The great business opportunity of the century is also the need of the hour.
In recent years there has been more and more understanding that business is not about profit maximization, but about creating value, societal value. Profits are a means, not an end in itself. Don’t get me wrong, without profits no cooperation can exist. But without societal purpose, a lot of companies lack a license to operate, which in turn seriously hampers their longer-term financial sustainability, simply is that. As the famous saying goes, “Equal distribution, and fairness, creates profits, not the other way round.” Recent robust empirical research of the International Monetary Fund, the World Bank, and the World Economic Forum, reiterates the statement. Economic growth over longer periods of time cannot be established without inclusion, equality, and fairness. But how to implement this insight in real-life practice at the level of corporations who are faced with a complex environment.
Indeed, we are living in uncertain times: fraud, health crisis, trade conflicts, ongoing hunger, refugees, pollution. Read the news, the challenges are considerable. More than that, our progress causes all of these. Medicine today is at the peak of progress, and at the same time the poverty rate is rising and rising. Hundreds of millions have no access to clean water. So what framework to adopt; a negative or a positive? Almost all SDGs address these problems. They are so-called common good problems. The creation of common goods presents problems without one owner. There are therefore also known as wicked problems. There is common good nature implies that there is always a public, a private, profit, and a non-profit side to each of the SDGs.
Wicked problems have no simple, one- size- fits all solutions. Technical and organizational approaches are always necessary. But the real approach lies in defining the societal road to take. This road almost always requires the positive involvement of companies, governments, Investors, knowledge institutes, and communities. Well, don’t deny complexity, find positive approaches, get all stakeholders in the room.
Addressing wicked problems requires an open, inquisitive, and entrepreneurial mindset and positive and action-oriented strategic frames. Doom scenarios do not work. They have actually been found to lead to so-called apocalypse fatigue, and this is where the sustainable development goals really have succeeded in shaping and framework, a new framework. In its creation, by organizing a three-year process of multi-stakeholder involvement in which companies, civil society representatives, governments, and knowledge institutes setup an agenda for longer-term action. In its elaboration, the SDGs signal a paradigm breach with a past in which only governments were held responsible for the world’s most complex problems. In its approach, the SDGs are based on a much better understanding of the fact that positive frames, with clear goals, are more energizing than negative frames.
It is not generally well-known but the United Nations also formulated five basic principles that fit into all SDGs, the five Ps. There are four general Ps: People, Planet, Prosperity, and Peace. These principles provide good benchmarks for measuring progress in all SDGs. But there is also one process-oriented principle, partnering. Partnering is a means, but perhaps also a goal in itself to enable the great business opportunity of the century is also the order of the hour. Implementation of corporate strategies at a more sophisticated level of intervention. More sophisticated business strategies do not only aim at, avoid doing harm, such as limit pollution, prevent human rights violations, but in particular at doing good, like solving poverty, creating access to health, creating access to education and finance.
In short, actively addressing all SDGs. In a world full of wicked problems, nobody can effectively achieve good alone. Embracing the SDGs as most of the corporate leaders in the world are inclined to do, is a matter of smart business and leadership. It actually provides tremendous growth opportunities. The SDGs are estimated to provide a $12 trillion growth mark per year, as long as companies are able to organize this together with other stakeholders. It is actually a matter of smart organizing.
Finally, especially for the investment community, dealing with these issues also opens up a lot of appetite among investors in all possible corridors. Headlines such as “Venture capital firms are directing investors’ funds towards sustainable assets”, “Credit Suisse raises $212m for ‘world’s first’ ocean health impact fund” are not rare today. Even pension funds find themselves investing in green ventures, while traditional VC’s lead their portfolio companies towards the adoption of migration processes and schemes in order to align with the SDGs. From this perspective, this is just the beginning of the journey and this journey is both fascinating and necessary as the entire business world is changing in front of our eyes.
Originally published at https://www.mikulitski.com on December 19, 2020.