Harvard Business School Professor, Former Medtronic CEO, Says 'Sustainable Capitalism Will be the U.S.'s Saving Grace'

Business leader Bill George couldn’t make it any plainer in a recent LinkedIn article: CEOs have to step up to a strategic and systematic approach to engaging all stakeholders.

 

In a stinging rebuke of the 3G short-term based business model that many believe caused the recent financial implosion at Kraft Heinz, Bill George argues in a recent LinkedIn post “that sustainable capitalism will be the U.S.’s saving grace.” 

 

The post merits a full reading, but here are several choice quotes:

 

“Responsible capitalism provides well-paying jobs for its employees, complete with healthcare and retirement benefits; offers customers high quality products with great value; bolsters communities by supporting local education, healthcare, and infrastructure; and ensures steady returns to its shareholders.” 

 

“As a result of problems created by capitalism’s extremes, most notably the meltdown of the financial system 10 years ago, responsible CEOs and their boards have shifted to the multi-stakeholder model of responsible capitalism as purpose-driven, values-centered organizations. They have recognized the pitfalls in the stock market’s unceasing pressure for maximizing short-term earnings and cash returns to shareholders, rather than investing in building sustainable businesses. These CEOs understand that serving a greater purpose and meeting customers’ needs with innovative products and service is the best way to develop talented organizations with highly motivated employees. By creating greater value for their customers, they increase their revenues and profits while earning sustainable value for their shareholders. This model works as long as companies continue to invest for the future in difficult times as well as boom times.”

 

“The Kraft Heinz debacle illustrates the flaws in strategy of maximizing short-term value by excessive cost-cutting. As I wrote two years ago when Kraft Heinz launched its bid for Unilever, this was a battle for the soul of capitalism.”

 

“As CEO of the world’s largest investment fund, BlackRock’s Larry Fink has led the way with his annual public letter, insisting that CEOs have strategic plans integral to their business models to use their resources to address societal problems. Other prominent CEOs, like General Motors’ Mary Barra and PepsiCo’s former CEO Indra Nooyi, have been passionate advocates for the purpose-driven approach to address societal problems.”