INSEAD VISIONARIES CONFERENCE

Transcription

1 INSEAD VISIONARIES CONFERENCE 21 March 2018 London Pre-reading

2 OVERVIEW INSEAD s mission has held steady since its inception: to develop global business leaders who through their skills, knowledge and entrepreneurial spirit promote peace and prosperity around the world. Today, the world experiences many unpredictable economic, political and social forces. As The Business School for the World, we ask ourselves how we can best confront these challenges and seize these opportunities. The INSEAD s Global Institute for Business and Society will explore how business innovation can offer new directions and deliver creative solutions for society s rapidly changing needs. Business as a Driver of Growth In reflecting on INSEAD s mission in a changing world, Dean Ilian Mihov formulated a vision for the school based on Business as a Force for Good. This concept has several possible interpretations. In a narrow sense, business creates value for the society by generating employment, by creating economic activity that leads to reduction in poverty, by delivering goods and services that people want. In terms of poverty reduction over the past 25 years, more than one billion people have been lifted out of poverty with the key driver being economic growth. This unprecedented leap in economic well-being fuelled by business innovation constituted a massive change in the fortunes of the poorest people in the world. This concept of business driving growth is integral to the greater mission of INSEAD. Much of our research focuses on how firms can achieve greater productivity and innovation, whether by improving supply chains, better managing risk, or gaining a deeper understanding of the evolving needs of customers. Through our teaching in Degree Programmes, Executive programmes, and company-specific programmes, we transfer this knowledge thereby directly influencing the decisions of current and future business leaders. But there is a broader, and increasingly more important, interpretation of Business as a Force for Good. Faced with debilitating financial crises, degradation of the environment, rising inequality, and persistent gender biases in the workplace, more and more members of society are coming to the realization that the market mechanisms that create spectacular growth do not always deliver the best outcomes for the public. To deal with market imperfections, governments continuously introduce new regulations. In some cases, this is the appropriate response that leads to better outcomes for the society, but in many cases regulations are ineffective, impossible or even counterproductive. Business as a Force for Good The rising tension between business and society calls for a new way that businesses think about their role. The objective of the decision-makers should be not only to create value for the company, which is an important and a necessary condition for survival, but also to think about how in this process of private value-creation the company can create positive social impact and minimise the negative externalities on the society and the environment. There is a need for new theoretical frameworks, strategies, and analytical tools to help leaders create the next generation of business models that will allow companies to fully embrace this vision. As a leading business school, INSEAD has a key role in developing the future leaders, managers, and entrepreneurs who understand the challenges and have the tools to formulate solutions that will align the interests of business with the societies they serve. 2

3 Launching the INSEAD Global Institute for Business and Society To establish a new way to study business and teach future decision makers, INSEAD will launch the INSEAD Global Institute for Business and Society this fall. The Institute will develop and transform our research, teaching, and outreach to strengthen the vision that businesses and their leaders can be a force for good by pursuing more than productivity gains and shareholder value and, as a result, lead a new way of doing business. This aspiration is a direct expression of our founders values and vision that business must be a force for good. The INSEAD Visionaries Conference 2018 As the school s closest friends and as leaders who are familiar with the responsibilities of aligning business and societal goals, we seek your thoughts and ideas on key initial focus areas of the Institute: (1) gender, (2) sustainability, (3) wealth inequality, (4) ethics, (5) social impact and (6) tech for good. Below you will find more information on these areas and the main questions our faculty are challenging themselves to answer. In preparation for the wold café discussions at the Visionaries Conference 2018, we encourage you to read about each of these areas and consider how global business leaders, managers and entrepreneurs like you can use their expertise and influence to better align business goals with pressing societal and environmental needs. We are looking forward to hearing your input on how we can better educate future business leaders to be socially minded. 1. Reaching Gender Parity For thousands of years, social norms have dictated that men and women should be treated differently. As a result, in all countries across the globe, women who want to work face more hurdles than men and, when employed, are often paid less for the same work. Despite mounting evidence showing a link between gender-diverse leadership 1 and higher performance 2 as well as significant research suggesting that gender income gaps can dampen productivity and growth at the worldwide level, 3 the pace of women s advancement into top management positions remains slow. In the G20, for example, women only make up 17% of corporate boards and 12% of executive committees. 4 It is clear that the dynamics, causes and consequences of gender imbalance are not yet fully understood, limiting our ability to reach gender parity. What are the organisational barriers to achieving gender parity? How will promoting more women to top positions help businesses? What facilitates female leadership? 2. Driving Sustainability The social and environmental impact of businesses has become a central issue in modern society. As the world s growing population currently consumes more resources than ecosystems can provide, consumers are becoming more aware and conscious of the social impact of business 1 Noland, M et al, Is Gender Diversity Profitable? Evidence from a Global Survey, February Global Finance Magazine, Female CEOs Outperform, But Glass Ceiling Remains, February IMF Blog, Empowering Women, Tackling Income Inequality, October McKinsey&Company, Time to accelerate: Ten Years of insights into gender diversity, October

4 practices. Furthermore, climate change is constantly on the news and communities are demanding higher standards of air, water and soil quality. Fortunately, there are many opportunities along international supply chains to meet resource shortfalls, ranging from improving yields to reducing inputs and waste 5. Though the technology and products to address today s global environmental and social challenges already exist, the business models, operations strategies and analytical tools necessary to implement, distribute, and utilise them in a wide scale are, in general, inefficient. How can businesses align their operations with the UN Sustainable Development Goals to promote inclusive and sustainable industrialization (Goal 9), ensure sustainable consumption and production (Goal 12), and combat climate change and its impacts (Goal 13)? What should decision makers prioritise in addressing sustainability? To what extent should business interact with government to drive sustainability? 3. Decreasing Wealth Inequality Widening income inequality is one of the biggest global challenges facing our time. Since the 1980s, income inequality has increased around the world, particularly in North America, China, India and Russia. 6 The world s top 1% of earners captured twice as much of the returns from economic growth as the poorest 50%, thereby claiming 82% of the global wealth generated in As a consequence, the richest 1% now hold more wealth than the bottom 99%. 8 Several factors contribute to these trends, including globalization, demand for skilled vs. low-skilled or unskilled labour as a result of technological advancements; declines in protections for workers; and decreasing tax rates for the highest earners. Social and economic disparities within segments of the population can have significant implications for growth and sustainability. The lower and middle classes are faced with shrinking employment options and stagnant wages, while those at the top enjoy considerably greater returns and opportunities. Does rising income inequality call into question the legitimacy of capitalism? How can businesses act as redistributors of wealth? Can a basic income reduce inequality? 4. Making Ethical Decisions Ethical decision making in business has increasingly come to be seen as not only the right thing to do but also critical to business success. Because we live in a closely interconnected world where businesses are exposed to stricter scrutiny, social and environmental problems are becoming business problems. Companies must therefore operate with greater responsiveness to ethical concerns and to their social and environmental impacts. The best companies go further by not only protecting their brands and corporate reputations but also seizing opportunities to create value for their stakeholders through proactive efforts to give attention to 5 International Trade Centre, State of Sustainable Markets 2017, June Oxfam, Reward Work, Not Wealth, January World Inequality Lab, World Inequality Report Credit Suisse, Global Wealth Report

5 ethics, corporate social responsibility and sustainability. As a result, firms that strategically integrate responsibility and ethics into their company culture and operations can find themselves both doing well and doing good. What informs the ethical judgments of business leaders? What are the factors that give rise to ethical or unethical conduct in organizations? What can be done to increase the likelihood of good conduct/reduce the likelihood of bad conduct? 5. Guaranteeing Social Impact The conditions that economic theory requires for markets to fully attain societal goals rarely exist in practice. At the same time, relying just on governments, philanthropy and international aid has proven to be insufficient. Thus private investments done with an intentionality for a positive impact are increasingly critical for societal progress. However, just having good intentions is often not enough to make the desired impact. Businesses must integrate a broader social agenda into their strategies to build financially viable, effective and scalable market-based solutions to meet critical societal needs. Is creating positive social value necessary for businesses today? What should business leaders consider when choosing between social impact and profits? In what ways is business better than government at addressing the needs of society? 6. Developing Tech for Good After an initial phase of euphoria about how the digital world improves our daily life with virtual assistants and other gadgets and services, we are coming firmly back to earth. The breakneck speed of digital development has created an increasing number of concerns about our right to privacy, the increasing market power of the digital giants, and the significant impact that machine learning and artificial intelligence will have on our work. Moreover, few companies can afford the luxury of having an open debate around these ethical dilemmas because market forces push them to play the game. As a result, the pursuit of individual digital business interests can lead to significant negative externalities for society as a whole and there's a strong risk that we ll end up in a situation that none of us find desirable. Do we need a more human approach for tech? To what extent is tech a force for good? How can businesses reap the benefits of technology while limiting its negative social impact? 5