By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL
In August, the Business Roundtable, an association of CEOs of America’s leading companies, issued a statement redefining the purpose of an American corporation. It stated how Americans deserve an economy that allows each to succeed through hard work and creativity toward leading a life of meaning and dignity. The statement elaborates, “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.” These CEOs committed to:
- delivering value to customers.
- investing in employees, which begins with compensating them fairly and providing important benefits and support for training and education, while fostering diversity, inclusion, dignity, and respect.
- dealing fairly and ethically with suppliers.
- supporting the communities in which they work.
- generating long-term value for shareholders.
While such a statement should not seem like a big deal, it actually is, and the reason for this resides in history. Why? Because, for nearly half a century, America’s CEOs have tended to follow the Friedman Doctrine. Written by economist Milton Friedman in the early 1970s the doctrine espouses, “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.” His doctrine and book, Capitalism and Freedom, sparked debate on many subjects, including business ethics and whether it was the responsibility of business to engage in socially responsible behavior. And, while purely focusing on profits may have been good for business in the 1970s, promoting such as your company’s ultimate and only objective would probably prove significantly less useful when recruiting employees today. So, I say it is about time the Business Roundtable got with the times.
Yes, we know businesses must be profitable in order to stay in business, while also providing a sufficient return to shareholders. But in today’s world, businesses that want to remain in business must consider the needs of other key stakeholders beyond just shareholders and customers. Because it matters if a biopharma creates a new therapeutic that remarkably helps patients, but puts a contract manufacturer or supplier out of business with something like unreasonable payment terms. It matters that businesses support the communities in which they exist, because employees want to take pride in the companies for which they are employed, and work for leaders they admire and respect.
In this month’s issue, we once again feature a biopharmaceutical company CEO, and I would imagine that Matt Patterson, cofounder, chairman, and CEO of Audentes Therapeutics, would be in alignment with the CEOs of the Business Roundtable. Because, though he may have started out simply as a protein purification technician at a GMP facility, once he understood the difference he was making for patients, that made all the difference. And if you do that well, the profits tend to follow.