Getting back to what matters – creating long‐term economic and social value

Abstract

Purpose

This “Masterclass” aims to guide executives through three complementary sets of insights into what is fundamentally wrong with the current model of capitalism, and the specific actions that they can take to create long‐term economic and social value.

Design/methodology/approach

Three sets of insights are compared: Fixing the Game by Roger Martin; “Creating shared value” in Harvard Business Review by noted strategists Michael Porter and Mark Kramer; and Higher Ambition by Michael Beer and his co‐authors.

Findings

Martin tracks the evolution of “shareholder capitalism” during the latter part of the 20th century and explains why it has become so detrimental. Porter and Kramer show business leaders how to restore credibility to capitalism by adopting a view of corporate social responsibility. Beer and his co‐authors explain “why” high performance over time results when business leaders simultaneously create economic and social value.

Practical implications

Some steps that executives can take are: focus – shifting the focus back to the customer and away from shareholder value, turning primary attention back to the real market and away from the expectations market; executive compensation – restoring authenticity to the lives of executives by eliminating stock‐based compensation and creating new models that focus executives on real and meaningful goals; and the civil foundation – defining and institutionalizing a more expansive societal goal for business executives ‐ to be a force that improves the society in which they live and work.

Originality/value

The author synthesizes three sets of cutting edge insight about how to transform a company to achieve long‐term value and social responsibility.

Citation

Leavy, B. (2012), "Getting back to what matters – creating long‐term economic and social value", Strategy & Leadership, Vol. 40 No. 4, pp. 12-20. https://doi.org/10.1108/10878571211242902