www.ebook3000.com More Praise for Completing Capitalism “Courageously reconciles dimensions that were thought to be mutually exclusive for centuries A must-read for today’s business leaders who are ready to reinvent their world!” —Jean-Christophe Flatin, President, Mars Global Chocolate “Roche and Jakub dramatically succeed where others have dismally failed Their clear, concise, values-driven words shape capitalism into its final form and elevate it to the pinnacle position that it deserves Roche’s and Jakub’s superb scholarship is underpinned and supported by the practical reality of successful pilots and business world applications They not only complete capitalism, they create and hand us a road map for responsible business in the 21st century.” —Dr Frank Akers, former Associate Director, Oak Ridge National Laboratory; Chairman, Mars Science Advisory Council; CEO, Oak Ridge Strategies Group; and Brigadier General, US Army (ret.) “For Veolia, the world leader in environmental services, the question of innovation in service of human progress is central: expanding access to natural resources, preserving and renewing them is our vocation Our values at Veolia are in profound harmony with the great essay of Completing Capitalism, which proposes a vision and practical solutions for a responsible capitalism based on reciprocity and shared prosperity.” —Dinah Louda, Executive Director, Veolia Institute, and advisor to the CEO of Veolia “The more complete form of capitalism put forward by Roche and Jakub is not about competitive advantage But to be competitive in the future, companies will need to operate this way.” —Paul Michaels, former CEO, Mars, Incorporated, and former executive, Johnson & Johnson and Procter & Gamble “Some endeavors require intellectual, emotional, or spiritual courage Bruno and Jay have demonstrated all three in fleshing out this valuable piece of work on behalf of Mars, Incorporated, our associates, and all stakeholders, including the planet I truly hope it evolves, as I believe it can and must, the dialogue regarding capitalism’s future and its crucial role in our world going forward.” —Stephen Badger, Chairman of the Board, Mars, Incorporated CompletingCapitalism_final.indd 3/14/17 12:43 PM “As human beings we long for the way the world is supposed to be, even as we make choices against that hope For years Roche and Jakub have been hard at work rethinking the way that business should be and ought to be—if we are to flourish as selves and societies, choosing a future that understands the grain of the universe With a rare willingness to ask the most critical questions about the nature of business, their ‘economics of mutuality’ is a vision for doing good and doing well in the context of one of the most iconic brands in the modern world Neither charity nor corporate social responsibility, but rather a way for sustained profitability, this book argues for making money in a way that remembers the meaning of the marketplace.” —Dr Steven Garber, Principal, The Washington Institute, and author of Visions of Vocation and The Fabric of Faithfulness “This crisis is more than a ‘normal’ crisis It requires a reset of our thoughts and ways of doing Business as usual does not work anymore or anywhere The journey that Jakub and Roche are proposing is a difficult one but a promising and fecund one It is ambitious but within our reach to make this world a better one This is, I believe, the only reasonable option We have patched up the system This is the good news We have to rebuild This is the promising appeal A properly functioning market economy must work for the many, not just for the few Now is the time if we want to eradicate poverty in our generation And here is how.” —Bertrand Badré, CEO, BlueOrange Capital; former Managing Director and Chief Financial Officer, World Bank Group; and former Group Chief Financial Officer, Société Générale and Crédit Agricole “Institutions today are failing to adjust to the urgent needs of humanity Power has shifted to MNCs Therefore, the responsibility for sustainable human existence lies mainly on the shoulders of business leaders Roche and Jakub address the right questions, economic and spiritual, while providing a vision and practical approach for making profits together with serving social, natural, and human needs Their book invites us to engage in a paradigm shift It calls for a movement of moral, responsible business leaders Let’s move forward!” —Avishay Braverman, former Senior Economist and Division Chief, World Bank; former President, Ben-Gurion University; and former Cabinet Minister and Chair, Finance and Economic Affairs Committees, Knesset www.ebook3000.com CompletingCapitalism_final.indd 3/14/17 12:43 PM Completing Capitalism Heal Business to Heal the World Bruno Roche CompletingCapitalism_final.indd ✜ Jay Jakub 3/14/17 12:43 PM Completing Capitalism Copyright © 2017 by Bruno Roche and Jay Jakub All rights reserved No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law For permission requests, write to the publisher, addressed “Attention: Permissions Coordinator,” at the address below Berrett-Koehler Publishers, Inc 1333 Broadway, Suite 1000 Oakland, CA 94612-1921 Tel: (510) 817-2277, Fax: (510) 817-2278 www.bkconnection.com Ordering information for print editions Quantity sales Special discounts are available on quantity purchases by corporations, associations, and others For details, contact the “Special Sales Department” at the Berrett-Koehler address above Individual sales Berrett-Koehler publications are available through most bookstores They can also be ordered directly from Berrett-Koehler: Tel: (800) 929-2929; Fax: (802) 864-7626; www.bkconnection.com Orders for college textbook/course adoption use Please contact BerrettKoehler: Tel: (800) 929-2929; Fax: (802) 864-7626 Orders by U.S trade bookstores and wholesalers Please contact Ingram Publisher Services, Tel: (800) 509-4887; Fax: (800) 838-1149; E-mail: customer.service@ingrampublisherservices.com; or visit www.ingram publisherservices.com/Ordering for details about electronic ordering Berrett-Koehler and the BK logo are registered trademarks of Berrett-Koehler Publishers, Inc First Edition Paperback print edition ISBN 978-1-62656-927-0 PDF e-book ISBN 978-1-62656-928-7 IDPF e-book ISBN 978-1-62656-929-4 2017-1 Interior design and production: Dovetail Publishing Services Cover designer: Brad Foltz www.ebook3000.com To the author and perfecter of our faith CompletingCapitalism_final.indd 3/14/17 12:43 PM This page intentionally left blank www.ebook3000.com CompletingCapitalism_final.indd 3/14/17 12:43 PM Contents Foreword b y Colin Mayer, Former Dean, Oxford University’s Saïd Business School, and Martin Radvan, President, Mars Wrigley Confectioneryix Introduction: Uprooting the Dysfunctions of Financial Capitalism Chapter 1: The Expanded Meaning of Capital 25 Chapter 2: Five Indicators for Measuring Human Capital and Well-Being at Work 57 Chapter 3: Measuring Social Capital— How Communities Affect Growth 69 Chapter 4: Measuring Natural Capital— Making More from Less 87 Chapter 5: Recalibrating Financial Capital— How Mutuality Drives Profits 99 Chapter 6: Maua—Social and Human Capital: A Case Study 107 Chapter 7: Coffee—Natural Capital: A Case Study 127 Chapter 8: Remunerating the New Forms of Capital 131 v CompletingCapitalism_final.indd 3/14/17 12:43 PM Completing Capitalism Conclusion: R epositioning Business as a Restorative Healing Power 145 Afterword by Lim Siong Guan, former Group President, Singapore Sovereign Wealth Fund (GIC)165 Notes168 Acknowledgments171 Index174 About the Authors 183 vi www.ebook3000.com CompletingCapitalism_final.indd 3/14/17 12:43 PM Foreword Colin Mayer, Oxford University Martin Radvan, Mars, Incorporated Oxford University entered into Mars’ mutuality journey three years ago when Bruno Roche and Jay Jakub together with a team from Mars Catalyst came to the Saïd Business School to give a presentation on what they called the “economics of mutuality.”1 Of course, we had some notion of the innovative management practices in which Mars was engaged but we had no idea of what we were about to hear The effect was electrifying People in the business school came away thinking that there was really something of substance that warranted careful and in-depth analysis So the seeds for what has thus far been a two-year—and is destined to be a many year—collaborative research program between Oxford University and Mars, Incorporated were sown We started in earnest in October 2014 examining what this curious concept of mutuality meant in practice within Mars We talked to people at all levels in the organization and in particular focused on a pilot study in Nairobi, Kenya, called Maua, in which Mars Catalyst (Mars’ internal corporate think tank) was actively engaged What I came to realize were three things First, that mutuality was a process, not a realization It was the exploration of the way in which business can implement structures, systems, and practices to derive benefits through conferring benefits Mars was in the process of identifying these structures, systems, and practices through experimentation, observation, and learning vii CompletingCapitalism_final.indd 3/14/17 12:43 PM Completing Capitalism been immensely blessed by the wisdom, friendship, and support of Dr Frank Akers, our “man from Gad” who co-chairs the Mars Science Advisory Council He is a former director of Oak Ridge National Laboratory and chaired both external peer reviews of our work that endorsed it, paving the way for the beginning of the model’s adoption by parts of the business and its teaching at Oxford University and soon elsewhere Thanks to Professor Peter Berger, our “resident sociologist,” who helped us crack the social capital measurement challenge with help from our partnering anthropologists, especially Dr Paige West of Columbia University and Dr Amy Stambach of Wisconsin University and Oxford University; to Dr Steve Garber, a very dear friend and quiet advisor who has shared this journey with us from the outset, introducing us to many fascinating contributors along the way; and to Michael Ramsden, Tomas Sandell, Arleen Westerhof, Andrew Baker, George Annadorai, Patrick McDonald and his team, and all the other friends who encouraged us along the way There are many more deserving recognition—too many to list—but a special thanks goes to former Mars CEO and friend, Paul Michaels, who initially championed our model when it was merely a crazy-sounding idea, and to Olivier Goudet, CEO of what has become the largest coffee sourcing company in the world, JAB Holdings, for his encouragement and support dating back to his service as Mars’ chief financial officer It was at Olivier’s urging, in fact, that we undertook writing this book Thanks to Martin Radvan, president of Mars Wrigley Confectionary, a valued mentor over many years and someone who believed in and helped advance the work described herein in ways that made it possible Thanks to Bryan Ayling, Ian Burton, and Cedric Bachellerie, and to former Oxford business school dean Professor Colin Mayer, our valued friend and partner in advancing and teaching the model to the next generation of business leaders, 172 www.ebook3000.com CompletingCapitalism_final.indd 172 3/14/17 12:43 PM Acknowledgments and to his team and to the current dean, Dr Peter Tufano And thanks to a treasured partner and confidant, the late Dr Pamela Hartigan, director of the Skoll Centre for Social Entrepreneurship at Oxford, for her friendship, shared passion for the topic, and energetic drive to help us action the model in practical ways up until the very moment of her passing She is greatly missed, but her memory lives on, in part via this work Last, but not least, we thank those who we have not specifically named herein who are nevertheless part of the journey to “complete capitalism,” such as our writing coach in the early drafting stages, our other thought partners, the rest of our Catalyst team including several former Catalysts who contribute (or have contributed) in many ways, and our families and many friends and well-wishers who pray for us daily Thank you all for what you are doing to unleash the transformational power of business to heal We are humbled and privileged to be walking alongside you 173 CompletingCapitalism_final.indd 173 3/14/17 12:43 PM Index Note: Page numbers in italics indicate figures; those ending in “t” indicate tables abiotic materials, 90–92, 91t, 98, 129t, 130, 137, 154 access, 43 actionability, 7, 20, 85, 93, 129 Africa, 62, 124 See also specific countries inefficiency of foreign aid in, 71 natural resources from, 145 agrarian economy, 15 agriculture, 129, 130 See also specific crops air, 90–91, 91t, 98, 129t, 130, 137, 154 Airbnb, 17 American Enterprise Institute (AEI), 35 approach, 61–63 Ashoka, 111, 113 Asia, growth in, 17 assessment, 154 assets, unrecognized, 132–33 Ateneo de Manila, 50 attitudes, 79–81, 79t, 79 authors crux of discovery, 4–5, journey of, vision of, 3–4 Bank of England, 11 Bank of Japan, 11, 35 base of the pyramid (BoP) markets, 108, 109, 110 behavior, 79–81, 79t, 79, 153 behavioral attitudes, 80 cooperative, 60 benefits, 20, 21, 23 expansion of, 39 sharing of, 28–29 Berlin Wall, fall of, 12–13, 27 big data analytics, 16 biodiversity offsetting, 44 biodiversity use, 90–91 biotic inputs, 127 biotic materials, 90–91, 91t, 98 Bloom program, 113, 121–22, 124 basic schematic of, 122 Böckerman, Petri, 60 bonus payments, 117 Boston University, 50 bottom line, triple, 26 bottom line net earnings, vs top line gross revenue, 31–32 Bourdieu, Pierre, 72 Britain See United Kingdom business See also enterprise evolving roles and responsibilities of, 157–58, 159 restorative power of, 17–18, 24, 145 business ecosystems, 20, 23, 139–42 embracing, 33, 158 mapping exercise, 54–55 business practices, 158 business priorities, rebalancing, business sustainability, 4–5 See also sustainability “cake division” fallacy, 104 Canada, 145 capital actionable, 152 completion of, 125 correlations across types of, 120–21 costs of, 141–42 definition of, 10 etymological meaning of, 10 expanding definition of, 25–56 forms of, 5, 18, 42, 56, 111, 118, 131–43, 149–50 global tax on, 21–22 hidden shortage of other forms of, 36–37 key variables, 152 kinds of, 6t links between types of, 138–39 measuring, 6t nonfinancial, 19, 26, 28, 33–34, 36–37, 56, 139–43, 149–50, 158–59 parsimonious, 152 related to performance, 152 remuneration of, 131–43 stable, 152 capital concentration, 40, 41 capital intensity, attributed value and, 106 capitalism benefits of, 39 complete(d), 37, 49–50 conscious, 26 inclusive, 26, 143 incomplete, 26 leveraging power of, 18 174 www.ebook3000.com CompletingCapitalism_final.indd 174 3/14/17 12:43 PM Index mono-capital form of, 18–19, 22, 39 new form of, 13, 37 capitals, weighing of, 138–39 carbon footprint, 44, 45, 88 car fuel, 101–2, 102 case studies, 106, 107–25, 127–30 Catalyst, 4, 115 Central Bank of Japan, 11 central banks, 11 See also specific banks CFCs (chlorofluorocarbons), 89 Chicago school, 1–2, 14, 21 challenges to, 26 influence of, 29 questioning relevance of, China, 17, 77, 145 chocolate, 121–24, 122 Churchill, Winston, 163 citizen-sector organizations (CSOs), 111, 113, 115 “club good,” 73, 74t CO2, 44–45, 88 See also carbon footprint Coca-Cola, 115 cocoa, 101–2, 102, 104–5 cocoa farmers, 70–71, 77, 104–5 coffee, 91–92, 96, 98, 100–105, 102, 127– 30, 137–38, 141–42 comparative analysis of coffee value chain, 102 comparative analysis vs other commodities, 100–102, 102 financial capital analysis of, 101t input analysis of, 129t journey of cup of coffee, 129t revenue sharing model for, 100–102 coffee farmers, 70–71, 76–77, 103–4 cognitive social capital, 78, 79, 79t collective actions, capacity for, 79–81, 79t, 79, 80–81, 84, 120, 132, 137, 153 Colombia, 127–31 Columbia University, 50 communities, 110, 123 benefits to, 119 building, 137 growth and, 69–85 comparative analysis, 102 competitive advantage, 113 completed capitalism model, 49–50, 125 as a non-rival good, 50–52 complex value chains, 32–33 conscious capitalism, 26 contribution, forms of, 41 cooperative behavior, 60 corporate identity, 59, 62, 67, 152 corporate social responsibility (CSR) initiatives, 1–2, 4–5, 21, 23, 45–46, 88, 119, 124, 160 corporate values, 62, 132, 136 corporations, 27–28 correlations, maximizing positive, 138–39 Côte d’Ivoire, 77, 83t, 123 creativity, 60 currency, 35 Dandora, 118 data mining, 63 data sources, 61–63 debt, 12, 23, 134, 136, 148 decision-making process, 80 deflation, 11–12 “degrowth” movement, 37–38 demand, 127, 128 differences, 40–41 digital economy, 17, 146 disruption, 17, 20 distribution, 127, 128 distribution curves, 104, 105, 106 dual-use investments, 142 Durlauf, Steven, 73 Easterly, William, “Can Foreign Aid Buy Growth,” 71 EBITDA (earnings before interest, taxes, depreciation, and amortization), 48 Ecclesiastes, 24 Ecole Nationale Supérieure de Statistique et d’Economie Appliquée in Côte d’Ivoire (Ivory Coast), 50 “ecological footprint,” 32 economic bubbles, 11–12 economic development social capital and, 84 three inputs needed to nurture, 9–10, 13 economic model(s) changes in, 15–17 since early 1970s, 14–15 economics, as management of scarce resources, 14 economic shifts, pain of transitions, 27 economic transitions,146 pain of, 27, 147–50 from West to East, 145–46 Edmans, Alex, 60 Einstein, Albert, 161 electronic payment, 111 employees, social capital among, 59, 63–66, 67, 152 end-of-life, 129 engagement metrics, 47, 48 England See United Kingdom entrepreneurs, 19, 24, 40–42, 55, 83–84, 108, 116–20, 122, 143, 150 higher margins for, 123 micro-entrepreneurs, 82–84, 105, 107, 109, 110, 114–21, 119, 163 175 CompletingCapitalism_final.indd 175 3/14/17 12:43 PM Completing Capitalism environmental crisis, 15 environmental good, investing in and accounting for, 21 environmental impact, knowledge of, 46–47, 48 environmentalism, 19 environmental performance, 44–45 environmental resources, scarcity of, 14 environmental schools of thought, 88 environmental sustainability, 45–46 environmental transformation, 151 environmental well-being, 20, 21, 23 European Central Bank, 11, 35 exclusion, 79–81, 79t, 79 expansionary monetary policy, 35 external reporting, 44–47 Facebook, 16–17 Factor Four concept, 93–94, 93, 98 Factor Ten concept, 93 Fafchamps, Marcel, 73, 74t fast-moving consumer goods (FMCG), 31, 32, 32 field research, 53, 75–80 financial assets bubble, 148–49 financial capital, 9, 23, 53–54, 110, 121 abundance of, 14 access to, 117 accumulation of, 16, 150 creation of, 16, 26 excessive accumulation of, 151 going beyond, 32–34 liquidity of, 11–12 management of, 158 measuring, 120–21 in new economic context, 149 next steps required, 106 overabundance of, 34–37 recalibrating, 99–106 successor system, 27 summary of key shared capital findings, 106–7 financial capital analysis, of sachet of coffee, 101t financial capitalism model, 9, 14, 19, 25 See also Friedman model questioning completeness of, 19 shortcomings of, 159 uprooting dysfunctions of, 1–24 financial capital metrics, 16–17 financial capital model, 1–2 financial crisis of 2008, 2, 10, 25, 35, 147 new open-mindedness after, 29 wake-up call, 25–27 financial performance management of, 22 metrics and, 19–20 financial services, 16 Fink, Larry, 155 firm-centered drivers, 63 firms, traditional legal boundaries of, 32 Forbes, 148 foreign aid, inefficiency of, 71 foundations, 52 “Fourth Industrial Revolution,” 146 France, 145 freedom, 118 Friedman, Milton, 1, 25, 49 Friedman model, 1–2, 9, 14, 18–19, 21–22, 25–26, 28, 39, 43, 157–58 maxim of sole social responsibility of the business = shareholder profits, 49 profit maximization and, 31–33, 132, 136 Fukuyama, Francis, 72–73, 74t G7, 145–46 Gallup Q12 Employee Engagement Survey, 47, 48, 61–63 Geibler, Justus von, 92 Germany, 32, 145 Ghana, 81–82 Gini index, 53, 100, 105 global debt, 12, 148 global financial assets, inflation of, 11–12 Global Footprint Network (GFN), 14–15, global money supply, 11, 34–36 gold standard, 35 good agricultural practices (GAP), 81 “good servant,” role of, 161–62 Gorbachev, Mikhail, 39 greenhouse gas emissions (GHG), 44, 48 Grootaert, Christiaan, 73 growth communities and, 69–85 low levels of, 12 profits and, 29–32, 32 sustainability and, 31 guest accommodation industry, 17 habitat services, 44 Harter, Jim, 59–60 Harvard Business School, 50 hawkers, 112, 112, 122 holistic performance, 5, 8, 20–21, 23 holistic value, 41, 151 holistic value optimization, 3, 13 horizontal organizational density, 80 hot spot analysis (HSA), 92–93, 129, 154 hot spots, 129, 154 identifying, 104, 106 measuring effectiveness in dealing with, 129–30 human capital, 5, 6t, 9, 33–34, 36, 52–53, 110–11, 139–43, 149–50, 160–61 176 www.ebook3000.com CompletingCapitalism_final.indd 176 3/14/17 12:43 PM Index business performance and, 59–60, 109 case studies, 107–25 conventional and unconventional sources of, 58–59 definition of, 57 development of, 53–54 five components of, 63–67, 66t five drivers with positive effect on, 63–67, 66t forms of, 58–60 key variables, 152–53 management of, 22 in Maua, 107–25 measuring, 6t, 57–68, 109, 114, 119–21, 131, 132–33 metrics for, 158–60 monetization of, 34 remuneration of, 136–37, 161 social capital and, 82–83, 84 summary of well-being findings, 67–68 temptation to monetize, 132–33 unconventional sources of, 58–60 value and, 132–33 variables of, 63–67, 66t, 84 hybrid value system (HVS), 54–55, 110, 111–15, 113, 118, 121–22, 125 International Labour Organization, 32 International Monetary Fund, 11, 148 international organizations, 54 investments, 123, 151–52 investors, 149 Italy, 145 Jakarta, Indonesia, 143 Japan, 11, 32, 145 Jevons effect (Jevons paradox), 97 job creation, 119, 124 job skill development, 137 Jubilee, concept of, 23–24, 135, 150–51 justice, 42 Kenya, 62, 77, 83t, 107–25, 163 key performance indicators (KPIs), 114 knowledge, 16, 160–64 knowledge economy, 16–17, 41, 146 “knowledge flow,” 16 Kyoto Protocol, 44 impact metrics, 91, 158–60 imperative to act, 38–39 inclusive capitalism, 26, 143 income, 110 income distribution, 100 incomplete capitalism, 26 Indonesia, 77 induction process, 114–15 industrial economy, 15–16, 146 industrialized countries, 145–46, 148–49 inequality, 15, 21, 40–41 inflation, 11–12 inorganic material See abiotic materials input analysis, 128–30, 129t inputs approach, 44, 53, 88–98, 127, 129 measurability and, 90 measurement through five metrics, 90 metrics and, 90–91 parsimony, 90–91 three inputs needed to nurture economic development, 9–10, 13 inputs vs outputs approaches, 88–98, 127 comparison of input and output approaches, 95–97 complementarity of inputs and outputs, 95–97 institutional voids, 112 institutions, 52 International Institute for Management Development (IMD-Lausanne), 50 labor, scarcity of, 14 labor markets, 32–33 labor productivity, wage growth and, 32 lagging indicators, 158–60 land, 90–91 overuse of, 134 ownership, 15 remuneration of, 134 Lenin, Vladimir, 37 life cycle analysis, natural capital inputs and, 90–91 line manager effect, 63–67, 68, 132, 153 Ma, Jack, 156 MAC (margin after conversion), 49 management, 31–33 management methodology, establishing new, 37–38 management metrics, 48 management practices, 52, 53–54, 158 experimentation with, 150 mutuality-related, 53–55 management science, 18, 19 management theory, 20, 28 Manila, Philippines, 121–24, 143 manufacturing, 127, 128 markup level, 100 Mars, Incorporated, 1, 3, 4, 61–63, 100, 110, 115, 124 Mars University, 115 Marx, Karl, 37 Marxism, 9, 19, 27 Massachusetts Institute of Technology, 50 Maua, 107–25, 113, 120t, 163 basic route-to-market, 112 177 CompletingCapitalism_final.indd 177 3/14/17 12:43 PM Completing Capitalism the big dram, 124 context for, 110 game-changing potential of, 124–25 performance of, 118–19, 120 profit and loss in, 120t rapid development in, 116–18 reflection on design and results, 118–21 start-up in, 114–16 taking program to the Philippines, 121–24 Mauss, Marcel, 72 “The Gift: The Form and Reason for Exchange in Archaic Societies,” 72 methodology, new, 43 metrics, 33–34, 128 abiotic, 129t, 130, 137 actionable, air, 129t, 130, 137 biotic, 129t, 130, 137 expanding, 132–33 external vs internal, 48–50 financial capital metrics, 16–17 of financial performance, 19–20 for human capital, 158–60 impact, 158–60 inputs approach and, 90–91 leading vs lagging, 48–49 management and, 33 measurement methodology, 113–14 monetized, 138 for natural capital, 158–60 new, 5, 7, 20, 22–23, 28, 37–38, 111, 158 nonfinancial, 20, 49 non-monetized, 138, 159 “output” metrics, 44 parsimonious, related to performance, reporting, 48 for social capital, 158–60 soil, 129t, 130, 137 stable, topsoil erosion, 129t, 130 water, 129t, 130, 137 micro-distribution, 107–12, 115, 122, 163 microeconomic analytic techniques, 63 micro-entrepreneurs, 82–84, 105, 107, 109, 110, 114–21, 163 microfinance lenders, 54, 81–83, 111, 113, 113, 117, 123 micro-sellers, 116–17 middle class, growth of, 17, 146 minimum income, 106 MIPS (Material Input Per Unit of Services), 92 mitigation banking, 44 mobile banking, 111, 117 monetization, 131–33, 138 money, 9, 34, 135 definition of, 10–11 generation of, 16 as “good servant,” 161–62 intrinsic devaluation of, 12 new (questionable) value of in recent times, 10–12 overabundance of, 34–37 remuneration of, 161–62 role of, 151 value of, 10–12 money supply, 11, 34–36, 148, 149 moral perspective, counterintuitive, 40–43 morals, M-Pesa mobile banking, 113, 117 multinational corporations, 3, 51–52, 125 BoP markets and, 108 evolving roles and responsibilities of, 157–58, 159 focus on, 7–8 role in development and enactment of new model, 27–28 role of corporations in development and enactment of new model, 27–28 multiple-capital business model, 33, 158 bringing the model to life, 18–23 key performance indicators, 123 measuring business performance, 109 as a non-rival good, 50–56 role of corporations in development and enactment of new model, 27–28 mutuality, 124, 160 business performance and, 121 principle of, 18 profits and, 99–106 value creation and, 121 mutual profits, 142–43 Nairobi, Kenya, 107, 108, 109, 121, 143 natural capital, 5, 6t, 15, 33–34, 52, 127, 136, 139–43, 149–50, 161 audits of, 46–47 case study, 127–30 development of, 53–54 factors accounting for use of, 90–91 key variables, 154 management metric for, 44–45 management of, 22 managing, 87–88 measurability of, 98 measuring, 6t, 87–98, 131 measuring value of, 132–33 metrics for, 137, 158–60 monetization of, 34, 131–33 natural capital efficiency, 98 natural capital productivity, 93–94 next steps for, 130 178 www.ebook3000.com CompletingCapitalism_final.indd 178 3/14/17 12:43 PM Index performance measurement of, 43–45 remuneration of, 134–35, 137–38, 161 return of, 137–38 scarcity of, 36 summary of key findings, 98 temptation to monetize, 132–33 natural resource inputs, 9, 88–89 actionability, 92 assessment, 92 data inventory, 92 five key metrics of, 90–92, 91t, 98 life cycle analysis and, 90–91 managing, 88 measurability of, 98 measurement through five metrics, 90 updating, 92 natural resources, 34, 127 from Africa, 145 limited, 87 overuse of, 134 remuneration of, 134–35 renewal of, 87 uses of, 128 negative interest rates, 12, 14, 149, 151–52 net sales value (NSV), 48 new economy investing in, 149 rules of, 150–51 NGOs (nongovernmental organizations), 52, 54, 81, 113, 113, 115, 118, 123 Nixon, Richard, 35 nonfinancial capital, 19, 28, 36–37, 139–43, 149–50, 160–61, 163 development of, 143 managing, 150 measuring, 43, 119–20, 131–33, 158–60 metrics for, 28–29, 33–34 monetization of, 34, 131–33 performance measurement of, 43 remuneration of, 138–43, 161 value of, 132–33 nonfinancial metrics, 20, 49 nonprofits, 118 non-rival goods, 50–51 nontraditional entities, partnering with, 54 nontraditional partners, 118 Nyeri, Kenya, 107, 121 “100 Best Companies to Work for in America,” 59–60 open collaborative platform approach, 51 operating costs, 141–42 operational status, 130 Opportunity International (OI), 81 optimal value distribution, 102 organic material See biotic materials, 90–91, 91t, 98, 129t, 130, 137, 154 Organisation for Economic Co-Operation and Development (OECD), 32, 90 Ostrom, Elinor, 74 output approaches, 44–45, 88–90, 97, 127 limiting output, 89 measurability and, 89–90 measuring output, 89 “output” metrics, 44 outsourcing, 32–33 overhead, 123 overwork, 23 ownership, 135 See also property land ownership, 15 of relationships, 16 Oxford University, 50, 115, 130, 141 ozone layer degradation, 89 packaging, 129, 130 pain points, 20, 33, 82–83, 112 Papua New Guinea, 77, 83t parable of the talents or minas, 42 Paris Climate Accord, 155 Paris School of Economics, 50, 58, 62 parsimony, 7, 90–91 partnering, 51–52, 54–55, 125 See also thought-partnering people, 9–10, 13, 23, 34, 36–37, 43 See also human capital holistic value of, 20 metrics measuring, 47 people metrics, 47 remuneration of, 32 performance, 60 business sustainability and, 4–5 evaluating, 158 holistic business performance, 7, human capital and, 59–60 impact of natural capital efficiency on, 98 measuring, 7, 19–20, 32–34, 43, 52–53, 113–14, 159–60 metrics and, 7, 33, 52–53 mutuality in business and, 121 of nonfinancial capital, 43 social capital and, 69–70 well-being and, 59–60 the Philippines, 77, 83t taking Maua program to, 121–24 Piketty, Thomas, Capital in the TwentyFirst Century, 21–22 pilots, 21, 77, 80–84, 83t, 103–4, 138, 159 approach underpinning, 152 Bloom program, 121–24 cocoa, 104–5 coffee, 91, 96, 98, 100–105, 102, 127–31 key principles underpinning, 152–60 Maua, 107–25, 163 planet, 9–10, 13, 15, 23, 34, 36–37, 43 179 CompletingCapitalism_final.indd 179 3/14/17 12:43 PM Completing Capitalism holistic value of, 20 overexploitation of, 23 overuse of, 23, 32 remuneration of, 32 planet accounting system (PAS), 92, 94–95 planet assessment, methodologies of, 92 planet metrics, current, 44–47 Poleman, Paul, 155–56 population growth, 36 populist movements, 15, 146 POUM (Prospect of Upward Mobility) effect, 64, 68, 152 poverty, 41, 109 pragmatic approach, 39–40 Prahalad, C K., 109, 143 The Fortune at the Bottom of the Pyramid, 143 priorities, realignment of, 161–62 procedural conditions, 58–59 processing, 129 production, 127 productivity, 32, 60 product life cycle, 128–29 profitability, 18, 20, 25–26, 31–32, 50–56 profits, 9–10, 13, 49, 97 finding “right” level of, 18, 29, 139, 162 growth and, 29–32, 32 holistic value of, 20 maximization of, 21, 23, 25, 31–33, 49, 124, 132, 136, 157 mutuality and, 99–106, 142–43 relationship between past and future, 31 right level of, 1–2, shareholders and, 139–40 short-term, 8–9, 26, 147 sustainability and, 31, 141–43 tradeoff of, 45–46 true, 162 value and, 29–30 property, 135 property rights, 135 prosperity, 27, 150 culture of, 146 expansion of, 18, 39, 42–43 shared, 24 sustainable, 21 purchasing power parity (PPP), 100, 101 qualitative data, 106 quality of life, 105 See also well-being quantitative easing (QE), 11, 17, 35–36, 148, 149, 158 questionnaires See surveys recognition, 153 recruitment, 114–15 redistribution, 37, 41, 42 relationships, 41, 43 ownership of, 16 religious organizations, 54 remuneration, 9, 52, 53, 161–62 being intentional, 139–42 deciphering and documenting links between types of capital, 138–39 finding “right” level of profit, 139–42 guiding principles, 133 harmonious, 23 on like-for-like basis, 133, 136–38 of new forms of capital, 131–43 remuneration curves, 105 Sabbatical principle, 133–36 renewable resources, 87, 154 replication, 124 research, 61–63 resource efficiency, 43–48, 88–89, 96–97, 98, 127, 129–30 responsibility, 160–61 rest, 136–37 See also sabbatical principle restoration, 17–18, 24, 136–37, 145 retail outlets, 112 retention rates, 60 revenue, distribution of, 100–102 riskless environments, 136–37 risk management, 149–50 rival goods, 51 Roosevelt, Franklin, 160–61 ROTA (return on total assets), 49 route-to-market approaches, 55, 107, 110, 118 rural communities, 121 Sabbath year (shmita), 134, 135 sabbatical principle, 133–37 Saïd Business School, 115, 130 scalability, 66, 109, 117, 124, 130 scarcity changing nature of, 14 forms of, 14–15, 36–37, 146–47 management of, 33, 34 of natural capital, 36 Schwab, Klaus, 146 self-centered drivers, 63 Senik, Claudia, 58 service economy, 16, 17, 146 Shabbat, 133–35 shared benefits, 154 shared financial capital, 5, 6t, 52–53, 99–106, 102, 136, 154 analysis of, 100–101, 101t business performance and, 109 distribution of, 99–106, 119 measurability of, 105 measuring, 105, 109, 114, 119, 120 relevance of, 106 180 www.ebook3000.com CompletingCapitalism_final.indd 180 3/14/17 12:43 PM Index shared prosperity, 24 shared value, 26 shared value index, 53, 100, 105, 152, 154 shareholders, 19 benefits to, 29, 32, 132 maximization of shareholder value, 25, 28 profits and, 29, 49, 139–40, 147 share-out sessions, 116 sharing experience, 116 Skoll Center for social entrepreneurship, 113 slum dwellers, 107–8, 118, 121–22 slums, 118 small- and medium-size enterprises, 51–52 “social business” strategies, 125 social capital, 5, 6t, 9, 33–34, 36, 52–53, 136, 139–43, 149–50, 153 actionability and, 85 actionable in business operations, 85 among employees, 59 approach to concept of, 70–71 attitudes and, 79t behavioral variables, 79 behavior and, 79t business performance and, 69–70, 109 business relevance of, 85 case studies, 107–25 challenge of measuring, 75–79 cognitive components of, 78, 79, 79 collective actions and, 80, 84 component variables of, 84 decision-making process and, 80 definitions of, 69–75, 74t development of, 53–54 as diagnostic tool, 83–84 economic development and, 84 elements of, 78–80, 79 of employees, 63–66, 67, 152 exclusion and, 80 horizontal organizational density and, 80 human capital and, 82–83, 84 identity variables, 79 impact of economic development, 84 key results, 80–85 key variables, 153 landscape across various pilots, 83t management of, 22 in Maua, 107–25 measuring, 6t, 69–85, 109, 114, 119–21, 131–33, 160 metrics for, 158–60 monetization of, 34, 132–33 projects undertaken between 2009 and 2015, 78t qualitative measurement, 75–79 quantitative measurement, 75–79 remuneration of, 137, 161 scalability of data collection and, 84 social cohesion and, 84 socio-demographics and, 80 solidarity and, 79t structural, 79t, 80 structural components of, 78, 79, 79t, 79 summary of key findings, 84–85 summary of projects, 2009-2015, 78t trust and, 79t, 84 value of, 132–33 variables of, 76–81, 79t, 79, 84 Social Capital Assessment Tool, 77–78 social capital projects, 76–78, 78t social cohesion, 80, 84, 120, 132, 137, 153 social division, 80 social expenditures, 26 “social fertility,” 81, 85 social good, 21, 163 social interactions, among coworkers, 59 socialism, 19 social justice, inequality and, 40–41 social recognition, 64–65, 68, 136 social responsibility, 25, 157–58 social transformation, 151 Social Venture Network, 26 social well-being, 20, 21, 23 socio-demographics, 80 soil, 90–91, 91t, 98, 129t, 130, 137, 154 solidarity, 79–81, 79t, 79 Solomon, King, 43, 131, 164 Solow, Robert, 73–74 Sorbonne, 50 Soviet Union, 37, 39 speculation, 10, 147, 151 stakeholders, 29, 49, 56, 83, 101, 104, 110, 112, 132, 139, 141, 159 benefits to, 120–21, 123, 149–50 mapping, 54–55 trust and, 112 value chain and, 55, 100, 102, 147 value sharing among, 106 Stalin, Joseph, 37 Stanford University, 50 status, 63–67, 153 perceived, 64–65, 68 Stiglitz, Joseph, Freefall, 148, 150 stock market indexes, rise in, 36 stock point, 112, 112, 116, 122 structural social capital, 79t, 80 submanagers, 106 subsistence traders, 112 sugar, 101–2, 102 supplier communities, 81 supply, 127, 128 181 CompletingCapitalism_final.indd 181 3/14/17 12:43 PM Completing Capitalism supply chains, 46, 47, 81, 104, 105, 106 surveys, 53, 61–63, 77–78, 80 sustainability, 4–5, 9–10, 15, 18, 20–21, 36, 50–56, 88, 109, 137, 147, 160 environmental, 45–46 growth and, 31 holistic, 24 sustainability programs, 31 sustainable profits, 142–43 systematic benchmarking, 139 systemic change, 148–50, 151 Tamny, John, “The Fed is Not Printing Money, It’s Doing Something Much Worse,” 148 Tanzania, 77, 83t technology, 16, 32, 96–97, 146–47, 162–63 Technoserve, 113, 115 temptation to nothing, 38–39 thought-partners, 50 top line gross revenue, 31–32, 100 topsoil erosion, 90–92, 91t, 127, 128, 154 traditional boundaries, going beyond, 32 training programs, 115, 137 transition, 38, 148–50 triple bottom line, 26 trust, 79–81, 79t, 84, 112, 120, 121, 123, 132, 137, 153 turnover rates, 60 Uber, 17 United Kingdom, 127, 128, 145 United States, 11, 32, 145 University of Indonesia, 50 University of Wisconsin, 50 UN Millennium Development Goals, 156, 161 UN Sustainable Development Goals, 156–57, 161 upheaval, 38 uplifters, 112, 112, 116–17 upward mobility, 63–67, 132, 136 urban communities, 121 US Federal Reserve, 11, 35 value, 15–16, 34 assessing, 19–20 attributed, 106 distribution of, 101–3, 102 generation of, 145 measurable, 118 profits and, 29–30 value chains, 32–33, 52–53, 99–100, 104, 105, 147, 151, 159 comparison over time, 106 embracing, 158 mapping of, 106 mismanagement of, 106 stakeholders and, 55 sustainability of, 140–42 value creation, 151, 18, 121 value distribution, 101–2, 102, 103–5 fairness of, 106 value chain mismanagement and, 106 value distribution curves, 106 values, 132 See also corporate values value sharing, 154 See also shared value Vietnam, 77, 83t violence, 146 wages, 63, 136–37 wage growth, 32 well-being and, 66t “walking the talk,” 63, 67 Wall Street, coming fall of, 12–13, 27 water, 90–91, 91t, 98, 128, 129t, 130, 137–38, 141–42, 154 weakest links, identifying and strengthening, 33 wealth accumulation of, 9, 136, 147, 151 disparity in, 21–22, 41, 146 forms of, 40 over-accumulation of, 23–24 redistribution of, 21 well-being, 23, 40, 110, 121, 123, 136, 152, 163 business performance and, 59–60 convention and unconventional sources of, 58–59 five drivers with positive effect on, 63–67, 66t general, 153 individual, 40 job-specific, 153 key drivers of, 66t measuring, 47, 57–68, 60–61, 114 social, 20, 21, 23 social capital and, 40 wages and, 66t at work, 47, 57–68 WhatsApp, 16–17 wheat, 101–2, 102 “win-win-win” scenarios, 151 working hours, 136–37 World Bank, 73, 74t, 75–78 World Economic Forum, 146 Wrigley’s, 16, 110, 111, 113, 115, 116–17, 118, 121–24, 122 Wuppertal Institute for Climate, Environment, and Energy, 50, 88–89, 92, 98, 127 Zuckerberg, Mark, 16 182 www.ebook3000.com CompletingCapitalism_final.indd 182 3/14/17 12:43 PM About the Authors Bruno Roche and Jay Jakub have been working side by side at Mars, Incorporated—makers of iconic brands like M&Ms, Snickers, Uncle Ben’s, Pedigree, Wrigley’s gum, and many more—for the last decade They have worked together in the company’s unique internal corporate “incubator” called Catalyst, established in the 1960s to challenge conventional business thinking by anticipating and identifying the next “big ideas” for business, then developing breakthrough capabilities to solve some of the corporation’s most complex business challenges with advances that have transformational impact Their deep friendship extends far beyond the workplace and into the realm of transforming business at large into a force for the common good, and in promoting vocational calling among those searching for greater meaning and purpose Bruno was born and raised in Paris, France, and has been married for the last twenty-five years to Marianne (Bayle), with whom he has four children Both Bruno and Marianne trace their family lineages to the southern French village of Le Chambon sur Lignon, made famous by the heroism of the Huguenot villagers who saved the lives of countless Jews by hiding them during the Nazi occupation of France—an act for which the town is memorialized in the Yad Vashem Holocaust Center in Israel and upon which the documentary Weapons of the Spirit is based Bruno has spent nearly three decades at Mars, mostly based in Brussels, Belgium, but traveling extensively to enact his 183 CompletingCapitalism_final.indd 183 3/14/17 12:43 PM Completing Capitalism unit’s global remit In addition to his Catalyst managing director function, he serves as Mars’ chief economist His education and academic research followed an applied mathematics path with a specialization in international finance, economics, and management sciences He is fluent in French, English, and Italian Bruno is a member of the World Economic Forum’s Network of Global Agenda Councils (on Sustainable Development), and he served as a special advisor to the G20 during the term of the organization’s French presidency (2009–2011) Jay was born in Rahway, New Jersey—ironically also the hometown of economist Milton Friedman, founding father of financial capitalism—and has been married for the last thirtyone years to Eleni (Xanthakos), with whom he has two teenage children Prior to joining Bruno at Mars in 2007, Jay had a long, distinguished government career in the US executive and legislative branches spanning nearly seventeen years, during which he held a number of senior positions At Catalyst, Jay is the senior director of external research and co-manages with Bruno the unit’s Mutuality Laboratory He oversees the work of its Culture Laboratory and directs the external research partnerships Catalyst has forged with Oxford University’s Saïd Business School and with leading academics around the world His doctorate is from St John’s College, Oxford University, and he is the author of Spies and Saboteurs (MacMillan and St Martin’s Press, 1999) Bruno and Jay, with their spouses, share a passion for people, especially the impoverished and oppressed, with a special focus on those who are broken in body, mind, and spirit Completing Capitalism is their first joint book 184 www.ebook3000.com CompletingCapitalism_final.indd 184 3/14/17 12:43 PM Berrett-Koehler is an independent publisher dedicated to an ambitious mission: Connecting people and ideas to create a world that works for all We believe that the solutions to the world’s problems will come from all of us, working at all levels: in our organizations, in our society, and in our own lives Our BK Business books help people make their organizations more humane, democratic, diverse, and effective (we don’t think there’s any contradiction there) Our BK Currents books offer 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Sincerely, Charlotte Ashlock Steward of the BK Website Questions? Comments? Contact me at bkcommunity@bkpub.com www.ebook3000.com CompletingCapitalism_final.indd 186 3/14/17 12:43 PM ... CompletingCapitalism_final.indd 3/14/17 12:43 PM Completing Capitalism Heal Business to Heal the World Bruno Roche CompletingCapitalism_final.indd ✜ Jay Jakub 3/14/17 12:43 PM Completing Capitalism Copyright © 2017... businesses at large manage their performance (heal business) to positively impact society and the environment (heal the world) Changing MNC business models to make them more universally sustainable—by... financial capital at the expense of people (the many)—unless they are shareholders (the few)—and at the expense of the planet And some today propose to remunerate the planet at the expense of financial