated societies like Trusts and Foundations, are recognized by Law, and in effect become "members of the community". But in the granting of this "right" the community doesn't get a commitment to act and behave in an honorable and responsible way, that we would expect from any individual. Although the people who make decisions in companies are people, members of the community, as representatives of the company they do not necessarily act in ways that serve the community. New law is essential, that will force incorporated groups to act in socially responsible ways. Monetary penalties have proven ineffective. We need the equivalent of "banishment", so that for serious offenses companies are forced to wind up their operations. Permission to be a business is a right that can be given, and also withdrawn.

In this new business world, External Linkcompanies have a responsibility to protect the environment, to produce products and services that enhance, not harm, the community, and to pay the people who work in the business fair and real incomes. Critical to these objectives is the ability of the community to see inside the structure of companies, and review their decision making process. The community can only be protected against abuse if sunlight can shine on the decision making of the BOD and on the financial transactions of the organization.

This intrusion into the privacy of the boardroom will be strongly opposed by the business community. There needs to be a better balance between the need for privacy and the public need for "sunlight" to expose what businesses are doing. The privileges of incorporation need to carry with them responsibility to act in publicly acceptable manner. A suggested method is the principle of stakeholder management of public companies.

None of us can be sure how this re-balancing of the rights and responsibilities of corporations will be concluded.  The first step is to recognise that a lack of balance currently exists.