Purpose-Driven Capitalism

The bottom line is that the bottom line isn't everything.

Thank you, Jim Rogers, for a little old-fashioned talk about values in business. Duke Energy's CEO addressed the North Carolina Chamber of Commerce recently and brought up the financial crisis. He recited some of the contributing factors -- real estate speculation, excessive leverage, flawed regulation of the financial services industry. But Rogers said the problem goes deeper, that these issues reflect the fact that "business lost its sense of purpose in the U.S."

Rogers said it was time to "refocus on purpose now, on values, on significance." He called for businesses to practice "purpose-driven capitalism," a recognition that businesses exist to do more than simply make profits. "Business serves a wide array of stakeholders, from customers and employees to business partners, the government and our communities. And I believe the true value of a business can only be measured in relation to its impact on its wide array of stakeholders, not just earnings per share."

That wider view of business success helps underscore why manufacturing needs to be talked up constantly in this country. During the past few decades, as the country lost millions of manufacturing jobs and tens of thousands of manufacturing businesses, we lost more than simply some aging industrial relics. We saw communities crushed across the United States. Complex supply chains were disrupted, withering our production capacity, leaving us with a tenuous ability to supply our own defense products and effectively barring us from participating in many growing industries. Generations were seeded with the idea that products would inevitably be made overseas and that the only ticket to success was in the service industries.

Bob Loderstedt, president of the New Jersey Manufacturing Extension Program, recently lamented the country's failure to ensure its competency in manufacturing and pointed out the danger of a "one-track-mind" focus on high-paying executive jobs.

"It's unrealistic to believe that everyone can be in a high-valued position. You need a range of jobs to give people options and drive motivation for growth," he says. "If you only have high-valued work, you are going to be left with a large quantity of people that are left permanently unemployed. It will boil down to an extreme rich-versus-poor' society, creating a welfare state."

There is no one answer to "fixing" manufacturing, as we pointed out in last month's series, "IW's Blueprint for Manufacturing Success." We need smarter tax and regulatory policies, investment in infrastructure, and government support for R&D and fledgling industries that can become the industrial powerhouses of the future. And we need manufacturing leaders who are entrepreneurial, creative, agile and dedicated to continuous improvement.

But it's also clear that we need to keep making the case that manufacturing is not a relic of the past, but rather a vital element of a prosperous American future. Dr. Donald Sebastian, senior vice president for research and development at the New Jersey Institute of Technology, states: "We need to change public perception. Having been to China, I can tell you there's this artificial impression that their success is based entirely on low-cost labor. This is no longer true; they have modern production facilities that are all highly automated and efficiently run, making the cost of labor a small contributor to the total cost of goods. Where they now excel is in the cooperative effort of business, government and universities to accelerate time to market. We need to do the same and grow this sector."

Citing the global competitive scene, Duke Energy's Rogers said American businesses need to "get our mojo back" through "innovation, drive and creativity, and that's what purpose-driven capitalism can do." The United States is still the leading manufacturing nation in the world. But if industry, government, labor and academia don't act with a common purpose to fuel our innovation, rebuild our industrial communities and ensure our international competitiveness, we'll one day find the slogan "Made in the USA" not a rallying cry but simply a call to nostalgia.

Steve Minter
Editor-in-Chief
[email protected]

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