Which is so relevant given the current discourse that is going on in our nation, the word a and d, the most powerful word in our language. With find out why in the power of and responsible business without tradeoffs. Thanks very much. A real treat to be back even if only virtually. In florida. Many years ago, as david mentioned, phd in philosophy. That was great, you will never have to worry about a job. Just opened a bunch of philosophy factories on the interstate and you will be fine. I got lucky to do a postdoc at wharton and always taught at Business Schools but i want to recapture if i can that sense of optimism and idealism in the shadows of this awful pandemic, and the really devastation that has occurred in many communities. I still remain incredibly optimistic we will find our way out of it, to Racial Justice and build a better world, all of us would like to do. I want to focus on the debate which exists about ethics in capitalism. There is an old story about business deeply rooted all over the world, not just in the us. You know the story, business is about the money, it is about profits. Last week was the Fiftieth Anniversary of the very famous paper by Milton Friedman that the only task of managers is to make it as funny as possible for shareholders, that old story may have been useful at some point, not very useful, it is not very useful anymore, making money and profits, shareholders is all that matters, the idea that business is about baskets trying to do each other in, people only worry about their shortterm economic selfinterest. I tell somebody people have to manage not to laugh, to make jokes, it is an oxymoron, theoretical subjects. Ever since the Global Financial crisis. The clarion call for can i think about business i will use the terms interchangeably. I am kind of a modern day adam smith fan. Smith never used the word capitalism. He did write a lot about ethics that most people dont read. The aftermath of the Global Financial crisis, an increase in calls for reform. Several problems, i would call the 70 problem, comes from the studies that looked at engagement. It is done in the us, higher, and singapore and others, 70 of people are unengaged. I love this. More actively unengaged in their jobs. If you are unengaged you just dont care. If you are actively unengaged i guess you would show up every day. That is a real problem i have seen. A real practical problem. I have asked many ceos, they all like to think it is better but some will say we have to work on this. The standard issue, trust in business, Business Executives is fairly low. You have seen studies around 20 . People trust business less than they trust doctors, less than they trust lawyers which hurts for some of us. The only Group Business beats in terms of trust is politicians. I will let you decide whether that is a victory or not. It seems not to me. We are still dealing with the aftermath of Global Financial crisis. Along comes the ed freeman along comes the covid19 pandemic and the movement by black lives matter and the search for Racial Justice. Business isnt in the into any of these things. It has a part to play in all of them but we are not going to solve these problems with more of the wrong thing. We are not going to solve these problems trying harder to maximize shareholder value. We are not going to solve these problems by seeing business as a bunch of greedy little basket trying to do each other in, out competing each other, in their shortterm selfinterest. What we need is a new narrative, a news story of business. A new way to think about it. We need a new conceptualization of business. The good news that i painted as a very dark beginning, good news is this is happening in the world and it is easy to forget about. Think about incredible interest, started in the 60s but weve seen renewal of interesting corporate responsibility, sustainability, weve seen social entrepreneurship, just capital, with Inclusive Capitalism like Richard Bransons group whose name i always forget, unconscious capitalism and stakeholder capitalism. All of these movements are about companies out doing business in a big way. I was at a meeting at the white house in the waning days of the Obama Administration and the point of the meeting was to figure out what is the right brand and what could government, in particular the department of labor, what could they do to encourage the movement . What is the right brand . How did this get branded . Wouldnt it be better if we pulled together under one brand . Sitting there i began to think it is the wrong question or different question. Maybe a better question is to think about what are the four or five absolutely necessary things that whatever the brands turns out to be this new story of business, of capitalism has to deal with. So we decided one of my colleagues, professor at notre dame, we decided to write the power of and responsible business without tradeoffs and suggests there are five key areas, key principles, key ideas, 6 or 7, we focused and they are connected, they give us a way out of thinking of business in the old story but they do require a fair amount of imagination. I want to talk about these five, focusing on any of them that you want to. The first one, we need to think about the idea of purpose, the purpose of business is to make as much money as you can. I need red blood cells to live but it doesnt follow from that that the purpose of my life is to make red blood cells lose even if i might have to focus on making red blood cells, i had a fun weekend, had my hips replaced. Not a fun way to begin. I had to focus on making red blood cells. It is not the purpose of my life even though that is what i had to do. Business must have problems. The idea that profits are bad or evil is like red blood cells are evil. You got to have them to live. I am a little bit of a musician. It doesnt matter whether you are for profit or notforprofit, you got to get paid and invest in the future. Profits are necessary but that is not the purpose of a business. Not why entrepreneurs started business. You better get a job because you have a better chance of making money getting a job than you do starting. Entrepreneurs started a business because they have a vision, they want to bring something into being. Purpose is what activates business ideas. Profits follow from purpose. They are not themselves the purpose of business. They are an outcome. It is a little bit like some of you may know people who spend a lot of their time focusing on being happy. Everything they do is about being happy. You got to be happy. These are the most miserable people on the planet because they dont understand that happiness is an outcome of what your relationships are, what you are doing with your life, what your purpose is. Profits are the same way. Profits are simply an outcome of how you make your purpose real, what are the ways you create value. We need purpose and profits, not just profits. The second point is no surprise to any of you, since the late 70s i have written about the idea of stakeholders. I thought thats just the way business works, on a dirt farm in georgia, had to deal with folks who could affect you and that you could affect. That is complete common sense to me, always has. Never understood why people thought that was a radical idea or even an interesting idea. I thought there were some interesting ideas in this old book i wrote called Strategic Management stakeholder approach but i didnt think the stakeholder idea was the most interesting one. I didnt realize how embedded the story was in our mind. We are in the grip of that old story, a group that we need to bring. Any business has always and will always create and sometimes destroy value for customers, suppliers, employees, communities and the people with the money. Building and leading a business means getting these things going in the same direction even if you are the most honest friedmanite in the world and all you care about is shareholder value, how are you going to do it . Create products for customers, have supplies to make it better, employees who are engaged, communities who want you there and if you do that and you are lucky you might make some money. Seeing stakeholders versus shareholders is a complete mistake. These are interdependent and you cant look at them as one versus another. The second thing to notice, thinking about stakeholders is a fundamentally different way most people want to think about business because you have to think about them in relationships, stakeholder relationships. Relationship that is very different than a transaction. Transactions are one off things that might be repeated but relationships endure over time. You expect them to continue. Personal relationships, we try not to keep score. My wife and i have been married for 43 years. She is the reason i went to work in the first place, she went to grad school, followed her along and next door to another room in the house, i said you know, i have been keeping score and i think you owe me three and i am very certain what the outcome of that will be. I dont think it will be good. Relationships you dont have to keep score which comes to show you help each other. That is how business works, not just a transactional thing. For the most part to build a Great Company you build a set of relationships. The purpose of stakeholders and shareholders, business doesnt exist and imagined by economists but a pretty good judgment, perfect competition, contained in the price etc. We know how the story goes. Business in the real world, with a societal institutions. We are as actors businesses, consumers, employees, citizens, parents, patients and it is hard to separate one institution from another. And other institutions, to understand, to improve our supply and the business embeddedness, businesses embedded in the physical world. We cant forget about intangible resources, thinking about what sustainability means, how business can be is a problem. It is a problem especially today in the us, because of crony capitalism. Some businesses includes with people in government to make special deals for themselves. Letting markets work enough and seeing business as part of society but rather i am doing this to make as much money as i can. And if we solve problems like Global Warming we really need people to start businesses and use in their creative imagination. The Human Connection principle, and we are not one dimensional maximizers of shortterm we call them sociopaths. For the most part we elect them to political office. The statement coming from me. What are human beings . We can be selfish, can be another regard. Anyone who has ever been in love forever had a child knows that this idea of focusing on this, not how human beings are. What a human being is, the iphones, think of the vocabularies we had to literally invent to get to iphones, the terms, the issues, we had to invent a vocabulary about glass and what a human being his, someone who can invent a vocabulary and solve problems to actually realize, time we recognize that. No one can create alone. It is urged to create by part of themselves in relationships with others. It is high time, setting lots of examples that are doing this. Dont take this, as the world was. What i am trying to worry is this is happening. Sometimes we dont see it. We have to put business and ethics to gather. Business shouldnt work, we have a crisis, we cant talk about this stuff anymore. These things are too sensitive. That is the deathknell of a democratic things that affect all of us that democratic society, not here for very long. We can say five things, purpose and promise and shareholders, societal institution and market institution, people with food humanity and economic interest, ethics and business and put those things to gather and a different view of the world. We need moral leadership. People who leave critical conversations, not righteous ones, no lectures on morality. We have to take people where they are and lead them to where they need to be. This requires incredibly emotional intelligence. It requires humility. It is best done with a good dose of humor. If we can address our own values, our own authenticity and contribute to others we will have let me say two things. One take away, are you willing to see the results of your conversations to the washington post. They never say Charlottesville Daily progress because if they did the test would be five factual errors. The caption under the picture, a vague idea that you could read this somewhere else. The newspaper test doesnt work for us in charlottesville so we had to invent a new one. The ben, emma and molly test. At the end of the day. Would i am proud of that i want you to learn from. If we are not making our organizations, companies, synagogues and mosques, educational institutions, places for our children to live in, we have the bar too low, by the name of Warren Haynes. With the allmond brothers, trying to learn the play, listening to Warren Haynes on a video. Places like the sound slide here basically, the most pain possible. Warren haynes stops and says when you play the blues it doesnt matter how many notes you play, you just have to measure the notes you play. My challenge to all of you is to figure out what are the notes you mean to play . In todays world there is a lot coming at you. There is an awful lot the we dont know. Listening to someone like Warren Haynes or bb king, more humanity in that one note and 100 others, a rule that would start as well. Thanks so much, 50 countries copies of your book, in your book, you give a number of concrete examples, to use your analogy. Can you share a couple examples of why you chose some of the companies you chose . There were lots of them. And jenny need, a film called fishing with dynamite, a 70 minute film on the shareholder stakeholder idea when lots of people comment on it including Michael Jensen and others, we pick out three companies, the Container Store has mediumsized retailer, a Startup Company in maine and Eastman Chemical and those are interesting companies. We looked at new york life which has been in business for a very long time and they basically embody these principles, look at carmax, and revolutionize the used car industry, used to be the icon of unethical behavior and others, not trying to argue what gets right all the time. The old story tells us you got to think of this like saints and sinners. Most businesses are sinners, just in it for the money. A few are safe, they are just in it for the money. It is the hallmark of the story, oscar wilde told us how to do it. Every saint has a path and every sinner has a future. I dont know many sinners. I dont know any saints. As human beings if every time we get something wrong i have to go straight to hell, businesses and going to be very interesting. Can you hear me . Okay. So james, to the best of his knowledge, the purpose of the firm is to maximize shareholder wealth, how do we get finance faculty and finance textbook authors to wake up . We will see them waking up in the near future, the Business Roundtable on what the shareholder values dont help very much. The principles of responsible investing, 9 trillion under management for those who signed those principles. 3, the black rock ceos letters to the companies about that. Financial textbooks tell us technologies of how to do stuff and they are important, dont just help you solve problems like how to build a great business. I have often asked students how certain they are of that 20 year prediction when doing a catch flows and present value. I cant imagine people do that anymore. I am more optimistic about this and probably you are the author of the one that doesnt do that, talk about shareholder wealth and that is a great idea. I think we will see more of that. There is no going back. I cant see that. Indeed, jim and frank warner have written a new book on financing. I encourage everybody to take a look at it. I have a question from adjunct professor janice asking would there be less skepticism regarding responsible Business Practices if they were viewed as part of a menu of Corporate Governance options for Risk Management and shareholder value rather than as a new model, citing a study asserting a disconnect between the Business Roundtable signatures aspirations, and what they are doing and implementing . For many years i tried to follow the Corporate Governance literature, following the law though i am not trained. I would say first of all, they are trying to say there is a disconnect between the roundtable and how much they implemented, of course there is. The issue of the Statement Last summer, it is a little soon to be trashing it. If you look at just capital, they have a website in which what they do is track what the companies have done by stakeholder, with respect to covid19. They are trying to see companies that sign the roundtable, putting their money where their mouth is. It is going to take time. Again, we have got to avoid the saints and sinners thing. When south argued persuasively to me that the idea that shareholder value is the only objective of a firm, is not the law. Shareholders dont companies on themselves. There is an awful lot ofmyth. Governance literature is interesting. But i am not sure we understand, it is embedded around the idea that shareholders are what count. Im not sure we know yet about stakeholder governance and what that is like. Parsons told us governors have an at many different levels. The firm as a whole, governance of relationships and we need to understand that as well. Interesting, but i am not hopeful of the governance literature as i currently understand it. Kind of a nonanswer. I apologize. Reporter i wonder if you could talk about the history of teaching business for nbas and what youve seen over the years, howard started to move, the earliest ones. Give us a little baseline on how it is going it has it been successful or unsuccessful . As a discipline,