Picture: 123RF/ALLAN SWART
Picture: 123RF/ALLAN SWART

The seismic paradigm shift necessitated by multi-stakeholder capitalism calls for a more fundamental appeal to governance principles than just the redefinition of the purpose of the corporation. The universal sustainability implied by this approach blurs the separation between the passion of a social mission from the image of the business, such as discipline, innovation and determination commonly associated with for-profit organisations.

Good governance has to seamlessly serve both a social purpose and investor demands by appealing to more fundamental founding principles. Clearly, issues that have been hitherto considered a soft science have coagulated to become the basis for corporations’ sustainability.

“Conventional Western approaches to leadership are centred on the individual, while African leadership prizes the person within the group. Traditionally, leaders and the led are tied by their common humanity. This requires leaders to be compassionate, accountable, and introspective — qualities that underpin shared vision in the enterprise”, writes Dr Reuel Khoza in his book, Let Africa Lead: African Transformational Leadership for 21st Century Business.

In a Davos discussion, Charles Handy is in sync with the fundamental change that needs to take place when he suggests, “The language and measures of business need to be revised. A good business is a community with a purpose, and a community is not something to be ‘owned’.”

Precisely because “ubuntu” principles are founded on inclusivity, they resonate soundly with the Davos definition of the purpose of a corporation, that is, “to engage all stakeholders in a shared and sustained value creation and in so doing serve all its stakeholders, employees, customers, suppliers, local communities and society at large”.

Ubuntu as a virtue or applied morals is embedded in actions that promote individual and collective well-being. Generosity, compassion, honesty, solidarity, fortitude, justice and patience underpin the concept.

Thus, the furtherance of multi-stakeholder capitalism stands at odds with the previous doctrine of the business of business being business, which led to excessive inequalities and a planet perilously close to destruction. There is a need for guiding principles that would make businesses progressive platforms of change and adaptability.

As Michael Porter of Harvard Business School put it, “Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the centre. We believe that it can give rise to the next major transformation of business thinking.”

Of the ubuntu virtues listed above, perhaps three can be easily assimilated into foundational tenets for the envisaged multi-stakeholder capitalism movement, which is now almost two years old. The three basic tenets of ubuntu — solidarity, compassion and justice — should underpin the new approach to stakeholder relations, allocating resources as equitably as possible and compassionately dealing with broader social issues that surrounds companies.

These principles are captured in a thought expressed by World Economic Forum founder Klaus Schwab when he says, “Business leaders now have an incredible opportunity. By giving multi-stakeholder capitalism concrete meaning, they can move beyond their legal obligations and uphold their duty to society.”

Multi-stakeholder capitalism is a watershed movement; it calls for business leaders to go back to the 17th-century French meaning of entrepreneurship — someone who undertakes a significant project or activity. It is even more useful as a term reserved for venturesome individuals who stimulate economic progress by finding new and better ways of doing things.

While we accept that common parlance and thinking limit the understanding of entrepreneurship to starting a new, profit-seeking business venture, we should also accept that the essence of entrepreneurship is much broader than that — entrepreneurs are the innovators behind economic progress. Of necessity, this call must completely blur the separation of social entrepreneurship from business venture entrepreneurship if it is to imbue a real change in approach to economic activity.

Economist Jean-Baptiste Say, writing in the 19th century, said: “The entrepreneur shifts economic resources out of an area of lower into an area of higher productivity and greater yield. Entrepreneurs create value.”

Perhaps 20th-century economist Joseph Schumpeter’s description provides an even more apt basis for the mammoth task that lies ahead. He described entrepreneurs as “the innovators who drive the creative-destructive process of capitalism”. In his view, the function of entrepreneurs is to “reform or revolutionise the patterns of production”. In short, entrepreneurs are agents of change.

Perhaps Peter Drucker’s description of entrepreneurs gives the new approach to capitalism an appropriate meaning when he says entrepreneurs, “always search for change, respond to it, and exploit it as an opportunity”. The response to multi-stakeholder capitalism requires finding a way of “inspiring principled performance”, as espoused by LRN, the international ethics consultancy.

Research shows that entrepreneurial management is resourceful and pursues opportunities without regard to resources currently controlled. Thus, any thoughtful discussion on this new vision for our international economy should be based on ubuntu principles, as without solidarity, compassion and justice the dream of multi-stakeholder capitalism will only be an illusion.

Perhaps we are now confronted by the reality aptly expressed by Albert Einstein: “We cannot solve our problems with the same level of thinking that created them.” We need to think from cause to effect, in spite of the difficult choices corporates have to make in an era defined more by practical issues of survival than spiritual consideration.

We will certainly be defined by the choices we make, so it would be wise to ensure our choices are guided by who we are and what we want to achieve, in solidarity with the whole human race.

• Thabe is managing executive of Angavu Ethical Solutions.

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