The purpose of the enterprise

Businesses, and inventors in technologies, must be held accountable for the impacts their products have on the lives of their customers and on societies. We must ask, why is this to be done? Who will benefit? Who may be harmed by it?

Arun Maira

[Photo by Vlad Tchompalov on Unsplash.]

When robots take charge of the world, what sort of world would it be? A story in The New York Times, When Robots Have Minds of Their Own, by Cade Metz, offers a clue. Metz reports a conversation with a researcher at AIOpen, an artificial intelligence (AI) lab in San Francisco founded by Elon Musk. Metz says, “The (researcher) showed off an autonomous system that taught itself to play Coast Runners, an old boat-racing video game. The winner is the boat with the most points that also crosses the finish line. The result was surprising: the boat was far too interested in the little widgets that popped up on the screen. Catching these widgets meant scoring points. Rather than trying to finish the race, the boat went point-crazy.”

Computers powered with AI are becoming capable of doing anything that humans can do. They have defeated human champions in games of chess and Go, among the most complex competitive games human beings play which require immense brain power. They can also drive cars through traffic. Moreover, the most evolved AI systems even have the ability to learn by themselves how to become smarter. Researchers find that, nevertheless, machines need human guidance to tell them what is the purpose of the game. Intelligent machines can go berserk. “In some ways, what these scientists are doing is a bit like a parent teaching a child right from wrong,” says Metz.

The story of humanity’s progress is a story with two threads through it. One is a story of the development of better means of getting things done. This is the story of scientific progress, of development of new technologies, and better methods of management which have propelled the industrialisation and economic growth of countries since the 19th century.

The other is the story of development of ideas to improve the quality of a human society. This is an evolving story, of discovery of human rights: such as the equal right of every person, rich or poor, black or white, to participate in the governance of their societies; every child’s right to education; women’s equality with men; and the rights of all human beings to dignity and privacy. Side-by-side with technological progress, these ideas have also gathered strength in the last hundred years.

One thread in the story of human progress is about development of the means to get things done. The other is an on-going story of aspirations, of new goals and discovery of new ends. This is a story about deep and often difficult conversations among people about what the purpose is of the enterprise they are managing and the projects they are undertaking.

We are excited by innovation and the novelty of new ideas. And we are awed by the speed and the scale of execution of tasks. Hence, we are impressed with the ability of leaders of large-scale projects to ‘get it done’—whether in military campaigns or humanitarian relief projects; building large irrigation systems and dams or large communication systems; the conduct of elections or the rolling out of a universal biometric identification in a country with over a billion people. ‘Execution is nine-tenths of strategy’, it is often said in business circles. ‘Implementation’ is the name of the game. Questions about the purpose of the endeavour may be a tiny ‘one-tenth’ of the enterprise, if they are raised at all. Why is this to be done? Who will benefit? Who may be harmed by it? Ethical questions about right and wrong are difficult ones. They can also be a distraction in the rush to get it done.

The Purpose of the Enterprise

Milton Friedman’s dictum, the business of business is only business, seemed to imply that business managers need not concern themselves with anything outside what they consider the bounds of their business. Since the 1990s, the dominant view was that the purpose of a business enterprise is to produce value for shareholders. Therefore, business leaders are evaluated by the shareholder wealth they create and are rewarded with slices of it. In this self-referential world, customers have a special place too, because they provide the income the business needs to make profits. Therefore, discovering customers’ needs (and even creating them) and then giving customers what they want is very good business.

I was a participant in an Aspen Institute seminar, in Aspen, Colorado, in July 2002, where the question of what is the purpose of a business became vivid.  The seminar, on the Challenges of Global Capitalism, was conducted by philosopher, Michael Sandel, author of Democracy’s Discontent: America in Search of a Public Philosophy (1998) and the bestseller What Money Can’t Buy: The Moral Limits of Markets (2012). In the seminar, Jerry Levin, CEO of Time Warner, chaired a discussion on the role of the media.

Many participants expressed their anguish at the ‘dumbing down’ of discourse in mainstream media. Discussions on TV had deteriorated into gladiatorial contests, such as the hugely successful American show at the time, Crossfire. (Which became an inspiration for TV panel discussions in India which have degenerated further into free-for-all melees.) The participants asked Levin: how would citizens be engaged with the deeper issues of their societies if all they saw and read in the media was designed only to entertain them? Did the media not have a responsibility as a pillar of democracy, to engage and educate citizens about these issues?

Levin explained why the media must focus on the demands of its readers and viewers. He said the media was a business, and a good business must give its customers what they wanted. If they wanted more entertainment, then the media must give them good entertainment. If the media did not give customers what they wanted, it would go out of business, he warned.

A participant in the Aspen Seminar said that society could not allow business leaders to get away with the justification that they were giving the people what they wanted. “Many people want hard drugs,” she said. “There is a lot of money to be made by supplying hard drugs to these customers. Could a business that supplied hard drugs be defended on the principle that it was giving people what they wanted? Just as sellers of drugs are declared criminals, all business leaders must be held responsible for the bad effects of their products and services on the lives of people,” she declared.

All businesses must be held accountable for the impacts their products have on the lives of their customers and on societies. Generally, developers of products are the first to know, when they test their products in the course of development, about the potential harm their products could cause. Sadly, they often suppress this knowledge in the rush to sell their products and make profits. Tobacco companies have done it. Pharmaceutical companies have done it too.  

Marc Benioff, CEO of Salesforce, set the cat among the business pigeons at Davos this year. He said, just as cigarette companies were regulated when the effects of smoking on health were known, social media companies must be regulated too. The chiefs of social media companies are aware of the bad effects the use of social media is having on the mental and emotional health of its users, as well as the divisiveness it is stimulating in societies.

Watch the panel discussion where Uber CEO Dara Khosrowshahi, Salesforce CEO Marc Benioff, Alphabet CFO Ruth Porat and others discuss business culture at tech firms and the need for regulation.

Sean Parker, the founding president of Facebook, told a conference in Philadelphia in October last year that he was “something of a conscientious objector” to social media. A month later, The Guardian reports, Parker was joined by another Facebook objector, former vice-president for user growth Chamath Palihapitiya, who said, “The short-term, dopamine-driven feedback loops that we have created are destroying how society works. No civil discourse, no cooperation; misinformation, mistruth. This is a global problem. It is eroding the core foundations of how people behave by and between each other. I can control my decision, which is that I do not use that shit. I can control my kids’ decisions, which is that they are not allowed to use that shit.”

Psychologist, Adam Alter, author of Irresistible, an examination of technology addiction, says, “Many tech titans will get up on stage and say things like: ‘This is the greatest product of all time’, but when you delve you see they don’t allow their kids access to the same product.”

The Ethics of Business

‘Leaders’, in the popular lexicon, seem to be persons who sit on top of organisations, or at the centre of teams, and ‘get things done’. Whereas, a rarer breed of ‘statesmen’ (and stateswomen) also concern themselves with ethical and moral dilemmas that they often must struggle with to confirm the purpose of their enterprises. The purpose of the civil war, for Abraham Lincoln, was a fight to defend a new, big idea—the rights of black people for emancipation from slavery. Mahatma Gandhi’s long campaigns for freedom were motivated by aspirations for freedom for Indians from foreign rule, as well as internal freedoms for castes in India that had been subjugated for centuries. For Gandhi, the ends were important, and so were the means. Violence to achieve the ends was not permissible. Therefore, throughout his life, while he led in action, marching ahead of people into dangerous situations, he also struggled with ethical questions. Indeed, the title of his autobiography, My Experiments with Truth, says it very well.

Trust in business leaders has been declining according to the Edelman Trust Barometer, an annual survey of citizens’ level of trust in institutions and their leaders. Some leaders in the business world have realised that businesses cannot carry on the way they have, taking shelter behind the ideology that the business of business must be only business. Laurence D. Fink, founder and chief executive of the world’s largest investment firm, BlackRock, has spoken up. BlackRock manages more than $6 trillion in investments. Fink has written to the leaders of all the firms BlackRock is invested in, that their companies need to do more than make profits—they need to contribute to society as well if they want to receive the support of BlackRock.

In his letter to them, he says, “Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”

The world needs business leaders who are not merely innovators with new ideas and good builders of organisations to ‘scale up’ the impact of the innovations. Leaders with new ideas and abilities to execute must also have a statesman-like capacity to reflect on difficult ethical questions about the purpose of their enterprises. Business schools who have so far focused mostly, if not entirely, on teaching their students better methods for managing and getting things done, with the purpose of the enterprise taken for granted as the maximisation of profits, are now being pressured to teach ethics to their students.

Ethical choices are generally very difficult. For example, there is the ‘utility’ question that philosophers have debated over centuries. Should the needs of a few be sacrificed to provide the maximum benefit for the maximum number of people? There is also the difficult question of the rights of individuals versus the needs of communities, which complicates policies when rights to privacy clash with needs for collective security. Ethical problems often require trade-offs between two good principles. A good answer to a profound ethical question in practice often is, ‘it depends’. There are no absolute answers to difficult ethical questions. If there were, ethics could be taught from a textbook of rules.

The Stories We Tell

Stories of teams that achieve unexpected results are very inspiring. They are worth recalling, and more stories of remarkable leaders and their teams must be written. If well analysed and explained, they can provide good practices for others who take on similar big challenges. They make very good case studies for schools of management. Stories describing the passions and emotions of participants in great teams, that achieved remarkable results against great odds, in sports, in war, and development of new technologies, make great books and movies too. Some examples are: The Conquest of Everest, Saving Private Ryan, the US Apollo Project, and stories of many accomplishments of India’s space programme. The Manhattan Project to develop the atomic bomb, the Human Genome project to map the human genome, and Tim Berners-Lee’s Weaving the Web, an account of the creation of the World Wide Web, are exciting stories of teamwork to develop new technologies.

Stories of developments of new technologies never end with the projects that created them. The more powerful the technologies, the more complicated are the next stages of the stories. The Manhattan Project accomplished its stated mission when an atomic bomb was produced at the Los Alamos Laboratories. Then another difficult project was organised to drop two bombs on Hiroshima and Nagasaki. Stephen Walker recounts the story of this project in his book, Shockwave. The success of the projects stunned the world, with the power of the technology that had been unleashed. Albert Einstein and Enrico Fermi, physicists who had urged the US President to develop nuclear energy, were dismayed with the use to which the new technology had been put. The leader of the Manhattan Project, Robert Oppenheimer, expressed his anguish “over the fact that no ethical decision of any weight or nobility has been addressed to the problem of atomic weapons.”

The example of nuclear energy and the bomb may seem an egregious one while discussing the responsibilities of leaders of businesses and technology innovators. However, its exaggeration helps to bring out a critical distinction between, on the one hand, excellence in management and execution, and, on the other, the necessity for statesmanship to clarify, and then insist upon the accomplishment of an ethical purpose for the enterprise, and not merely get things done on a grand scale.

The same story may be seen through many different lenses. Each will reveal different truths, as Akira Kurosawa demonstrated in his classic movie, Rashomon. Writers choose what they want their stories to reveal. They simplify their work when they take only one view: a story written in black-and-white. Project started; difficulties encountered; difficulties overcome; project accomplished; celebration; story ended. However, the story becomes more real, and the writers’ work more difficult, when they attempt to weave many perspectives together and the story must be written in many shades of grey. Moreover, it is not obvious when the writer should end the story when many important strands of the story have not yet ended.

Ethical decisions require a knowledge of conflicting principles, which may conflict in practice, as well as an understanding of different types of facts about the situation. Whereas stories of decisions executives took which led on to success or failure of projects, and to the growth or decline of businesses, may be good case studies to teach management, more complex stories, illuminating the ethical dilemmas faced by the protagonists, are required to teach ethics.

The Aadhaar Story: An Example of Unclear Purpose

Over a billion people in India, up in the hills and down in the plains, in crowded cities and in remote villages, have been provided with unique numbers linked with personal biometric markers of their identities. Aadhaar is deservedly celebrated as a marvel of project execution. It compares with the conduct of massive elections in India, the world’s largest democracy, in which hundreds of millions of people, even in the remotest parts of the country, cast their votes electronically.

Aadhaar is becoming a ubiquitous requirement for life in India. Banks require the number. Tax authorities must have it, and phone service providers too. Those entitled to subsidised services will not get them unless they have the magical number. Whereas to some people this is a sign of the Aadhaar project’s success, others fear the consequences of the spread of Aadhaar on India’s democracy. Concerns of invasion of privacy have reached the Supreme Court. Citizens are worried about denial of services if the technology fails. They also fear that the seeding of their Aadhaar numbers into many processes will increase the state’s ability to snoop into their lives.

As Aadhaar’s applications multiply, and citizens’ fears rise, the story of the Aadhaar number has become much more complicated than a good story of teamwork to produce a large-scale technological solution. It has become a story about human rights, about rights to privacy and justice, and about the power of the state. Constructive criticism of Aadhaar is becoming difficult when criminal charges are filed against a journalist revealing a leak in the system’s security.

The proliferation of digital communication and computation technologies is raising enormous issues of data privacy and data misuse. Aadhaar is inevitably embroiled in them. The regulation of the internet, social media, and other so-called ‘smart’ technologies, is a global issue, which will require resolution of contentious issues about citizens’ rights versus government responsibilities, as well as about private property rights vis-à-vis public interests. Contending principles are involved.  Computer calculations will not resolve these matters. Democratic deliberation is required.

The more powerful and potentially transformative a technology is, and the larger the scale of the enterprise, the greater is the need to confirm its purpose. Technology is a neutral force, albeit it can be a very powerful one. Human beings are wise to fear the consequences from spread of a new technology. However, promoters of new technologies are excited by its power, and can be disdainful about those who suggest caution. They dismiss them as anti-technology and anti-progress. ‘It always works out well in the end’, they blithely say. They turn a blind eye to the battles for regulation of powerful technologies that have happened after the genie has been let out of the bottle: safety and pollution controls of automobiles; regulation of the uses of nuclear energy, even for generating clean power; clashes about the benefits and dangers of genetically modified crops; and, now, contentions about the benefits and the harms of social media platforms.

Those who express concern and suggest pause are not against technology. They are concerned about the impact unbridled technology can have on other things that human beings value. It is difficult for a meeting of minds when positions are taken, and arguments and their supporters are marshalled into opposing camps. The online journal Founding Fuel is bringing together, on one platform, the diverse views that must be considered to confirm the purpose of Aadhaar. The Aadhaar Debate: Is Common Ground Possible? NS Ramnath wrote in October 2017. And, this week, Haresh Chawla has written a good piece, The Thinking Indian’s Guide to Aadhaar, which is an invitation to hear other perspectives. It could be titled as A Thinking Indian’s Guide to Aadhaar, since other thinking Indians may have other perspectives. Moreover, others with fundamentally different perspectives cannot be dismissed as ‘unthinking’ people. They may just think differently. For example, the publishers of Civil Society magazine, thoughtful people too, have other views. They must be listened to, and their perspectives understood too, to come to an agreement on the purpose of an enterprise which can have far-reaching effects on society.    

Democratic Deliberation about the Purposes of Enterprises

It is becoming increasingly difficult to have thoughtful deliberations about many difficult issues the country is facing, such as demonetisation’s after-effects, bans on cow-slaughter, and the applications of Aadhaar. We must step out for a moment from debates about the specific issues and consider why it has become difficult to listen to other points of view. Better dialogues will improve the quality of public policies. They will also strengthen democracy. The progress of the country depends on this.

There is an old saying, ‘There are always three sides to every story: your side, the other side, and the truth’. Issues vexing the country, such as those mentioned before, are complex and have many angles to them. Sadly, if someone is presumed to be on the other side because she does not unquestioningly support our side’s view, there is no possibility to find the truth. Loyalty to ‘our’ is valued more than citizens’ responsibility to question and criticize when necessary. The belief is that if someone does not endorse our view, she must be on the other side. Whereas, she may not want to take either side. She may be just wondering what the truth really is.

Some people believe that technology can provide the solution for democratic decision-making. When everyone has a smartphone, all can give their preferences on any issue with the click of a button. Thus, they say, governments can easily determine what the people want. However, for ‘press-the-button’ democracy to work, those called upon to vote on an issue must understand the implications of the decision proposed. They must be explained these implications in terms they understand. And they must be willing to give their time to understand these implications, and not merely vote for what they instantly like.

One thing is very clear. Social media is not a good platform for democratic and thoughtful deliberations about how social media should be regulated. Its algorithms force people into self-reinforcing echo-chambers, in which people follow who they like, and lob hate-bombs across the walls of their echo-chambers at people they do not like. It is not designed for thoughtful deliberations, in which people are willing to listen to other points-of-view. It too quickly and sharply divides people into groups who are for something and those who are against it; into communities of ‘people like us’ and people not like us.

Leaders, Not Robots, Will Transform the World

Economists of the non-socialist kind are becoming nervous. They say capitalism must be saved from greedy capitalists. Humanity must be protected from unbridled technology, even some CEOs of technology firms now say. Society is demanding that companies, both public and private, serve a social purpose. And it wants innovations to serve humanity’s purposes.

Managers get things done within a framework of rules. Capabilities of robots with artificial intelligence are advancing. Robots are becoming capable of doing many things managers do. While robots may play complex games better than humans, they may not have the ability for a long time, if at all, to determine what the purpose of the game must be. Robots may teach themselves methods to score more points and judge more from less, but they will not have the capacity to make ethical choices that distinguish right from wrong.

The world urgently needs statesmen in business and in politics to step up to change the rules of the game in their spheres of responsibility, to make the world more sustainable, more inclusive, and better for everyone.

Statesmen-leaders are those who take the first steps towards what they deeply care about and in ways that others then wish to follow. Transformational leadership begins with a deep caring for a cause. Leaders of transformational change must also have courage to experiment with new paradigms and to be the first to take steps into unchartered territory. Finally, they will appear as transformational leaders only when many others follow them. Others will follow, without coercion, if they too care for the cause the leader is pursuing, and the goals towards which she or he is leading. Therefore, the purpose of the enterprise must emerge from an inward listening to what matters most of all in one’s heart, as well as an outward listening to what matters to others.

It is time to pause. A time to stop talking and tweeting. A time to listen, and to learn to listen, to people not like us. 

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About the author

Arun Maira
Arun Maira

Former Chairman, BCG India & Member, Planning Commission

None

Former Member, Planning Commission of India
Former Chairman, Boston Consulting Group, India
Chairman, HelpAge International

Any discussion on policy and the future of India is enriched with Arun Maira’s views, and not just because he was a member of the Planning Commission of India for five years till June 2014. Arun is one of those rare people who have held leadership positions in both, the private as well as the public sector, bringing a unique perspective on how the two can work together to foster growth for India. He has led three rounds of participative and comprehensive scenario building for the future of India: in 1999 (with the Confederation of Indian Industry), 2005 (with the World Economic Forum), and 2011 (with the Planning Commission).

In his career spanning five decades, Arun has led several organisations, including the Boston Consulting Group in India. In the early part of his career, he spent 25 years in the Tata group at various important positions. He was also a member of the Board of Tata Motors (then called TELCO). After leaving the Tatas, Arun joined Arthur D Little Inc (ADL), the international management consultancy, in the US, where he advised companies across sectors and geographies on their growth strategies and handling transformational change.

Another decade later, Arun was back in India, this time as the Chairman of the Boston Consulting Group, a position he held for eight years till 2008. The other leadership positions he has held include being the chairman of Axis Bank Foundation and Save the Children, India. He was also board member of the India Brand Equity Foundation, the Indian Institute of Corporate Affairs, and the UN Global Compact, and WWF India.

Recognising his astute understanding of both macro as well as micro policy issues, Arun has been involved in several government committees and organisations, including the National Innovation Council. He has been on the board of several companies as well as educational institutions and has chaired several national committees of the Confederation of Indian Industries.

In 2009, Arun was appointed as a member of the Planning Commission, which is led by the Prime Minister of India. At this minister-level position, he led the development of strategies for the country on issues relating to industrialisation and urbanisation, and drove the formulation of policies and programmes in these areas. He also advised the Commission on its future role.

With his vast experience and expertise, Arun is indeed a thought leader. He is invited to speak at various forums and has written several books that capture his insights.

His recent books include An Upstart in Government: Journeys of Change and Learning; Redesigning the Aeroplane While Flying: Reforming Institutions (published in May 2014); Remaking India: One Country, One Destiny; Transforming Capitalism: Improving the World for Everyone; and Shaping the Future: Aspirational Leadership in India and Beyond.

His book, An Upstart in Government: Journeys of Change and Learning (Rupa), was published in August 2016. The theme of the book is: the progress of nations and organizations has to be a cooperative endeavour. A good society is one that enables each individual to realize his or her aspirations. Everyone must cooperate to create such a society. The book should be of great interest to leaders in government, in the private sector, and in civil society organizations also. For they must all create better cooperation systems within their enterprises and with each other too.

His most recent book, Listening for Well-Being: Conversations with People Not Like Us, was published in 2017. The book is an incisive analysis of the causes for the increasing divisiveness in societies, aggravated by the shallowness of public discourse, and the break-down of communications between people with different beliefs and histories. He suggests ways to reverse these dangerous tendencies and make the world better for everyone.

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