India has been the topic of much discussion in the recent past. While much is said about about India’s growth numbers, it is equally true that this growth has not been inclusive. India the emerging economic giant is equally an India the land of the impoverished. Home to about 360 million people living below the poverty line.
The Indian Governments recent legislation mandating compulsory spending 2% of the company’s net profits in the CSR activities is an effort to involve corporates in allocating much needed funds to address some of the challenges we face as a society. Many businesses have however strongly opposed this. They believe in the traditional view of business that it exists to maximize profit by fulfilling consumer needs. Others believe that a fund allocation alone is not enough. Unless we redefine the role of business in our society we will continue to have structural problems that create conflict.
Technological advances and complex economic systems have allowed us to flourish. A billion of us are pressing against multiple ecological frontiers. Vast disparities in our society and class conflict further threaten to destabilize our nation. The current western economic model based on unrestricted growth and consumption is obsolete. The alternative is to attempt something fundamentally different, namely to develop the well-being of all of us.
The time has come to initiate a more holistic approach that defines progress.
Gandhis principle of Trusteeship provides a means of transforming the present unequal order of society into an egalitarian one. Under this principle surplus wealth needs to be kept in trust for the common good and the welfare of others. Everything that we do must be economically viable as well as ethical at the same time making sure that we build sustainable livelihoods for all. Economic equality through trusteeship will thus ensure an equitable distribution of wealth amongst all.
At a speech at the IIM World Congress the Public Trust doctrine was discussed as an intrinsic way of thinking long term about business, profits and society. It was said that the idea of profit must be reconsidered…..if resources are held in trust by society at large, then distinctions between “my resources” and “someone else’s resources” are rather artificial. If using my resources to generate a profit also causes the degradation of someone else’s resources, then that is a loss, and a loss that must be taken into account before declaring a profit!’
Trusteeship challenges the fundamentals of business and management education as it is taught today.
Several corporates are today larger than many countries. Given their sheer size and the lives they impact should we not be thinking of fundamental structural changes? Trusteeship in that context can function as a long term solution to solving the conflicts of society. The world of big business and finance after the economic crisis and scandals has come to understand that we need to redesign the systems of corporate governance and finance in order to create more sustainable and responsible economies.
Rather than train managers for organizations that operate within twentieth century logic, management educators and businesses need to become custodians who provide a service to society.
While laws can be drafted to ensure compliance a structural shift is much more in order for long term sustainable impact. This I believe can be done if both Educational Institutions and Corporates work together to encourage Trusteeship in business models that enable companies to co-create with local communities, while providing opportunities for sustainable livelihoods as well as enrichment of natural capital, yet at the same time, innovating and designing for sustainable change.
The Trusteeship Institute with Industry and Academic participation could be set up as a way of promoting this intrinsic redesign of business. Some of the things that could be looked at are:
- Global Responsible Leadership
We need right kinds of people to step in at the right levels of leadership and undertake initiatives that will have a systemic impact. For this a systems-based approach is important to develop the key dimensions of globally responsible leaders. Rather than isolated knowledge a complex interdisciplinary approach needs to be adopted for new leadership education.
The Trusteeship Institute would celebrate innovative leadership which focuses on ‘Responsible growth’.
- Common Good / Inclusive Growth
Business as it is run today is ruled by its quarterly results. Leading to short term thinking and short term profit maximization. This has lead to many serious financial crises in the recent past.
A fundamental shift is required to a paradigm of creating sustainable value for society and the world. Such a shift implies moving beyond the conventional triple bottom line approach of balancing issues of people, profit and planet to simultaneously create positive environmental value, positive social value and positive economic value in every aspect of a business and its related supply chains. This may requires not only practical tools and methods to change practice inside organizations, but potentially includes the fundamental redesign of the modern corporations as well as the legal and other frameworks in which they operate. Such a shift will favor the common good. (50+20 Agenda) Value will be not just the product but the lives that we impact positively overall progress of society.
The Trusteeship Institute’s collaborative initiatives with corporates and business schools can focus on a 3 step approach driven by capability, equity and sustainability.
- Design + Innovation
Indian companies today need to start looking at solving genuine problems and not those created by the irrelevant and artificially created scarcity model. Hunger, livelihoods, education and healthcare are universal needs that are not being addressed, despite being present at every street corner.
Co-creating solutions that solve these problems can be a genuine way to sustainable growth. A Trusteeship based framework that blends design with technology, environment, people, economy and culture can be the primary framework for value creation.
Corporate India can play an important role in driving ground level, affordable innovation in not just products but processes and thinking.
The Trusteeship institute can work with stakeholders to develop innovation frameworks that co-create genuine value for bottom of the pyramid consumers. The engagement is driven by the need to find like-minded collaborators, and solve problems that might be someone else’s solutions.
To wrap up, I quote Gandhi where he says ‘true economics stands for social justice, it promotes the good of all equally, including the weakest and is indispensable for a decent life’. This has implications at the macro economic level as well as at the micro level, as it talks of equitable distribution of wealth being a measure of success, rather than the current form which has high income disparities. It also builds the case for CSR being embedded within the business values of the private sector. Gandhi clearly states that distribution of wealth is not about charity but about ensuring basic human dignity. This is what The Trusteeship Institute could stand for.
References
Education and Looking Beyond Profit – Keynote Address IIM World Conference, Goa, 31st May 2013
http://tharoor.in/speeches/education-and-looking-beyond-profit/
Trusteeship As a Moral Foundation for Business, C. GOPINATH
http://www.gandhi-manibhavan.org/trusteeship.pdf
The 50+20 Agenda, Management Education for the World
http://50plus20.org