Connecting Business to a Greater Purpose

Strategy, ethics and purpose expert Professor Andrew C. Wicks explores how individuals, organisations and society operate in the world — from ethics in business and the value of purpose-driven leadership to stakeholder theory.

Professor Andrew C. Wicks

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SPEAKER_02 0:07

In order for business to work and to be successful, I have to understand business fundamentally as an activity that's about making myself better off, but also thinking about and taking care of others. It's a pretty novel way to think about business, but I think it's a pretty important one. There is no way of doing business where ethics is not present. Every business has a sense of purpose. So I want to make the argument that ethics is there, whether or not we want to see it or think about it. It's a global phenomenon, they're calling it the great resignation. People don't feel like going to work is actually of value to them. To me, that's the challenge of purpose, is not this extra thing that I need to bring in, but how do we think about what we're doing and how do we create an environment in the organization that makes people want to show up and give their best.

SPEAKER_01 1:07

We're trying our very best to keep up with this new form of media platform, but we're very happy to tag along the ride and hope that you are as well. On another note, in the studio today, we're glad to present Professor Andy C. Wiggs from the Darden School of Physics at part of the University of Virginia. From the very beginning of Andy's career, he has been exploring questions about how we make better choices, think about institutions differently, and all how we as humans operate in the world. He's always been asking the real big questions, resulting in the purpose and ethics expert he is today. Here at ABT, Andy is teaching purpose-driven leadership, and we're excited to welcome him in the studio today. So allow me to introduce Andy and ABT's very own Yesper Berkman to a talk of stakeholder theory, purpose, and how there's really no way of doing business today without having ethics included. So without further ado, let's dive into it.

SPEAKER_06 2:11

Alright, so welcome today. I have the privilege to talk to Andy C. Wicks from Darden School of Business. Warm welcome to you, Andy, and thank you for taking your time for this uh podcast. I would just like to start with asking you as you go through campus or talk to colleagues at uh Darden School of Business, what what are some of the topics that you discuss when you run into colleagues on premises?

SPEAKER_02 2:40

Well, we talk about a wide range of topics about how we understand business. And again, especially here at Darden, much of that has to do with stakeholder theory or thinking about business in a slightly different way. I guess one of the things that really attracted me to coming to Darden and to working with my colleagues is Darden is a place that sees business as a human activity done by humans for humans. And I think for a lot of business schools in the world, that seems like a strange idea. Business is about economics. It's about uh, you know, the profit motive, it's about numbers and doing whatever the spreadsheet tells me I ought to do that makes the most money. And while those are important tools, uh I think many people here start with this idea that in order for a business to work and to be successful and to me to feel good about what I'm doing, I have to understand business fundamentally as an activity that's about me living out my aspirations and dreams, making myself better off, but also thinking about and taking care of others. It's a pretty novel way to think about business, but I think it's a pretty important one.

SPEAKER_06 3:40

Absolutely, absolutely. When you talk about the issues with colleagues, etc., is there any reason why it's particular at Darden that that you know stakeholder theory started? You know, we know that Ed Freeman basically um coined the term at the time, but but but is there is there any reason particularly that it happened there?

SPEAKER_02 4:01

Well, uh first of all, I think our founder, Colgate Darden, and the founder of the university, Thomas Jefferson, had a strong vision around sort of the the idea of the humanities and putting human beings at the center of what this institution was all about. And this idea of higher learning, creating community, the importance of values and ethics at this as the cornerstone of all that we do, that's very that's been very well entrenched. And that preceded Ed Freeman. Certainly, Ed coming here has made a huge difference in that. And I was actually a graduate student when Ed first came to Darden. Um I think he got here maybe a year before I did, but I ended up in grad school running into him and taking a class with him, and then he sort of convinced me to go from I was a religious studies PhD, uh, doing medical ethics. And I met him and he sort of opened my eyes to what I might do in business ethics. And I did work with him on the side and applied for a job in a business school. And lo and behold, uh, that's where I spent my entire career is in business school. The whole time I was exploring questions to me that were fundamental about what does it mean to be a human being? How do we live in the world? And how do we make better choices, think about institutions differently that uh uplift humanity rather than make it into a drudgery and something that we kind of we don't thrive through?

SPEAKER_06 5:22

I've actually never asked you this, uh Andy, but but during the during the COVID crisis, did also because of your background with your PhD, coming back to studying um medical ethics, etc., did you do do some specific works with with medical staff or anything during that period?

SPEAKER_02 5:41

To me, there's been so much in healthcare that's been super interesting and challenging uh over the last several years. I mean, what we have asked healthcare workers to endure, the the responsibilities that they have taken on, the burdens that they have borne on behalf of the community, is just remarkable. And I think they've really tested the this Hippocratic tradition that says if I am in the healthcare field, I'm not just, I don't just have a job. It is part of my duty to take care of others. The pandemic put that in a whole new um perspective. I've also been very interested in healthcare on a variety of topics. I've been really interested in the interface of medicine and business. That's less of an issue in Europe because we sort of segregate. You you found a way of creating uh shielding off business for how help from how healthcare works. That's less true in the United States. And I've been fascinated. You know, I started in medical ethics, I moved to business ethics, and I was startled by how little of a conversation there is across those two different divides. And and I I would argue in our country, it's either the medical people have the power and make the people with the money who are running the organizations essentially do what they want them to do, or it's the other way around, and there's not a coherent way of lending those conversations. And I think that's really dysfunctional. It's led to some major problems in our system.

SPEAKER_06 7:01

Andy, just um talk to us a bit about your background, how how you ended up um at the university.

SPEAKER_02 7:10

Um I have to tell you, it was very indirect. I had two brothers, one older, one younger, and I think they came out of the womb knowing what they were going to do with their lives and their careers, and lo and behold, they have both done that. I was somebody who did not know that when I was a kid, and I kind of had to find my way in part by figuring out what was not a path for me. I was lucky to have some very uh helpful uh mentors along the way. And I was taking a reading class with the chair of the religious studies department, reading a guy named John Rawls. And it was through the work that we did that my mentor, the guy I was working with, had actually studied with the guy who wrote the book, a guy named John Rawls. And it was incredibly impactful. And I wrote my undergraduate thesis with him, and he was the first person who really saw in me, hey, I think you should go to grad school. I think you could be a professor, I think he'd be great at it. And I thought, there's no way. But I listened to him and I went to grad school and I stuck with it and along the way found that this was something that I was deeply passionate about. And I've been a professor now for 30 years, and I am so grateful for that mentorship. And I have no doubt I made the right the right choice. It just wasn't obvious to me at the time.

SPEAKER_06 8:22

So, for those of you who do not know uh Anne Z Wakes, he's a professor of business administration today, but he also takes care of the doctoral program where he's a director um at Darwin School of Business. So very much a mentor role model for a lot of uh young people, and um and he also um help us out here at ABT Business School in the field of purpose-driven leadership, so where we combine also ethics uh in in that. Before you went into you know, to also focus very much on purpose, I guess I guess ethics is it's a starting point.

SPEAKER_02 9:01

I went to grad school to study ethics, and I wanted to uh I said I was I was somebody who wanted to ask big questions, but I wanted to ask them with my feet on the ground.

SPEAKER_05 9:09

All right.

SPEAKER_02 9:10

So I was less interested in figuring out how many angels dance on the head of a pin. Uh I I wanted to really understand choices and ways of thinking about life that impact how we live every day. It's really me trying to understand how life works and appreciating some of the challenges uh of what it means to be a professional, either in business or in medicine.

SPEAKER_06 9:30

And I guess in terms of ethics in business, how do you see that development uh over over time? Um, as you mentioned, you've been teaching for around 30 years. So so you know, the the the interest, the ethics in business uh has really come to it's it's like a sweet. You know, you you're the expert. So how do you see that development over the 30 years you've taught?

SPEAKER_02 9:56

Here's here's what I'd say about it. To me, business is an activity, just like all other aspects of life, where ethics is necessarily always embedded. There is no way of doing business where ethics is not present because we have particular ways in which we interact with others. We have certain rules that we either expect people to follow uh or or want them to follow. We have uh ways in which we try to create better consequences for ourselves and for others. We try to use the resources at our disposal to make people better off and to try to minimize the harms. We are embedded in relationships where we are either creating more value and building up the strength of those relationships or eroding and destroying them. And finally, we're taking actions that define who we are. Am I a trustworthy person? Am I somebody who's brave? Am I somebody who's a coward? Uh, those are things that are going on all the time, whether or not we're paying attention to them. So I want to make the argument that ethics is there, whether or not we want to see it or think about it. And I want to say our view about how we think about ethics and business has really shifted in terms of my underlying view about why does a business exist and how should I value different stakeholders? That's maybe the one that's the most striking. And it's also reflected in this more recent shift by the business roundtable, a very prominent lobbying organization in the US that's made up of corporate CEOs, and they explicitly said, Oh, yeah, our view of the firm is no longer maximize profits for shareholders, it's now create value for all stakeholders.

SPEAKER_06 11:35

So businesses are trying to create um more value for for all stakeholders. Um, how how do you see that impacting the the whole climate change? Or is it the other way around that we actually, you know, as we are thinking about uh stakeholders, climate is actually a beneficiary, you could say. Um how how do you see the the two uh interconnect?

SPEAKER_02 12:00

So I I think that it's it's a both and rather than an either or. I think um because we care more about the climate, we we bring that in as what we want firms to do and how we want them to behave. So if I'm an employee and I see my firm creating all these damage, uh all this damage to the environment, that's a problem for me. And it's fascinating to think about, you know, why should I care about stakeholders? One is I say, well, you know, just from this quote unquote moral perspective, I feel like I ought to care about them. But I can also frame it from the lens of it's also about the outcomes. If I don't listen to my stakeholders and they they do want more than just more money and more stuff, it's it's leading me to also care about the things that my stakeholders care about and the reason why they might want to either work for me or for a competitor, buy my product or a competitor's product. If I am not factoring in the environment, if I am not taking care of my workers, if I am not thinking about the community and taking actions that support that, that's one more reason why they may value what I'm providing less. And over time, if I'm providing less and less value as compared to my peers, people are gonna make different choices. They're gonna want to be affiliated with different firms, they're gonna want to wanna buy different products, work for different companies. And if they have the chance to create their own, they're gonna create one that looks more like the things that they value. And yes, money is important, but money is a reflection of how well are you doing of taking care of your stakeholders. We get so caught up in the money piece, we we forget what's the why did I get the money? Well, I got the money because I created value for other people. And if I hold on to that human aspect, all of a sudden these other human pieces start to seem more part of the conversation rather than these extras that somehow are separate from the concern about the money.

SPEAKER_06 13:52

In terms of um the stakeholder theory and then linking it to purpose, is that the next step in trying to engage all stakeholders, or is it an articulation of you know the value of trying to create, or what how does it fit in in your mind?

SPEAKER_02 14:09

So, to me, this focus on purpose is really making us pay attention to a question that is there, whether we want to think about it, uh, and one that people who have defended the shareholder view have really tried to sort of get us to say it's not there or it's not important. My argument is every business has a sense of purpose, whether or not we want one, whether or not we've thought about it, or whether or not we really can understand and articulate it. And oftentimes that purpose is not the one that is written up on the wall someplace that says, here's what we say our purpose is. If I hired a sociologist and I had them go into your organization, they would watch for a couple of days and they could come back and say, what is sort of this implied notion of purpose? Why do people show up? What are they doing? What are they trying to accomplish? And and my argument is many companies hunt on this and just say, well, it's just about making the money. Well, that's yeah, we got to care about the money, but why are we doing what we're doing? What are the things that we won't do? How do we collaborate? To me, a notion of if we are more intentional and more conscious about our notions of purpose, we can we can create and say things that allow people to get more inspired. So if I asked you, Yesper, I would like you to do something for me tomorrow, and it will help make a stranger, you're never going to meet, a couple of extra pennies, please work extra hard. How how is that in terms of getting you excited about doing this thing for me? Not not too too too good. It does nothing. It does nothing for me. But if I said, Yes, bro, tomorrow I want you to do this thing for me, and if you do it, you will help put a man on the moon. Yes, bro. If you do this thing for me, you will help fight world hunger. If you do this, if you do this thing, you will work to improve the lives of other people, right? That's a very human thing that I can get motivated and excited about. And this is not just in theory. We see really fascinating examples of this. If you follow Southwest Airlines, they are a relatively low-cost provider. They are not paying big bonuses for people on the front lines, and yet every day there are people who are committed to creating the most outstanding customer experiences for their customers, and they live that and they do that every single day. What is Southwest Airlines doing that allows people on the front lines to have that level of commitment and to live it out every day? Uh, that's super interesting. On the other hand, I've got companies where people are nailing it in, they're not giving forth their best effort. And as a matter of fact, in this country, and I think it's a global phenomenon, they're calling it the great resignation. People don't feel like going to work is actually of value to them. And I think that's a huge challenge to organizations. How can you talk about what you do and what you provide such that people would like to be part of your organization and show up and to give their very best? To me, that's the challenge of purpose, is not this extra thing that I need to bring in, but how do we think about what we're doing and how do we create an environment in the organization that makes people want to show up and give their best? We have plenty of examples of companies that are doing that badly. And to me, the really great organizations are the ones that can create these deeper senses of connection, meaning, value that make people want to show up and give their best.

SPEAKER_06 17:33

Yeah, a story also that hit the Danish news, uh, the American firm uh Patagonia, you know, because of the the founder basically handouts, you know, all his earnings, uh, or the the company itself. But but it but it he actually always had this build into his business model.

SPEAKER_02 17:53

Um I mean it's consistently been a company that has had a strong notion of purpose. Um, and I want to I want to distinguish between what in America they call a B Corp and a regular for-profit business. I think some companies want to emphasize purpose so much that they they almost put caring about financial returns kind of in the backseat, and they sort of don't want to lose money, but they're really focused on purpose. Patagonia to me has occupied kind of a space in between. I think they're an incredibly interesting company. And again, they've been very clear about wanting to preserve the outdoors, wanting to create um sustainability. I mean, what kind of company says, uh, look, we're only going to offer you four choices in sweatpants because you don't need more than four choices. And they're doing that specifically because they want to limit consumerism. They don't want to uh encourage the kinds of things that have driven people to overconsume. And I find that an absolutely fascinating way of thinking about your business, but they've been incredibly successful with a very significant part of the population. At the same time, because they've taken such a strong stand, I know there's plenty of people that would prefer not to buy from Patagonia because they don't share the values of the organization. And that's one of the things that can be challenging when you take a position, and again, not a political position, but a position in the marketplace. It allows you to be very closely connected with your customers, with your employees, with other stakeholders, but it may also make other people less inclined to want to uh collaborate with you. And just as another related example, I mean, think about a company like Legos. They've done something incredibly interesting. They have created a context where they can ask their customers to come in and collaborate with them to help them create the next generation of products. That's interesting. Why would a customer essentially step in and become effectively an employee? Help that company create new value and doing it just because they love the brand. That's super cool. And I think this is sort of the frontier for organizations now is how do I invite forms of collaboration, people willingly choosing to be part of our process of creating new value in ways that are different and that don't fit traditional rules. And the more I can get stakeholders to show up and to give me support for things that create new value for other stakeholders, I have just created a richer and more powerful organization as compared to my peers. That's the kind of thing that purpose gets into. If we think about that in an interesting way, man, it's it's incredible what we can accomplish. And if you haven't thought about purpose in a way that's clearly connected to the value that you create, you have work to do in thinking about your purpose. And to me, it's really that intersection between your aspiration, your way in which what we do is changing the world for the better, and the value that we create. That's the that's the sweet spot for thinking about purpose. So I would say be clear about that and then find ways to engage with different stakeholders to say, how can the piece of what I do connect to that? If they're having trouble seeing that connection, chances are you have work to be done. But if you've designed that purpose well and you understand the value that you create within your organization, chances are you have ways of connecting the dots between the piece that we do of that and the larger good that the organization does.

SPEAKER_06 21:18

Great. At the end, I know that Ed Freeman also gave a TED talk about that this is the time for businesses to create a new story, taking on the stakeholder theory and applying it really.

SPEAKER_00 21:33

I really believe that we can be the generation that makes business better. To do that, we need a revolution. Now it's not a revolution like we talked about in the 60s and those days. It's a it's a revolution about ideas, it's a conceptual revolution. We need a new story about business. This new story says, first of all, business is about purpose. Purpose right and profits follow. We need to change the story of business and change what we expect and what we do. Putting ethics and values at the center, at least on the level with money and profits.

SPEAKER_06 22:15

How do you how do you see that uh happening? You feel like you know businesses are doing that, but are they are they trying to rewrite the story about business that they don't have any ethics? Uh how how is your view on that?

SPEAKER_02 22:28

I mean, I've long challenged the idea of the aim world business. And again, to me, if you're if you're in business, you're you're doing ethics all the time. It's not a question of doing ethics or not. It's are you doing ethics well or are you doing ethics badly? So you're doing ethics. And and I I I've always been frustrated by this idea that if I can't, if I'm caring about the money, that's the opposite of caring about the ethics. I think caring about the money is a surrogate for caring about my stakeholders because if my business is not making money, I'm not living up the obligation, the responsibility I have towards the people who gave me money in the first place. I need to take care of my shareholders. If I'm not making money, I can't continue to provide great products at a reasonable price for my customers. My customers are not going to be happy with me if I'm jacking up the price, I don't have my product, or I'm making shabby products. I can't take care of my employees who I have a moral responsibility to take out, take care of, if I don't have enough money to be able to pay them a good wage and to create reasonable working conditions that they enjoy and feel like allow them to live out their potential. So as I go through all these different stakeholders, the money piece is not just this amoral thing. It is actually an integral piece of doing ethics well. For some reason, we've told ourselves this story that business is about, uh, and Ed uses this phrase of the people have as well, greedy little SOBs who want to just sort of do each other in. And I don't think that's a I don't think that's an accurate picture of most business people. Most business people want to do well, and caring about money is absolutely appropriate. You should care about the money, just like all the other stakeholders care about their returns. But that's not incompatible with also caring about others. If we drop this idea that if I'm in business, there's only one thing that I can care about and start to realize I can care about multiple things at the same time, all of a sudden I can say, Yes, I'd love to take care of my customers while also doing well financially. And those two things can coexist. Seeing that more complex logic and seeing business as more than one-dimensional creatures allows us a richer way of understanding business and it allows us to feel like we're more decent human beings and our private lives. Yes, but with your partner, do you always do what your partner wants to do? No, yeah, no, not always, and sometimes you think about yourself, sometimes you think about your partner, right? What happens in our private life when our friends stop creating a lot of value for us? We change friends, we stop spending time with that friend. Does that make us only rational calculating self-interested SOBs? I don't think so. We can still care about people and be committed to a relationship, but not unconditionally. The same thing is true in business. For some reason, we get in the context of business, we we won't want to turn it into this two-dimensional world that's just not very helpful.

SPEAKER_06 25:25

Well, it's been a great pleasure, Andy. Thank you very much for joining us. And hopefully, on this final learning point, you are helping us doing even better in the future.

unknown 25:38

Great.

SPEAKER_02 25:39

Thank you so much for including me. Thank you.