Corporate Strategy Perspective: Strategy at the Crossroads of Business and Society

 Business and markets have played a powerful role in creating tremendous wealth and raising the standard of living for millions over the past few decades. This role can be seen in the provision of medicine, food, and a host of other life-affirming advances. Yet, in the face of this great wealth creation, we are keenly aware of inequities and promises that are unmet. 

Confidence in business and markets has recently been shaken by the tremendous destruction of wealth, the surge in government and regulatory activity, and social and environmental challenges that are now in stark relief from Columbus to Copenhagen. All these portend potentially powerful change.

Our collective focus must turn to furthering the “smart evolution” of business in the face of trends such as the growing talent shortage, the rise of Asia, climate change, shifting demographics, and others. This change means creating wealth in ways that are more considerate and aligned with the natural systems upon which all life depends. It raises this question: What is the proper role for business and its leaders in society and the communities in which they live and operate? Getting the answer right is perhaps the single most important challenge to building successful long-term business strategies for the companies that will rule the future. Leaders are coming to understand that these issues matter so much that they should sit at the heart of corporate strategy, not in some sideline administrative function. The value at stake is too great to not be addressed through long-term strategic plans.

And yet, while corporations are confronted with social issues in every country in which they operate and at every level of their organizations, the role of business in society is not often considered in a holistic way. In fact, it’s far more the norm for institutions to become caught up in internal matters and pressing day-to-day concerns, losing sight of the wider world outside. This notion gives rise to a second critical question: How can business properly fulfill its role and responsibilities in society? The answer to this question will determine whether our society succeeds or fails, whether communities prosper or suffer, and whether we enjoy sustained economic growth and prosperity.

It is demonstrably clear that success of the economy and society, as well as the corporations that operate within them, is determined in great part by their collective effectiveness in solving the most pressing problems. The health of each is shaped by the skills generated by our education system, the quality of our water and air, and even the sustainability of our pension programs. In most places, there are serious concerns for each.

External shocks, the likes of which we have just experienced, rarely arise without warning. Many threats to business arrive after considerable indications of a coming storm. Leaders whose strategies embed and build the capability to sense, shape, and prepare for long-term horizon risks and opportunities are better positioned to handle the trends that will hurt their competitors. This is the mandate for winning business strategies for the future.

McKinsey & Company is a management consulting firm that helps leading corporations and organizations make distinctive, lasting and substantial improvements in their performance. The firm has extensive experience in all major industry sectors and primary functional areas as well as in-depth expertise in high-priority areas for today’s business leaders.