Redefining the Corporation

From Making Moneyto

Creating Prosperity

Vafa AkhavanDesiree Akhavan

EBBF Annual Conference Lisbon, Portugal 10/2012www.ebbf.org

Lets Talk About• What’s happening in the world• Why we need to redefine the Corporation• How do we get there• Where do we start

Global TrendsCOMPLEXITY(Systems within

Systems)

COMPRESSION(More with Less)

DUALITY(Concurrent forces)

POLARITY(Extremes of Swings)

Any effort in trying to transition from making money to creating prosperity requires it to be done in the context of global trends that would influence both that transition and its outcomes.

Global TrendsSystems within Systems (Ecodynamics): The dynamics of integrated ecosystems. There is an ecosystem at work with multiple systems within it that are all interconnected and interdependent with various orders of magnitude. Make a change in financial planning and it has an effect on operations which impacts product development that can determine levels of sales that impact profits.

Compression (Physinomics): The crossroads of physics and economics. Financial performance is demanding that companies deliver more with less. We want to reduce time to value and increase value over time. “I want the product developed faster, go-to-market quicker, and sell more at higher margins.” The forces at work to deliver more with less impacts the economics of any enterprise.

Global TrendsDuality [(+) x (-) = Restruction): For every force there’s an anti-force. For everything that doesn’t work there are things that work. Trust is being destroyed in the world of business and concurrently new ways are creating trust. Companies have eroded employee trust with their actions but new companies leverage transparency and social media to build trust. Trust is being reconstructed.

Polarity in Chasms (Polarchasm): The polarity in the world is penetrating every field of endeavor. Chasms are growing across areas of activity. Both the horizontal and vertical gaps between rich and poor, wealth and poverty, are widening.

Polar ExtremesOrder of Magnitude

• Top 100 US CEOs in 2011 earned $3.14bil in comp. • Top 25 hedge fund managers in 2011 earned $22

billion o Ray Dalio, Bridgewater Associates $3.8bilo Carl Icahn, Icahn Capital Mgmt. $2.5bil

• Top earner in 2010?o John Paulson, Paulson & Co. $4.8bilo (=sum income of 150,000 Mississippians)o (=sum income of 5,200,000 Indians)o (=sum 80% of Somalia GDP)o (=sum 310% of public debt Papua New Guinea)

Polar ExtremesOrder of Magnitude

Global top 50 most profitable companies = $853 billion profits They are in America, Europe, Asia (China) =sum countries 93-192 ranked GDP =sum countries 57-192 ranked National Debt

The GDP of the 41 Heavily Indebted Poor Countries (567 million people) is less than the wealth of the world’s 7 richest people combined.

Less than 1% of what the world spent every year on weapons was needed to put every child into school by the year 2000.

Global Wealth IndexNorth America, West Europe &

Australia dominate wealth

What’s Going On In The World• Lack of morals and ethics are

growing• Corruption is rampant • The middle class in NA & Europe is

eroding• The middle class in BRIC is growing• Big part of the world is one class –

The Dying Class• Political & financial systems are

failing• Free markets, and the not so free,

serve the few at the expense of the many

• We're struggling in the midst of growing chaos

• Corporations and Banks in North America hold $4.0 trillion in cash going nowhere and doing nothing

• World order is emerging not just as a necessity but as a reality

• New visions are being articulated • Social investment is spreading• Impact funds are growing• Meaningful dialogue is taking place

to redefine a better future• New models of government and

Corporations are been developed• Number of partnerships are growing

to address the plight and struggle of humanity

• Proliferation of access to information is enabling greater advances on all fronts

• Bhutan is governed by the Gross National Health index and not the Gross National Product index

My Friend The Capitalist

I sent this deck to a very close friend and serial entrepreneur. He read up to this point and said the following, and I quote:• Boring, Yawning• You’re putting me to sleep• Heard all this stuff before• SO WHAT?

The So What is That I Want to Go From This……

The essence of the overwhelming burden, helplessness and plight of a growing number in humanity.

To This……Joy, well being, work, satisfaction, health, confidence,

eager for the future - prosperous

VESTERGAARD

…. And to This.Inventing technology that allows children to drink almost anything

which enables them to rise above poverty, develop capacity and contribute to society - prosperous

….. And If You Want

You can do it profitably

Why Redefine The Corporation?

Because when you just make money a cancerous outcome is division and pain

but when you create prosperity you generate unity and create a sustainable

advancement for humanity

“If the human race wishes to have a prolonged and indefinite period of material prosperity, they have only got to behave in a peaceful and helpful way toward one another.” Winston Churchill

Global Prosperity IndexHow does the world fare with prosperity?North America, West Europe and Australia out perform the rest of the world. Tight correlation with the Global Wealth Index.

Factors Defining ProsperityLEGATUM PROSPERITY INDEX

1. Economy - Stable and growing economies increase per capita income and promote the overall well-being of their citizens.

2. Entrepreneurship & Opportunity (E&O) - A strong entrepreneurial climate in which citizens can pursue new ideas and opportunities for improving their lives leads to higher levels of income and wellbeing.

3. Governance - Well-governed societies enjoy national economic growth and citizen well-being.

4. Education - Education is a building block for prosperous societies.5. Health - A strong healthcare infrastructure in which citizens are able to enjoy good

physical and mental health leads to higher levels of income and well-being.6. Safety & Security - Societies plagued by threats to national security and personal

safety cannot foster growth in average levels of income or well-being.7. Personal Freedom - When citizens enjoy their rights to expression, belief,

organisation, and personal autonomy in a society welcoming of diversity, their country enjoys higher levels of income and social well-being.

8. Social Capital - Social networks and the cohesion that a society experiences when people trust one another have a direct effect on the prosperity of a country.

From Making Money To Creating Prosperity

HOW DO YOU TRANSITION?

1. Determine the right factors for your Corporation to create prosperity

Diversity & inclusionEmployee Rights

OpportunityWell being

JusticeValues

2. Define The Right Factorse.g. What is Well Being?

• I WORK and contribute• I have a PLACE to live• My FAMILY LIFE is balanced• I ENGAGE in the community• There is a LEISURE part to my life• I am HEALTHY in body, mind and soul• I have SECURITY in my life• I live in a healthy & sustainable ENVIRONMENT• I have FINANCIAL MEANS to sustain• I am constantly LEARNING

3. Make The End To Be The BeginningToday’s Beginning is MAKING MONEY

WHAT WE DO (The Means)Asset / resource allocation

System enablers

Leverage employees

MarkCom / CSR

CSAT, ESAT

OUTCOMES WE EXPECT(The End)Revenues

Profits

EPS

ROI / ROA / ROE

Equity

Applied LocallyThe difference in making money across regions and

countries is Relative Maturity & Sophistication

PRINCIPLE KPIs USA INDIA SUMALIA PALESTINE GERMANY

Revenues

Profits

EPS

ROI / ROA / ROE

Equity

WHAT WE DO(The Means)

Revenues

Profits

EPS

ROI / ROA / ROE

Equity

OUTCOMES WE EXPECT(The End)

Diversity

Justice

Opportunity

Well Being

Human Development

Values

“Education is an ornament in prosperity and a refuge in adversity.” Aristotle

Make The End To Be The BeginningToday’s beginning should become the means for

the new end – Creating Prosperity

Applied LocallyThere can be global consistency and unity in factors

while there is diversity in relative application &

PRINCIPLE KPIs USA INDIA SUMALIA PALESTINE GERMANY

Diversity

Human Rights

Justice

Opportunity

Well Being

Values

“I can promise you that women working together - linked, informed and educated - can bring peace and prosperity to this forsaken planet.” Isabel Allende

The Corporation Making Money

Resources

Market Opportunity

Growth & Profitability

Shareholder Value $

The Corporation Creating Prosperity

Shareholder Value

Human Capacity

Community Development

Creating Prosperity $

4. Establish The Environment For Creating Prosperity

• CLEAR on the definition of prosperity• to create prosperity from which not

only the Corporation itself, but society-at-large, can benefit

• UNITED around achieving the definition in real terms

• AGILE to achieve the performance balance

• ACCOUNTABLEo to itself (corporate code of

conduct)o to the community (external

audit, subject to international standards-voluntary or not)

• PROACTIVE to get ahead of the curve

“We cannot seek achievement for ourselves and forget about progress and prosperity for our community... Our ambitions must be broad enough to include the aspirations and needs of others, for their sakes and for our own” Cesar Chavez

How Do We Get There• Sincerity of purpose• Live without prosperity

• Change the beginning• Design with end in mind

• Be clear on the goal• Create partnerships• Execute with passion• Deliver the results

“You must be the change you want to see in the world.”

Mahatma Gandhi

Attributes Necessary For An Effective Transformation

True SeekershipSubordination

ServitudeFortitude

CourageSacrificeIntegrityPassion

”A man's moral worth is established only at the point where he is ready to give up his life in defense of his convictions.”

Henning von Tresckow

5. Start With YouThe Cornerstone of Change

YOUR HEART & SOUL

O SON OF MAN!Bestow My wealth upon My poor, that in heaven thou mayest draw from

stores of unfading splendor and treasures of imperishable glory. But by My life! To offer up thy soul is a more glorious thing couldst thou but

see with Mine eye.

(Baha'u'llah, The Arabic Hidden Words #57)

But I’m Just One Person.So were….

• Mahatma Gandhi • Rosa Parks• Nelson Mandela • Zarin Taj (Tahirih)• Konrad Adenauer

But I’m none of these greats. Well, neither is Narayanan Krishnan

http://www.youtube.com/watch?v=y_3BEwpv0dM

Your behavior defines who you are.

Your legacy is the impact of your behavior on others.

The true measure of success is the impact you have on the life of others.

Clayton Christianson, Professor Harvard Business School

APPENDIX

WorkshopRedefining the Corporation: from making money to creating prosperity

Vafa and Desiree Akhavan

Participants in the workshop will delve deeper into the four conditions for sustainable transformation of the Corporation. The discussion will follow a consultative approach to defining each of the four conditions. The output of the workshop will also include specific actions that participants can deploy upon return to their work environments. The three questions: What needs to be changed in order to create prosperity for the world while still successfully conducting business? How can a business change the way it evaluates its performance to include meeting the needs of society and the environment? How can we decrease the tension between business and society?

The four conditions:Sincerity of its purpose is changed from generating profit for owners to creating prosperity for communitiesCreate clarity around the description of prosperity for the entire organization Unity of purpose to pursue this new goalEstablish an operating model that addresses the ecosystem and can facilitate the execution of a SMART plan

Workshop Program

1. Introductions and expectations (10m)2. Review prep work from resources (20m)3. Break into groups: Conglomerate, Mid-cap,

Start-up4. Discussion of case studies (45m)5. Reports(15m): Conclusions, next steps

CHILD CATEGORY STATISTICS

Children in the world 2.2 billion

Children in poverty 1.0 billion

Shelter, safe water, health For the 1.9 billion children from the developing world, there are:• 640 million without adequate shelter (1 in 3)• 400 million with no access to safe water (1 in 5)• 270 million with no access to health services (1 in 7)

Children out of education 121 million

Worldwide child survival • 10.6 million died in 2003 before they reached the age of 5 (same as children population in France, Germany, Greece and Italy)

• 1.4 million die each year from lack of access to safe drinking water and adequate sanitation

Worldwide child health • 2.2 million children die each year because they are not immunized• 15 million children orphaned due to HIV/AIDS (similar to the total children population in

Germany or United Kingdom)

Polar ExtremesOrder of Magnitude

Creating Prosperity: A success story

Carbon For Water begins with the hardships of the people of Kenya’s Western Province, where safe drinking water is scarce and the wood fuel used to boil water for purification is expensive. These two factors conspire to make waterborne illness a daily—and life-threatening—reality among the already poor population. Women and girls are especially vulnerable; they often miss school or work when fetching wood, and some even fall victim to sexual violence in the process.Filmmakers Evan Abramson and Carmen Elsa Lopez introduce audiences to a unique solution to this age-old, and worsening, problem. An innovative company has financed the distribution and maintenance of 900,000 water filters in Western Province, funded entirely by carbon credits. These credits are awarded for actual reductions in use of wood fuel as well as the anticipated reduction in future fuel use. The filters help to slow deforestation, as household demand for wood drops. In this way—and in just five weeks—4.5 million people were given the means to purify their water, which in turn unlocks the potential to improve families’ income, education, and health.

http://www.vestergaard-frandsen.com/lifestrawhttp://www.carbonforwaterfilm.com/

Resources• http://www.nytimes.com/2012/07/13/opinion/brooks-why-our-elites-stink.html?

_r=1&nl=todaysheadlines&emc=edit_th_20120713• https://www.youtube.com/watch?v=16K6m3Ua2nw&feature=player_embedded• http://www.youtube.com/watch?v=VMqcLUqYqrs&feature=related• https://www.youtube.com/watch?v=16K6m3Ua2nw&feature=player_embedded• http://www.youtube.com/watch?v=VMqcLUqYqrs&feature=related• http://www.pbs.org/now/transcript/transcript_shiva.html• http://hondurashumanrights.wordpress.com/2011/01/24/sweatshops-mining-tourism-free-trade-

negotiations-canadas-involvement-in-honduras-support-for-the-post-military-coup-regime/• http://a.mw.cnn.com/primary/wk_article?articleId=urn:newsml:CNN.com:20120907:jay-leno-

tonight-show:1&branding=&category=cnnd_entertainment&pagesize=10• http://www.forbes.com/sites/devinthorpe/2012/09/10/eight-crowdfunding-sites-for-social-

entrepreneurs/• http://www.forbes.com/sites/annefield/2012/08/30/new-impact-investing-stock-exchange-is-

making-steady-progress/• http://www.vilcap.com/about-vilcap/• http://www.ssireview.org/articles/entry/qa_roundtable_on_impact_investing• http://www.youtube.com/watch?v=buMyJPQLS9U• http://www.youtube.com/watch?v=y_3BEwpv0dM• http://twistedsifter.com/2011/01/the-most-expensive-house-in-toronto-canada/• http://mashable.com/2012/09/26/wikipedia-online-change/

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