IIPM: Sustaining Capitalism!

CSR is Passe , Sustainability is in. And B-Schools alike are Waking Up To This Fact. B&E’s Amir Moin writes on why for The Moment, Sustainable Capitalism is the food for thought For Sustaining Capitalism

Had Darwin been a 21st century management guru, a capitalist thinker instead of a naturalist, his famous maxim written way back in 1874 would have read thus – “It is not the most profitable of companies that survive, nor the most fundamentally strong, but the ones that are most responsive to change.” Debates may continue to rage over what Darwin would have penned down, but the fact remains – the sole coffer-filling motive of profit-making is no longer worshipped as the mighty dam that can hold the growing volume of capitalism together. Cracks are getting more visible by the day, and B-schools around the world – the so-called budding grounds for next-gen CEOs – have started appreciating this. Four decades back, when Milton Friedman said, “The social responsibility of business is to increase profits,” the B-schools took it to heart. And the students, they memorised the lessons chalked-out on the green boards. To the extent that every MBA graduate aspiring to be a CEO knew that the day he would become accountable, top and bottomlines are what would be counted as his scores. Decade-long plans went out of the window, and in walked quarterly targets. This became the Holy Grail for the MNCs (led by the alumnus of various respected B-schools), which promised “day to day” accountability to make their shareholders lift the wine glasses in joy. But just like every new victory comes with a fresh backslide, this one too did. The global economic crisis, proved why the profit-based principles can crash. It did. This forced the proponents of management education the world over, to sit up and take note of the fact that it was their very belief in “book profits” that had led to the catastrophe.

While we may continue to criticise corporations and B-schools alike for the lack of integration when it comes to churning out business managers with a vision of “sustainable” profit-making, the good news is that CEOs around the world are increasingly realising the importance of sustainable corporate policies as a tool to not just leverage their reputation in the public domain but one which guarantees their company’s existence in the times to come. In an exclusive interview with B&E for a special CSR issue, Lakshmi Niwas Mittal, Chairman of Arcelor Mittal, had said, “Fundamentally, businesses exist to make profits. Rightly so, because without profits, you have no business and no economic growth and development. But simultaneously, we should work to ensure that our approach never compromises on long-term sustainability & on thinking about the generations to come for short-term profits.” As is apparent, the process has begun, and the breeze of sustainability has started blowing in the front lawns of multi-nationals and B-schools. The thought for the moment reaches out beyond the myopic realms of CSR. It considers responsibility in all elements central to the society – health & safety, environment, human resources, investments in R&D and much more...

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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