It is critically important that business does not make the same mistake as during the last financial crisis, when bailed out corporations failed to respond quickly enough in recognizing their social license to operate, according to Colin Mayer, Peter Moores Professor of Management Studies at the Saïd Business School, University of Oxford.
“The consequences of doing that will be much more serious now than they were 10 years ago,” he said during the webinar “Why Companies Need to Rediscover their Purpose.”
Business is one of the most important institutions in our lives: it clothes, feeds and houses us, employs us and invests our savings, and it is the source of economic growth and prosperity around the world. But at the same time, it has been a cause of growing environmental degradation, inequality, social exclusion and mistrust, he noted in a conversation with the Santiago Center Director Karen Poniachik and Bernardo Larraín, President of Chile’s Federation of Industries (Sofofa).
In response to this current pandemic fueled by the Covid-19 outbreak, less than 40% of people around the world believe that business is doing a good job in putting people before profits, looking after their employees adequately, or supporting their suppliers.
However, “purpose allows a way for companies to steer themselves through this crisis and out of it,” Mayer said. “Purpose indicates where companies can invest to produce real value propositions for their investors and well as for society and customers… The purpose of a business is to produce profitable solutions to problems. It should not produce problems for people or planet.”