Conclusion

What this book has done is to demonstrate the practicality of putting purpose into practice. It has done this in the context of business taking the lead in doing it for itself and not waiting on others—changes in the law, regulation, or institutional investment—to do it for them. In particular, the book has demonstrated that companies can bring about a fundamental change in their business models away from a preoccupation with profits to putting purpose at their heart. This is not about doing good as an add-on to business as usual or a nice to have, or a charitable activity that offers redemption for the nasty things that firms do to make the profits that allow them to be charitable. It is about moving to a view of the firm that recognizes its reason for being to be to ‘produce profitable solutions for the problems of people and planet’ and ‘not to profit from producing problems for people and planet’.

That is a profound change in the way of thinking about business. It is not about production or ‘stacking them high and selling them cheap’. It is about being clear about what problems a firm is seeking to solve, for whom—its customers, employees, suppliers, distributors, communities, environment, and societies—how it is solving the problems, by when, and why the company is particularly well suited to solving the problems. It involves establishing a real understanding of the nature of those problems that different parties face and what is required to solve them.

It requires building strong partnerships with a variety of different organizations and individuals in the private, public, and not-for-profit sectors and recognizing what is required to promote a common purpose and understanding amongst them. It necessitates expenditures and investments in different parties, in human, natural, and social as well as financial and material capital. And it involves constructing the metrics of the performance of those different types of capital, which capture their key performance indicators.

Finally, an accounting framework is required that duly acknowledges expenditures on human, natural, and social capital as investments as well as current expenditures, and maintenance of capitals as depreciation requirements analogous to those of material capital. The construction of a mutual P&L therefore involves reclassifying expenditures as capital rather than current costs and making appropriate provision for maintenance of the relevant capitals.

The book has not only set out the principles and practice of this new management innovation but has also shown how companies in different sectors, parts of the world, and stages of their development have in practice implemented them. It has therefore demonstrated the practical reality as well as the conceptual theory that underpins putting purpose into practice.

The reason why this matters is that shifting from profit production or even goods and services production to problem solving is the means by which business in the future will re-establish the credibility and status that it should command in society. Once people—be they customers, consumers, employees, suppliers, or societies—believe that business is there to solve their problems then they will have trust in an organization that at present they deeply distrust. This converts profit from being a source of conflict between business and society to one that is a means for sustaining levels of trust that avoid the need for philanthropy or government support.

That trust is then the basis of the reciprocal benefits that firms and their investors derive from this approach to business. Trust is one of, if not the, most important and largely unrecognized asset of business. It is the source of greater customer loyalty, more engaged employees, more reliable suppliers and more supportive shareholders and societies. It therefore creates higher revenues and lower costs and therefore greater profits. But it does not come from the pursuit of those profits but as a by-product of the intrinsic purpose of solving other people’s problems.

While the book has provided a powerful demonstration of the practical reality of business transforming its business model to put purpose into practice, it has also revealed how much further we need to go before this becomes the conventionally accepted norm. First, the cases reported in the book demonstrate the widespread adoption of these approaches but in nearly all cases, these are examples of companies adopting the practices in part not all of their businesses. Even in the case of Mars, we have noted the ambiguity surrounding what mutuality means has allowed it to experiment with the concept in different parts of the business. However, it also implies that there is no common uniform adoption of mutuality throughout the organization. It is a series of interesting pilots rather than a guiding star of the whole of the company.

Second, while Mars and other companies have been able to adopt mutuality principles, it is much more feasible in a wholly family-owned firm than one that is exposed to the demands of capital markets and institutional investors. While policymakers increasingly emphasize good stewardship of companies by investors, institutions still have a primary duty to their investors and beneficiaries who, with some notable exceptions in the case of impact investing, are predominantly interested in financial returns and often short-term measures of performance. Companies owned by institutional investors are therefore under pressure to prioritize profits and short-term returns, which undermines their ability to promote other purposes.

Third, while the law in general pays due regard to the responsibility of directors to their stakeholders as well as their shareholders, this is in the context of promoting the (long-term) performance of firms for the benefit of their shareholders. In other words, the law has an extrinsic view of purposes of companies and the promotion of parties other than shareholders rather than an emphasis on their intrinsic interests. This is not an adequate basis for a reformulation of purpose around profitable solutions to problems of people and planet.

Finally, regulation is conventionally viewed in the context of the Friedman Doctrine notion of defining and enforcing the rules of the game by which companies maximize shareholder value. It is not considered as a tool for aligning private purposes of companies with public interests in circumstances in which companies perform public functions in, for example, delivering goods and services as utilities or infrastructure providers.

While the book has therefore demonstrated that it is perfectly feasible for companies to adopt principles of mutuality in the context of the existing ownership, legal, and regulatory framework, there are limitations to the extent to which it will be feasible for them to do so. The book has only touched very briefly on these broader policy issues because they have not been its primary focus. However, this should in no way diminish the importance of policymakers recognizing the need for reform to achieve the fundamental reconceptualization of business that is required to address the increasingly pressing social, political, environmental, and technological issues that confront nations around the world and with which this book began.

Colin Mayer CBE FRA is the Peter Moores Professor of management studies at the Saïd Business School at the University of Oxford. He is a professorial fellow and sub-warden of Wadham College, Oxford and an honorary fellow of Oriel College, Oxford and St Anne’s College, Oxford. He is a fellow of the British Academy and the European Corporate Governance Institute. He is a member of the UK Government Natural Capital Committee and the Board of Trustees of the Oxford Playhouse. He was appointed Commander of the Order of the British Empire (CBE) in the 2017 New Year Honours for services to business education and the administration of justice in the economic sphere. He was chairman of Oxera Ltd. between 1986 and 2010 and assisted in building the company into what is now one of the largest independent economics consultancies in Europe. He is a director of the energy modelling company, Aurora Energy Research Ltd. He advises companies, governments, international agencies and regulators around the world, and he leads the British Academy enquiry into ‘the Future of the Corporation’. He is the author of Firm Commitment: Why the Corporation Is Failing Us and How to Restore Trust in It and Prosperity: Better Business Makes the Greater Good, published by Oxford University Press in 2018.

Bruno Roche is the founder and leader of the Economics of Mutuality. He served as the Chief Economist at Mars, Incorporated between 2006 and 2020. In that position, he led Catalyst, a global thought leadership capability and internal corporate think tank to Mars, which was the laboratory for the Economics of Mutuality from 2006. Recognising its potential to reshape the landscape of business, finance and management education, Mars endorsed Bruno to re-deploy the Economics of Mutuality as a structurally independent public interest foundation with a management consultancy arm, able to grow beyond the boundaries of one company. Today, he leads the Economics of Mutuality globally from Geneva, Switzerland with the support of Mars as a key partner. Bruno co-created Economics of Mutuality Labs at the business schools of Oxford University (SBS) and CEIBS (Shanghai). He is a visiting lecturer in different universities and serves as an expert to the World Economic Forum. His education and academic research interests followed an applied maths path, with a specialization in international economics and finance and management sciences. Bruno co-authored Completing Capitalism: Heal Business to Heal the World, which has been published in both English and Chinese.

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