How the Growing Power of Business Is Revolutionizing Profits, People and the Future of Both
Review of World, Inc.
By Joseph R. Cook, J.D., M.B.A.
Reviewed May 10, 2007
How can business contribute to the increasing challenges facing our world? How can multinational corporations survive in the future? How can investors assess the risks and potentials of companies operating in the new global economy?
These are some of the questions addressed in World Inc. by Bruce Piasecki. Dr. Piasecki draws on his experience as president and founder of the American Hazard Control Group, a management consulting firm specializing in energy, materials and environmental corporate matters. As he describes in the book, AHC Group has consulted with a number of prominent multinational firms on key strategic initiatives, and has regularly held workshops and forums with top global business leaders. World Inc. is the result of these experiences and discussions.
The book explores the central theme that mounting social pressures facing our world will encourage the search for new products, and that the most successful firms (and the ones that will survive) will be those providing products that satisfy the requirements of price, technical quality and social response. The author introduces the concept of the "S Frontier." This is the frontier of new business strategy considering three critical realities: "the Swiftness of new global market information"; "the Severity of some of the leading social problems before us (climate change and the rising price of oil)"; and "the need for Social response capitalists." These themes are discussed throughout the book in terms of strategies and opportunities for a business to prosper in the new century.
Dr. Piasecki focuses on the enormous influence of the multinational corporation (MNC) in the global economy. Some facts cited: fifty-one of the largest economies in the world are new corporations; three hundred MNC's account for 25% of the world's total assets; and 40% of world trade now occurs within MNC's. With the power and resources of the MNC, it is difficult to think that government alone can solve the problems facing our future. Therefore, the author argues that business in the new global economy will need to respond to societal pressures to create better products and consider the higher good which, in turn, leads to their own self-interest (profit and survival).
The book provides important insights on how progressive companies are responding to the new challenges by several case studies, including examples of actions taken by Toyota Motor Company and Hewlett-Packard (HP). Dr. Piasecki has provided consulting services to both firms and describes, for example, Toyota's anticipation of future energy costs by the development history of the Prius hybrid car, and HP's "e-inclusion strategy" to identify 4 billion potential HP customers from the disadvantaged areas of the world. These are examples of corporations responding to future social needs by developing innovative products and services that address those needs.
One chapter of the book focuses on leadership and offers 10 important lessons for developing leaders for this new form of capitalism. Dr. Piasecki draws an interesting distinction between what he calls "leaders who hurt" and "leaders who heal." He argues that there are corporations headed by individuals who don't care who is hurt so long as they are making a profit. In contrast, there are corporate leaders who heal by answering pressing social needs. These latter firms are the ones we come to trust as consumers, and are likely the ones to make the future contributions to our world by social response product development.
Finally, from the investor viewpoint, the book addresses what the author describes as the new global equity culture. All of us are in some respect investors or have a stake in the equity markets either through individual purchases or participation in institutional investments such as mutual funds, 401(k) plans, or variable annuities. In this new global equity culture, the author sees a convergence of individual investor decisions and social response product development. As a result, we investors need to re-think our techniques to assess the financial and business prospects of a business.
The author argues that past approaches to making investment decisions fail to recognize the hidden value of a company that has launched initiatives such as social response product development to reduce future liabilities and create new business opportunities. A concluding chapter of the book discusses third party rating services and how these services are beginning to focus on social product response as a factor in risk evaluation of firms.
World Inc. offers important insights into what businesses today ought to be considering for their long-term strategy. As the author points out, this book is a start toward thinking about the role of the corporation in this new global business culture. As companies get bigger, the intelligent leaders understand that their social obligations have increased. Dr. Piasecki states the challenge this way: "It will be the intelligent union of both government and corporate leadership that will better the world." The challenge, of course, is how to achieve that intelligent union.
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Mr. Cook is a member of the Council for Ethical Leadership Board of Trustees and teaches Business Ethics and Social Responsibility at Capital University, School of Management.