On May 12th and 13th, 2017, a diverse community of business leaders, academics, and MBA students gathered for the second annual Responsible Business Forum: Making Business Mutual, at Saïd Business School. The aim was to present and discuss evidence demonstrating that sustainability issues can be solved effectively and durably, not through the proliferation of CSR or similar initiatives, but through integrated business model approaches. This understanding is at the core of ‘mutuality’, a principle that emphasizes the fair distribution of risks and rewards of a firm’s activities to strengthen relationships and promote holistic performance.
The concept of mutuality goes beyond CSR, shared value, or similar initiatives and instead offers an approach in which all stakeholders thrive by seeking to maximize human, social, environmental and financial capital. Mutuality is being put into practice by several organizations and MNC’s, through different strategies and on different scales. Some of these approaches and learnings were shared at the Forum through ten company case study presentations from companies such as Marks and Spencer, Zurich, and Interface. Core elements of the management theory at the heart of the mutuality movement – namely the Economics of Mutuality – were also discussed at the Forum through four masterclass sessions. These tackled important questions covering topics such as measurement, leadership, management, regulation and ownership.
Ultimately, the Forum created a space for collective exploration and understanding of how to implement mutuality in business, and how to do so at scale.
Theory and Practice
Through ten company case studies we heard from a variety of companies across sectors working to reform their supply chains, transform risky markets, empower the poor at the base of the pyramid, and drive organizational change.Each case study discussion touched on a few key themes that were present throughout the forum.
The first is the need for high levels of trust in all stakeholder relationships. Several companies described the importance of trust with other parties – both internal and external – as fundamental to building out activities that are mutual and responsible. Partnerships built on trust give companies the space and resilience to pioneer new practices in increasingly complex environments.
The second and recurrent them is the importance of measurement. Delegates heard in nearly every case that the implementation of robust measurement practices is difficult, but necessary in shifting mutuality from theory to practice. Ultimately, developing a system of measurement that accounts for both financial and non-financial value is an urgent requirement if business is truly going to be a force for good in society.
Third is a long-term commitment to the whole ecosystem, including NGOs, investors, and regulators. The adoption of mutuality in business is a long-term commitment that requires a willingness to share and learn from each other’s success and failure. Moreover, it is a pre-requisite to building both the trust and the right measurement system able to drive mutual business practices.
People say you can’t do it, until you do it, then you become a thought leader, trend setter.
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Reflections and Learning
Progress and challenges
This year, through the addition of the masterclass format, delegates were given the opportunity to examine in greater detail the specifics of the Economics of Mutuality. What does a management model built on the principle of mutuality look like? How does it tackle the key questions around the measurement of non-financial capital? What are the results and what does it mean for business leaders and managers? And more broadly, is the Economics of Mutuality transferable beyond Mars’ family-owned structure?
While significant progress has been made across the themes of measurement, management, leadership, and ownership, a lot of further work is still required. For example, companies that are striving to adopt mutual business practices are eager for measurement practices that capture human, social and natural capital in robust ways. Yet, capturing the health of these forms of capital that would allow a company to compete, report, compare and benchmark – both internally and externally – faces many challenges. These are to do with conceptual ambiguity, as well as technical questions around data collection mechanisms and standardization. Nevertheless, as was shared passionately by a number of Mars leaders and in the case study, Maua and Bloom are pioneering ways of measuring these forms of capital that is scalable and actionable for business.
Should mutuality be enforced?
Finally, learnings from the day culminated in a lively, traditional Oxford Union style debate. Six business students debated yet another pressing question related to the concept of mutuality – should such a principle be enforced? They address the motion: ‘This house would oppose the enforcement of mutuality in business.’ Three students argued for the enforcement of mutuality, expanding on different definitions of enforcement and calling for the need for regulation as a method of accountability, especially within business. The other three argued against enforcement, pointing to the vagueness of the definition of the concept and questioning the possibility of full implementation as the main reasons it could not be enforced. After a close vote, the motion was rejected.
Technology and finance industries
On day two, we shifted focus from a discussion of the Economics of Mutuality within a corporate context to its future application in other industries such as technology and finance.
Experts on the fast-growing innovation economy – home to companies like Uber and AirBnB – returned to the fundamental importance of trust. As technology shifts towards the sharing economy and collaborative platforms, trust is no longer centralized within a single organization but rather distributed through networks and digital platforms. The panelists discussed the opportunity for mutuality to shape this growing economy as it develops.
We then heard from several leaders in the financial sector who inspired a vision for mutuality within financial institutions. These leaders acknowledged that historically financial institutions have been focused on short-term earnings and for the past decade, there is a suspicion towards financial institutions and their ability to operate with any considerations beyond profit. However, each of these speakers described how they are shifting the perspective and practices within their own firms towards longer-term objectives, in hopes of restoring trust and integrity within the industry. These investors all described the possibility of taking into account notions of alternative forms of capital as they make decisions about investments, and ultimately broadening the goals beyond financial performance.
Finally, we heard form a panel who discussed how we might design organizations – both in terms of corporate governance and structure as well as culture and values – in way that assist them to achieve the implementation of mutuality. Central to this conversation was the importance of including humanities modules in MBA curricula so current and future leaders do not simply learn to compete, but learn to do so with compassion.