ebbf - vafa akhavan - redefining the corporation from making money to creating prosperity
Redeﬁning the Corporation From Making Money to Creating Prosperity Vafa Akhavan Desiree Akhavan EBBF Annual Conference Lisbon, Portugal 10/2012 www.ebbf.org
Lets Talk About• What’s happening in the world• Why we need to redeﬁne the Corporation• How do we get there• Where do we start
Global TrendsAny effort in trying to COMPLEXITYtransition from making (Systems withinmoney to creating Systems)prosperity requires it tobe done in the context COMPRESSIONof global trends that (More with Less)would inﬂuence boththat transition and its DUALITYoutcomes. (Concurrent forces) POLARITY (Extremes of Swings)
Global TrendsSystems within Systems (Ecodynamics): The dynamics ofintegrated ecosystems. There is an ecosystem at work withmultiple systems within it that are all interconnected andinterdependent with various orders of magnitude. Make a changein ﬁnancial planning and it has an effect on operations whichimpacts product development that can determine levels of salesthat impact proﬁts.Compression (Physinomics): The crossroads of physics andeconomics. Financial performance is demanding that companiesdeliver more with less. We want to reduce time to value andincrease value over time. “I want the product developed faster, go-to-market quicker, and sell more at higher margins.” The forces atwork to deliver more with less impacts the economics of anyenterprise.
Global TrendsDuality [(+) x (-) = Restruction): For every force there’s ananti-force. For everything that doesn’t work there are thingsthat work. Trust is being destroyed in the world of businessand concurrently new ways are creating trust. Companieshave eroded employee trust with their actions but newcompanies leverage transparency and social media to buildtrust. Trust is being reconstructed.Polarity in Chasms (Polarchasm): The polarity in the worldis penetrating every ﬁeld of endeavor. Chasms are growingacross areas of activity. Both the horizontal and vertical gapsbetween rich and poor, wealth and poverty, are widening.
Polar Extremes Order of Magnitude• Top 100 US CEOs in 2011 earned $3.14bil in comp.• Top 25 hedge fund managers in 2011 earned $22 billion o Ray Dalio, Bridgewater Associates $3.8bil o Carl Icahn, Icahn Capital Mgmt. $2.5bil• Top earner in 2010? o John Paulson, Paulson & Co. $4.8bil o (=sum income of 150,000 Mississippians) o (=sum income of 5,200,000 Indians) o (=sum 80% of Somalia GDP) o (=sum 310% of public debt Papua New Guinea)
Polar Extremes Order of MagnitudeGlobal top 50 most proﬁtable companies = $853billion proﬁts They are in America, Europe, Asia (China) =sum countries 93-192 ranked GDP =sum countries 57-192 ranked National DebtThe GDP of the 41 Heavily Indebted Poor Countries(567 million people) is less than the wealth of theworld’s 7 richest people combined.Less than 1% of what the world spent every year onweapons was needed to put every child into school bythe year 2000.
Global Wealth IndexNorth America, West Europe & Australia dominate wealth
What’s Going On In The World• Lack of morals and ethics are • World order is emerging not just as a growing necessity but as a reality• Corruption is rampant • New visions are being articulated• The middle class in NA & Europe is • Social investment is spreading eroding • Impact funds are growing• The middle class in BRIC is growing • Meaningful dialogue is taking place• Big part of the world is one class – to redeﬁne a better future The Dying Class • New models of government and• Political & ﬁnancial systems are Corporations are been developed failing • Number of partnerships are growing• Free markets, and the not so free, to address the plight and struggle of serve the few at the expense of the humanity many • Proliferation of access to information• Were struggling in the midst of is enabling greater advances on all growing chaos fronts• Corporations and Banks in North • Bhutan is governed by the Gross America hold $4.0 trillion in cash National Health index and not the going nowhere and doing nothing Gross National Product index
My Friend The CapitalistI sent this deck to a very close friend andserial entrepreneur. He read up to this pointand said the following, and I quote:• Boring, Yawning• You’re putting me to sleep• Heard all this stuff before• SO WHAT?
The So What is ThatI Want to Go From This…… The essence of the overwhelming burden, helplessness and plight of a growing number in humanity.
To This……Joy, well being, work, satisfaction, health, confidence, eager for the future - prosperous
…. And to This.Inventing technology that allows children to drink almost anything which enables them to rise above poverty, develop capacity and contribute to society - prosperous VESTERGAARD
Why Redefine The Corporation? Because when you just make money a cancerous outcome is division and pain but when you create prosperity you generate unity and create a sustainable advancement for humanity “If the human race wishes to have a prolonged and indefinite period of material prosperity, they have only got to behave in a peaceful and helpful way toward one another.” Winston Churchill
Global Prosperity IndexHow does the world fare with prosperity?North America, West Europe and Australia out perform the rest of the world. Tightcorrelation with the Global Wealth Index.
Factors Deﬁning ProsperityLEGATUM PROSPERITY INDEX1. Economy - Stable and growing economies increase per capita income and promote the overall well-being of their citizens.2. Entrepreneurship & Opportunity (E&O) - A strong entrepreneurial climate in which citizens can pursue new ideas and opportunities for improving their lives leads to higher levels of income and wellbeing.3. Governance - Well-governed societies enjoy national economic growth and citizen well-being.4. Education - Education is a building block for prosperous societies.5. Health - A strong healthcare infrastructure in which citizens are able to enjoy good physical and mental health leads to higher levels of income and well-being.6. Safety & Security - Societies plagued by threats to national security and personal safety cannot foster growth in average levels of income or well-being.7. Personal Freedom - When citizens enjoy their rights to expression, belief, organisation, and personal autonomy in a society welcoming of diversity, their country enjoys higher levels of income and social well-being.8. Social Capital - Social networks and the cohesion that a society experiences when people trust one another have a direct effect on the prosperity of a country.
From Making Money To Creating ProsperityHOW DO YOU TRANSITION?
1. Determine the right factors foryour Corporation to create prosperity Diversity & inclusion Employee Rights Opportunity Well being Justice Values
2. Deﬁne The Right Factors e.g. What is Well Being?• I WORK and contribute• I have a PLACE to live• My FAMILY LIFE is balanced• I ENGAGE in the community• There is a LEISURE part to my life• I am HEALTHY in body, mind and soul• I have SECURITY in my life• I live in a healthy & sustainable ENVIRONMENT• I have FINANCIAL MEANS to sustain• I am constantly LEARNING
3. Make The End To Be The Beginning Today’s Beginning is MAKING MONEY WHAT WE DO OUTCOMES WE EXPECT (The Means) (The End) Asset / resource allocation Revenues System enablers Profits Leverage employees EPS MarkCom / CSR ROI / ROA / ROE CSAT, ESAT Equity
Applied LocallyThe difference in making money across regions and countries is Relative Maturity & SophisticationPRINCIPLE KPIs USA INDIA SUMALIA PALESTINE GERMANYRevenuesProfitsEPSROI / ROA / ROEEquity
Make The End To Be The BeginningToday’s beginning should become the means for the new end – Creating Prosperity WHAT WE DO OUTCOMES WE EXPECT (The Means) (The End) Revenues Diversity Profits Justice EPS Opportunity ROI / ROA / ROE Well Being Equity Human Development Values “Education is an ornament in prosperity and a refuge in adversity.” Aristotle
Applied Locally There can be global consistency and unity in factors while there is diversity in relative application & PRINCIPLE KPIs USA INDIA SUMALIA PALESTINE GERMANY Diversity Human Rights Justice Opportunity Well Being Values“I can promise you that women working together - linked, informed and educated -can bring peace and prosperity to this forsaken planet.” Isabel Allende
The Corporation Making Money Resources Shareholder Value $ Market Opportunity Growth & Profitability
The Corporation Creating Prosperity Shareholder Value Creating Prosperity $ Human Capacity Community Development
4. Establish The Environment For Creating Prosperity• CLEAR on the deﬁnition of prosperity • to create prosperity from which not only the Corporation itself, but “We cannot seek achievement society-at-large, can beneﬁt for ourselves and forget about• UNITED around achieving the progress and prosperity for deﬁnition in real terms our community... Our ambitions must be broad• AGILE to achieve the performance balance enough to include the aspirations and needs of• ACCOUNTABLE others, for their sakes and for o to itself (corporate code of our own” conduct) o to the community (external Cesar Chavez audit, subject to international standards-voluntary or not)• PROACTIVE to get ahead of the curve
How Do We Get There• Sincerity of purpose• Live without prosperity “You must be the change you• Change the beginning want to see in the world.”• Design with end in Mahatma Gandhi mind• Be clear on the goal• Create partnerships• Execute with passion• Deliver the results
Attributes Necessary For An Effective Transformation True Seekership Courage Subordination Sacriﬁce Servitude Integrity Fortitude Passion”A mans moral worth is established only at the point where he is ready to give up his life in defense of his convictions.” Henning von Tresckow
5. Start With You The Cornerstone of Change YOUR HEART & SOUL O SON OF MAN!Bestow My wealth upon My poor, that in heaven thou mayest draw from stores of unfading splendor and treasures of imperishable glory. But by My life! To offer up thy soul is a more glorious thing couldst thou but see with Mine eye. (Bahaullah, The Arabic Hidden Words #57)
But I’m Just One Person. So were….• Mahatma Gandhi• Rosa Parks• Nelson Mandela• Zarin Taj (Tahirih)• Konrad AdenauerBut I’m none of these greats. Well, neither isNarayanan Krishnan http://www.youtube.com/watch?v=y_3BEwpv0dM
Your behavior defines who you are.Your legacy is the impact of your behavior on others.The true measure of success is the impact you have on the life of others. Clayton Christianson, Professor Harvard Business School
Workshop Redefining the Corporation: from making money to creating prosperity Vafa and Desiree AkhavanParticipants in the workshop will delve deeper into the four conditions for sustainable transformation of the Corporation.The discussion will follow a consultative approach to defining each of the four conditions. The output of the workshopwill also include specific actions that participants can deploy upon return to their work environments.The three questions:What needs to be changed in order to create prosperity for the world while still successfully conductingbusiness?How can a business change the way it evaluates its performance to include meeting the needs of society andthe environment?How can we decrease the tension between business and society?The four conditions:Sincerity of its purpose is changed from generating proﬁt for owners to creating prosperity for communitiesCreate clarity around the description of prosperity for the entire organizationUnity of purpose to pursue this new goalEstablish an operating model that addresses the ecosystem and can facilitate the execution of a SMART plan
Workshop Program1. Introductions and expectations (10m)2. Review prep work from resources (20m)3. Break into groups: Conglomerate, Mid-cap, Start-up4. Discussion of case studies (45m)5. Reports(15m): Conclusions, next steps
Polar Extremes Order of MagnitudeCHILD CATEGORY STATISTICSChildren in the world 2.2 billionChildren in poverty 1.0 billionShelter, safe water, health For the 1.9 billion children from the developing world, there are: • 640 million without adequate shelter (1 in 3) • 400 million with no access to safe water (1 in 5) • 270 million with no access to health services (1 in 7)Children out of education 121 millionWorldwide child survival • 10.6 million died in 2003 before they reached the age of 5 (same as children population in France, Germany, Greece and Italy) • 1.4 million die each year from lack of access to safe drinking water and adequate sanitationWorldwide child health • 2.2 million children die each year because they are not immunized • 15 million children orphaned due to HIV/AIDS (similar to the total children population in Germany or United Kingdom)
Creating Prosperity: A success storyCarbon For Water begins with the hardships of the people of Kenya’s WesternProvince, where safe drinking water is scarce and the wood fuel used to boilwater for puriﬁcation is expensive. These two factors conspire to makewaterborne illness a daily—and life-threatening—reality among the already poorpopulation. Women and girls are especially vulnerable; they often miss school orwork when fetching wood, and some even fall victim to sexual violence in theprocess.Filmmakers Evan Abramson and Carmen Elsa Lopez introduce audiences to aunique solution to this age-old, and worsening, problem. An innovative companyhas ﬁnanced the distribution and maintenance of 900,000 water ﬁlters inWestern Province, funded entirely by carbon credits. These credits are awardedfor actual reductions in use of wood fuel as well as the anticipated reduction infuture fuel use. The ﬁlters help to slow deforestation, as household demand forwood drops. In this way—and in just ﬁve weeks—4.5 million people were giventhe means to purify their water, which in turn unlocks the potential to improvefamilies’ income, education, and health. http://www.vestergaard-frandsen.com/lifestraw http://www.carbonforwaterﬁlm.com/
Must Watch"Theyre in the business of making money for themselves." Dennis KelleherFrontline 01: Money, Power & Wall Streethttp://video.pbs.org/video/2226666502Frontline 02: Money, Power & Wall Streethttp://video.pbs.org/video/2226666506Frontline 03: Money, Power & Wall Streethttp://video.pbs.org/video/2229573859Frontline 04: Money, Power & Wall Streethttp://video.pbs.org/video/2229573868
REALLY Must Watchhttp://www.youtube.com/watch?v=_1Y0zexvuHw&feature=player_embedded#!http://www.youtube.com/watch?annotation_id=annotation_98911&feature=iv&src_vid=JHki-oxghss&v=E2zYxElCy6Ehttp://finance.yahoo.com/blogs/daily-ticker/whole-foods-ceo-why-pay-employees-more-131203168.htmlhttp://www.youtube.com/watch?v=Rml_k005tsU