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Lecture - Notes-Week One Lecture Notes
Lecture - Notes-Week One Lecture Notes
Week 1 Syllabus
1.1 Course Overview 1.2 The Dominant Story of Business 1.3 Four Flaws in the Dominant Story 1.4 The Fourth Flaw 1.5 The Global Financial Crisis 1.6 A New Story is Emerging
Week 3: Environment as a Driver of New business models Week 4: Conscious Capitalism and Stakeholder Theory Week 5: Focus on how to develop a business idea that makes money and makes the world better. Then well summarize where weve been.
2. The idea of business ethics as oxymoron 3. People are just motivated by money 4. In the next video Ill talk about globalization and change:
There has been a lot of change in business, the business world is no longer stable and predictable.
1.3 The Standard Story has at least 4 Flaws: Old Story Flaw #1
Business is just about economics. Money is all that matters. This gets dressed up as: The purpose of any business is to maximize profits for shareholders. I need to make red blood cells to live but making red blood cells is not the purpose of life. And, business is a part of society, not some isolated activity that is about money and profits. Most entrepreneurs start a business because they are on fire about something. They are trying to make peoples lives (or even their own) better along some dimension.
1.3 The Standard Story has at least 4 Flaws: Old Story Flaw #2
Business Ethics is an oxymoron like jumbo shrimp. Tell people that you teach business ethics and they have to manage not to laugh, or else they tell you a stale joke:
I didnt know business had any. Must be a short course. A strictly theoretical subject isnt it.
This is a real problem. Most business people want to and actually do act ethically.
1.3 The Standard Story has at least 4 Flaws: Old Story Flaw #3
People are simple, and motivated by money or self interest. Levinsons question: What animal comes to mind between a carrot and a stick? Its worse. Treat people like jackasses and they will start to act like jackasses. Human beings are complicated and complex creatures.
1.4 The 4th Flaw in the Standard Story: The World Has Changed
Last time we talked about 3 flaws in the old story.
Business is just about economics and the money Business and ethics dont mix People are simple economic maximizers
Globalization New Political Realities Changes in the micro relationships that companies have Most driven by IT.
1.4.1 Globalization
Globalization is not new Human beings have always traded around the world from ancient times. Nonetheless, today it is undeniable. When Im traveling around the world, I put it as even Americans understand Globalization. National Geographic has given a great example of globalization by calling our attention to the simple pencil.
The graphite is from Brazil and Mexico, the softwood is from Sweden and south Africa, the rubber is from Thailand and Malaysia, the metal is from China and Mozambique, and pencils are pretty simple to manufacture.
Ideas travel around the world quickly, supply chains are globalized, and businesses can no longer pretend that what happens in one society will not affect their own society.
1.4.1 Globalization
Todays businesses like Toyota operate in multiple countries, and they must have a strategy that makes as much sense in Tokyo as it does in Tennessee, in Mumbai and Rio. And, they have to operate in a way that their philosophy, processes, how they treat people are tied together all over the world. At Toyota they have a very famous philosophy called the Toyota Way, but the company has had to globalize that philosophy so that it makes sense in countries other than Japan.
1.4.1 Globalization
A good example is the emergence of State Owned Enterprises (SOE) in China. SOEs continue to grow and control a substantial part of the business assets in China. They are connected to important families and government officials at all levels, etc. In short, you simply cannot understand how to do business in China without taking SOEs into account. So, if you think that business stands outside of society; that it isnt intimately connected with society and other societal institutions, you wont do very well in China. So, that standard story of business as a purely economic institution just wont do.
1.4.4 Summary
Go back to the standard story. You cant hold a company together by just focusing on the moneyyou need something more like purpose. Ethics issues are front and center. When there is a fire in a supplier factory due to poor working conditions, todays customers and politicians want accountability. Not everyone is the same around the world. Some people may in fact be motivated only by money, but most of what we know is that issues of purpose, autonomy, mastery, and values like family and compassion and wanting to be better for themselves and their societies, are better ways to think about motivation. We must understand business as set firmly in society. Sothe old story just has to go. And, good riddance to it!
Total losses have been estimated at 15-20 Trillion dollars, but thats only an estimate. It doesnt account for the human consequences of the loss of millions of jobs, and the breakdown of many institutions, indeed the fabric of society in places like Iceland, Ireland and Greece.
Globally, only 43 % of informed publics trust CEOs as credible spokespeople and only 19 % of the general population trust business leaders to tell the truth regardless of how complex or unpopular the truth is. Trust in NGOs remains high, with an overall 88 % of countries surveyed over 50% & (the highest is Mexico, an emerging market, at 83 %; the lowest is Japan, a developed market, at 37 %). The most notable change over time is in China, where only five years ago trust in NGOs was 48 %; today it is 81 %.
(Edelman)
3.
4. 5.
Lets tell this story and expect it of our businesses and businesspeople. We can see this new story emerging all over the world.