The future of business is business. Future business more global and more decentralised, making sure that enterprises are a lot more responsible,
smart cities, more collaboration, consumer driven productivity.
Environmental and social responsibility. Global human centred.
Purposeful Individualised. Automation. Big Data.
Climate Change. Space Exploration. Renewable Energy.
Information security. Exciting and digital. Hello and welcome to the Future of Business Podcast.
I'm your host, Alison McArthur. In this episode we're in conversation with Bruno Roche, chief economist at Mars Catalyst,
a think tank that challenges conventional business thinking to solve business challenges.
One such initiative is the economics of mutuality,
which considers how businesses can operate more responsibly and take into account moral and social dimensions beyond the purely financial.
Beyond his role at Mars, Bruno is also currently a member of the World Economic Forum Council on Sustainable Development and has
worked for the French government as a special adviser on social justice and globalisation for the G20.
We sat down with Bruno for a fascinating conversation on profits and purpose and the responsibilities of our generation in driving change.
We hope you enjoy it as much as we did.
Maybe we can just start if you tell us a little bit about your background, how you got into the responsible business space and the Mars Catalyst.
Thank you. So good morning, everyone. Good afternoon. Great pleasure to be here today and yes, to respond to your question.
I don't know about now, 28 years ago. So it's a long time ago.
And most of you weren't born at the time. And I just I was because I was really intrigued by the values of the company.
And after a few years doing a personal job, I was actually I joined this organisation called Catalysts, which was set up in the mid-sixties.
So as it goes, the division of the of the management and the owner at the time,
that's the most important and more difficult question to business could be sold with non-traditional business approaches.
And the fact that it is has grown from the mid sixties to what it is today as a kind of a leadership,
uh, organisation to answer difficult business questions,
but in a way that is not traditional, using a fusion of technology, sciences, humanities ranging from anthropology, sociology, economics, mathematics.
So the physics. It's been a great fun. And today catalyst is made of about 12, 13 people around the world based in in the US, in Europe and in Asia.
It was a partnering with universities like, like Oxbridge and others in order to bring new knowledge to solve big business problems.
So it's interesting you say this started around the sixties, so it was sort of really getting going around the time that,
you know, Friedman was publishing his articles about how the sole purpose of corporations is to generate profits for shareholders.
So did you come off it or did the catalyst come up against a lot of opposition because it was like absence of ideology of corporations at the time?
Yes, actually, the march has been funded in the hundred years ago and from the beginning is
the owner of voice mail in Europe developed this this concept of mutuality,
which is, you know, the word is called reciprocity. And his vision, that's the sole purpose.
What the ability of the company is to promote the majority of benefits,
starting from the consumers, the customers, the government bodies, the employees, suppliers,
and at the very end, the shareholders as a vision of of Mars,
was actually the opposite of the Milton Friedman approach, because Mao's was a family, it still is a family business.
They actually managed to prosper and grow and thrive during the FRIEDMAN But the
economy without adopting the the principles of the Chicago school of thought.
So it's not a surprise that two years before the quotations was in six,
there was this question that was part of a discussion between management on the shoulder.
And the question was what should be the right level of profit? And this question was brought to me in 2006.
At the time, I was just being appointed head of Catalyst and chief economist for most.
And it was probably the most interesting question that an economist could could get.
But the fact that this question was asked by order of a company and not an NGO or not a government is, of course, remarkable.
But also it's it's not random.
It's it's part of the general idea that it's the purpose of business to be a business is to promote ambiguity of benefit.
And that was actually the principle that led most success of the last hundred years.
And that was a challenge we were given at the time, was to transform this principle into a business model.
So in order to to decipher the net, you lose that.
That's all behind the principle of maturity and that what we call it economics of maturity.
But essentially the idea was to it was a business question as well as an ethical question, because the idea that's behind the rate of of profits,
there is also this notion that the rate of of profits is critically important to define the prosperity and the long term growth of the company.
So it's not a question of how much you should give back stood about making money one way and sharing it afterwards.
It's about leveraging the is the the reciprocity principle or the reporting business as a way to nurture the success of the company,
not only socially and and understood on the planet, but also financially.
So no synthetics. It is a very interesting approach because most people believe that you make money first and then you show it essentially
as the intuition that was behind it is that the the sharing of success is a driver of success and not a by-product.
Yeah, exactly. So I guess at the moment there's a real kind of a lack of faith in the public sector to address these issues,
such as climate change, wealth inequality. Do you feel like the private sector has to play a role in this, and how would what form would that take?
Would it be public private partnerships or is it a it's a paradox,
is that we the world actually is has never been more prosperous, more safe plagues, famine, kind of.
Almost, almost disappear now. I mean, I'm old enough to remember what happened, like only 20, 23 years ago.
So there is a paradox here that the world has never been so great, in a sense, but in parallel,
the level of trust, the level of lack of well-being has never been that high.
And I think it's connected to the fact that we address many of these issues famine, plagues, economic prosperity.
But at the same time, we also did it at the expense of the natural resources.
And we also did it in such a way that it benefits, particularly the top 1% of the world.
And so therefore, which is a huge success came also huge issues, but also a lack of purpose.
So why are we doing this? And human beings are purpose driven people and why are we doing this?
So we have a real issue in parallel. As you just said, the government are ill equipped to handle global issues,
primarily because most of them are really overwhelmed by debt, but also because nation states are limited in their actions.
They are they are not the country really act on a global basis.
So the true actors of globalisation are either large multinational corporations or large organisations like the NGO.
So therefore mechanically there is a higher need for these global actors which have more latitude and more power to act on a global scale,
to address this new issue of inequality in their natural resources and also lack of purpose.
So there is a medical and mechanical shift from nation states to these new actors.
The issue is that these new actors,
they are not equipped to handle with the complexity that they are new size and the undue influence conferred on them.
And again, this is going back to this concept of economics maturity.
The purpose of this research is to equip the the leadership of these new global actors to respond to the duty,
but also to the opportunity of addressing these social issues, other issues and purpose issues.
Yeah. And could you give an example of how Mars has imbued their employees with a sense of purpose or has implemented responsible business practices?
We are united by a set of common practices, and I think that it's fair to say that what unites is emotions, which is is how we do business.
And in some occasions you can really lead to a lot of inspiring, responsible practices.
But because Mars is very discrete and usually we don't we don't speak too much about what we what we do,
there is a saying in my country which is that noise doesn't do good and good and make noise.
And Mars is to the extent is very discrete. And that is what I love about this company,
because we don't when you do good things that because we want to look good because
we sense interacting group as a business as you see what is interesting is
that Mars doesn't have a foundation so like many companies are try to do good
just by splitting the business operations and the charitable charity to Mars,
we try to combine the two. He thought Easy know we are not always successful.
We have to stay humble. But there is a real sense of effort to to apply as much as possible responsible practices,
not because we want to look good, because we fundamentally believe it's the right thing to do for the business.
Absolutely.
I think just going on from that, like many companies at the moment, they've sort of realised this important to appear socially conscious and,
you know, nod to the Sustainable Development Goals and as such they have so big CSR departments.
What are some ways of stakeholders to ensure that companies are doing more than just, you know,
paying lip service to these issues rather than like fully integrating into the business world?
And to me this is a real challenge.
I think the I mean, the SDGs are great initiative because actually it gives a framework and a common language to different players.
I think also I think in my view there are three generations of responsible practices.
The first one was the charity and this initiative.
What what happened over the last hundred years? People make a lot of money.
They are very successful in their business eventually to set up a foundation and the degree to the foundation.
Very good with that. No problem. I love it.
The only issue is that the charity dollar only has one life where he has a business dollar as many people lives.
So if you want to have a scalable approach to the issues of inequality and not your resources to charity suddenly will not suffice.
So the second step in my view, is what we call the CSR, the corporate social responsibility.
Again, it's very, very good. But if you go deep into the motivations, it's primarily, first of all, happening at the periphery of the business.
And it is that's good. But in an individual like what we're doing with charity, right, it's a bit closer to business,
but still it's on the periphery of the business and it's most of the time it's an investment in increasing like a building schools.
So those issues are very good, but again not scalable.
And many companies actually are in this is doing it for.
Repetition purposes and for risk mitigation purposes.
The diadem, but not enough. I seem to seal the waiver that we are going to see over the next couple of the next decade.
Is that this concept of responsible practices or reciprocity in business,
in business will have to get into the core of the business and not only it very referee and in my view it is almost a revolution.
It needs to happen because it means that the way we measure value creation and the way
we manage value creation will have to be fundamentally changed across two dimensions.
The first one is that the company is no longer responsible within the legal boundaries,
essentially the shareholder, the employees and the dialogue suppliers and customers.
But the first corporation in that company will increasingly be more responsible across a wider ecosystem,
and that the legal boundaries of the firm are not a good description of the true ecosystem in which a company will operate.
This is a first revolution, which means actually that the value creation process would have to embrace different
type of stakeholders that actually the company doesn't know how to handle today.
Second Revolution is that company will have to manage different form of capital today.
Companies know very well how to manage financial capital and we do a very good job at doing that by maximising profit in the future.
In my view, that company will have to manage different form of capital, social capital, human capital, natural capital, right?
And not only within the boundaries of the legal, not only within the legal firm,
but across a wider ecosystem, which means actually that the notion of profit will have to be amended.
And in parallel to this revolution, we we need to think about new modes of profit construction,
which would which would include the value creation or the value destruction across a wide open system and across also different forms of capital.
So this concept of mutual profit that we have developed within the economics of mutuality with Colin Mayer and with Bobby Coles is in my view,
critical because this notion of mutual profit, which eventually help businesses identify what is the right level of profit and can
help also incentivise the whole company on on a new modes of profit construction.
So this revolution of bringing responsible practices at the core of the business through different tools,
different processes to manage and measure value creation and align the organisation on on these principles is critically important to put purpose,
which is actually an important strategic imperative in business into practice.
Do you think the younger generation will pay a large part in this push for change?
Because, you know, the younger people are sort of generally, you know, maybe more socially conscious than previous generations.
And given that so much of the value of a company consists of its human capital,
you think as they go into the workforce, they're going to have different ideas of what constitutes profit?
Yeah, well, the good news well, the good thing about the younger generation, they have less things to unlearn.
So we knew that takes much more mental energy early on than to learn.
So people of my generation will have to mobilise more mental energy to unlearn the traditional way of doing business.
So I think you guys start with a bit of an advantage, your second regret.
So is that you're probably much more aware of what's works, what is the work?
It doesn't make you necessarily better people,
but it makes you actually more aware and I think you are the first generation will be able to say I didn't do good.
My generation. We were very, very few to say when you mean.
I really feel myself privileged to. I had this kind of intuition for the last 25 years, but 25 years ago I was really alone.
Well, not alone, but it was one of many again today.
I mean, even like every year when we ask the questions to the MBA student, how many of you believe that the purpose of business to make profit today?
Today I delivered an MBA only 25%, like a quarter of a class say yes.
I mean, 25 years ago it would be like 1890 3%.
So you are much more aware duration. So therefore because you, you know, you are more responsible.
So there is with knowledge come responsibility and therefore because there is a simple portion of a smart people and good
people and automation that that my generation essentially because you are more aware and you are more you have more knowledge.
I expect, actually, that your generation will embrace this idea of leveraging businesses from the core.
To do good will actually be one of the mark of your generation.
Yeah. And and do you think MBA curriculums have sort of adapted to reflect this new idea of, you know,
what purpose is within an organisation or, you know, if it if not, how could they change that question?
But I think the curriculum of business course just follows the practices in business.
And you can see that actually today's tangibility purpose, responsible businesses.
Part of the curriculum, but still on the margin. Mm hmm.
Right. Yeah. And finance is still the the the golden discipline, actually.
I mean, I studied finance, but I come from this world of of finance and, uh, and I think in a sense, it's not wrong,
but I think as long as it will stay on the periphery in the form of elective, it will just attract, uh, just a few people.
Right. Which will not be a revolution. I really believe, actually, that finance needs to be reformed as a function today.
It's a function that essentially is is about compliance.
And I think finance could become an innovation function. And when finance would be reformed to embrace this form of capital,
that also eventually will reform to take into account not only the legal stakeholders of the firm,
but the wider set of stakeholders in finance could be tremendous, powerful tool to bring changes.
So yeah, I personally, I always when I work with business units,
my number one objective is to bring the will to work with the finance department because they are the actors of change.
They don't know it. Most of them. They don't know it because it seems they are more like a compliance structure.
But I think it's much more than a complaint structure. It's a co-pilot structure and it could be a sort of innovation structure.
So in a sense, to back to to a question to finance curriculum need to be adjusted.
As long as a finance curriculum is that adjusted, it will it will still be an interesting phenomenon, but not a scalable movement.
Absolutely. And as you say, finance institutions will rule the world and they are starting to be of more exciting areas of finance,
such as like impact investing, where they're going to look at like how you can solve social environmental problems through finance.
But it's still. Yeah, but the issue is impacting impact.
Basically, people believe that there is an implicit assumption that if you do impact investing,
you will have less financial performance and which actually not true.
This is something we really have to it's a myth we have to kill.
And every time we implemented the economics of majority in real businesses in poor countries or rich countries on supply side and demand side,
every time we saw that actually not only the companies that had kind of strategies,
not only they are more, of course, more responsible and have a higher impact on people and planet, but they also have higher financial performance.
And it's not by accident. It's because when your business mobilises different form of resources, when you're adding resources to your business,
it's a form of social, human, natural capital across a wider ecosystem.
You're essentially adding resources to your business.
And then on top of that, if you apply the discipline of management to manage these kind of resources intentionally,
you should be surprised that your business outperform. That's normal.
Yeah.
Okay, so it's not a matter of easy or it's just, yeah, you can do it together, but it's a matter of investment and the energy that I like to take.
It's more like close to to home here because consumer goods businesses eventually
moved about 40 years ago from from a manufacturing business to a marketing business.
And this revolution to add marketing function to consumer goods with a real revolution.
I remember when I studied the history of businesses, it was a lot of tensions.
People got fired, there was a lot of fight. But eventually today, if I look at my company models, the real value of the company is in the brands.
It's not in the manufacturing unit.
And I think today we are a similar situation that companies that do not make the conscious decision to invest intentionally in the social,
human, natural capital in their ecosystem.
Beyond the legal boundaries of the firm, we make the same tragic mistake at companies that you want to invest in marketing.
40 years ago, the companies that actually decided not to invest in the new capability,
bringing people to the media industry from Hollywood, from outside world, actually two days are gone.
So it's not a question of looking good or doing the right thing.
Know, it's a question of survival. A recent we are just a similar time in history that companies are do not have this intuition to invest
in the ecosystem according to defence of capital would just simply not be there in 20 years from now.
So I kind of want to just talk about sort of challenges because it's obviously still quite challenging to implement this,
that you've clearly had a very successful career and you've got very strong sense of purpose.
Has there ever been any times where you've sort of failed at your goal?
And if so, how did you overcome it? Oh, my goodness. Yes, I failed so many times.
You know, I knew about it. But with failing you, are you also learning?
And I learned very early in my in my career that it's important to be faithful in small things and when the odds are so is really against you,
which happens when you want to bring innovation especially is going to be division. You have to go back to your purpose and and wait and be patient.
And when you face too much opposition from others, it's very easy to be angry and to be bitter and to be discouraged.
I chose barely my career to forgive when I was held,
to ask for forgiveness when I did the wrong thing or said the wrong thing and never lose sight of my purpose.
So do you have any sort of advice that you would give? To MBA students or anyone that's looking to pursue a sort of responsible career.
But first of all, I'd like to tell you about my dear MBA students that I'm a father of four children,
and some of them are actually in the in the same career, in an in business.
And what I teach to my children and the people of your generation is is first of all, you are a privileged generation.
If I speak to you today, it's because you probably belong to the top 1% of the world.
Okay. So with this blessings comes also responsibilities.
You you have received a lot from your parents, from your generation, from.
So now you have the responsibility to manage this talent that you received in a way that is responsible and meaningful.
And you will achieve this by being very conscious that you are a unique person with a unique calling and with unique identity.
And each one of you received a very specific target in life that will actually will define who you are and what is your calling.
And it takes time to identify who you are and what is your calling.
But it is number one challenge for you and not only for your generation, but for any generation.
The life we have is very unique and is very precious and there is so much more joy in fulfilling
your calling and just being selfish or trying to fulfil the calling of other people.
And my advice as a as a human being, but also as a father, is to is to really find out who you are and what is your calling.
And you can find it through speaking to your family to understand why you are on Earth right now,
because you have chosen to to work in business things.
That business is actually probably one of the most powerful tool we have today to bring prosperity and well-being and restoration to the world.
So therefore, as future business leaders, you have to remember that there is more joy you to give and to receive,
and that there is that the most successful individuals organisation businesses are
the ones that are driven by a sense of purpose that transcends self-interest.
I think that's a really thoughtful note to end on. Green Arrow.
So thank you so much for joining us today. Thank you very much. And thank you for joining us for this edition of the Future of Business podcast.
If you enjoyed the episode, please do rate review and subscribe.
We'd love to hear your feedback. And as always, if you have comments or questions or if you'd like to suggest a topic for a future episode,
please feel free to email us at SBS Podcasts. SB Stocks Don't Ask, Don't UK until next time goodbye.