Going from chasing profits to creating value

IN 1970, the eminent economist and Nobel Prize winner Milton Friedman wrote that "there is one, and only one, social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud".

More than four decades later, no one will argue with him that one of the main objectives of businesses is to make profits for shareholders, but profits alone are no longer enough. Societal expectations of roles of businesses, as well as views of business leaders, have undergone a sea change.

Businesses in the second decade of the 21st century are expected to create value concurrently for their shareholders, consumers, employees and communities in the areas they operate, as well as for society as a whole. This is what a major multinational like Nestlé calls creating shared value, a term that it coined and is now used extensively by many businesses. Another major multinational, Unilever, has declared that its "clear purposes are to make sustainable living commonplace", which is the best long-term way to grow its businesses.