Summary: Management as a Calling: Leading Business, Serving Society by Andrew J. Hoffman

Recommendation

Professor Andrew Hoffman draws on his unique knowledge of the intersection of sustainability and business to deliver a powerful argument for corporate activism. Bolstering his engaging writing style with well-referenced facts, Hoffman leaves little doubt that humanity’s profound social and environmental challenges demand corporate leadership solutions. This, he contends, starts in business school, where curricula and attitudes must change to emphasize social and environmental responsibility alongside investor returns. This succinct, emotive work may challenge your politics – and open your eyes.

Take-Aways

• Business schools must reorient toward stakeholder capitalism and corporate social activism.
• Pledges and words alone won’t suffice.
• In some ways, business is rising to the occasion.
• No one can solve social or climate issues alone.
• Climate change threatens to destroy business and capitalism.
• Don’t blame others or yourself; instead, act.
• Three future scenarios exist: collapse, market-driven decision-making, or transformation.

Summary

Business schools must reorient toward stakeholder capitalism and corporate social activism.

Today’s generation of business students reflect the concerns of youth worldwide who have grown tired of leaders’ empty social and environmental promises. Few business schools, however, address the role of business and executives as change leaders beyond their companies. Business school curricula must evolve to include core courses in ethics, sustainability and social impact; to teach about multi-stakeholder capitalism rather than simply investor capitalism; and to focus on healthy partnerships between business and government.

“Students would do well to disregard the canard that questioning capitalism is the pursuit of a communist or socialist agenda.”

Professors should disabuse students of the notion that questioning and seeking to improve capitalism equates to promoting communism or socialism. They must equip future corporate leaders with the knowledge and tools for critical thinking about their positive role in society, and to live that role effectively. Business school students must enter their studies with a pro-social mind-set, viewing their future career as a calling rather than allowing themselves to become instruments of faceless shareholders.

With its focus on creating shareholder value, capitalism today breeds myopic leaders willing to do anything – within the wide bounds of legality – to make money. University of Chicago economist Milton Friedman introduced this perverse priority in the 1970s when he advised CEOs that their first and only responsibility was to generate returns for owners.

Business schools pay lip service to ethics and corporate malfeasance by offering electives on those topics. However, they largely continue to emphasize executive duties to shareholders. Many business students leave school with less appreciation for broad moral concerns – such as ethics and social responsibility – than they had when they arrived at school.

Pledges and words alone won’t suffice.

Some hard-nosed business leaders criticize the notion that businesses exist only to generate profits, including former General Electric CEO Jack Welch, who called the exclusive focus on shareholder capitalism “the dumbest idea in the world.” Salesforce CEO Marc Benioff declared the idea dead and Unilever CEO Paul Polman argued for the reinvention of capitalism. Eighty years ago, business guru Peter Drucker said business exists to improve society; profits follow that motive. In 2020, the global business and political leaders of the World Economic Forum formally adopted stakeholder capitalism – as did 99% of the CEOs of the world’s largest companies in their pledges as part of the Business Roundtable.

“If there are no solutions coming from business, there will be no solutions. ”

Numerous firms, investment funds and business groups have taken similar pledges. A few have actually acted and, for example, divested fossil fuel stocks. On the whole, however, Friedman’s views retain their hold on business. These perverse incentives and the lack of meaningful government regulations fueled an unending string of corporate scandals and nearly caused the collapse of the global economic system in 2008. Moreover, they permit the steady worsening of social and environmental problems.

The recurring calamities wrought by present-day capitalism include extreme social stratification that threatens to bring down the system itself. Income and wealth inequality ranks worse globally than it has since 1929, and the equality gap is worse in the United States than in India or Russia. The shocking decline in American life expectancy results, in part, from income inequality. Worse, unbridled environmental degradation could destroy most life on Earth. Climate change is an imminent existential threat. Increasingly, the public puts much of the blame – and the onus for repair – on business.

In some ways, business is rising to the occasion.

Ultimately, business must participate in finding and implementing solutions to societal and environmental challenges. Business and government investments in renewable energy, for example, have driven costs down dramatically – below that of fossil fuels in some cases – while shifting the share of overall energy usage toward wind and solar.

“We are facing systemic problems that require systemic solutions, and the pragmatic reality is that we must turn to, and work with, the market to solve these challenges.”

Many Americans and business students wrongly believe government has no role in the markets. Regulations permit businesses to compete fairly and in the interests of society. Government services protect food safety and generate new science and technologies that business turns into consumer products. Business leaders must work with governments to find, co-invest in, and implement market, social, and environmental solutions. This may include activism opposed to populist or nativist laws that deny minority rights, for example, and support for progressive policies aimed at improving society, including measures such as a carbon tax to address climate change.

No one can solve social or climate issues alone.

Encouragingly, more than two-thirds of today’s business students want to learn about environmental and social issues and incorporate those concerns into their future work. Over 80% would take a salary cut for the chance to do so. This portends well in an era in which people increasingly expect corporations and their leaders to go beyond internal policies – to reduce and reuse and pay fair taxes – to take proactive leadership roles for changing society.

“In the end, the challenge of climate change, indeed the broader challenge of living in the Anthropocene, requires a broad-scale shift in our culture.”

In acknowledgment of the deep damage business has done to the world, activist executives should convince others to join their efforts, not only in sustainability but beyond, to repairing and restoring the environment and society – a profound business transformation.

Today’s systems and infrastructure won’t let you achieve a zero footprint. Nevertheless, do what you can and hone your persuasive skills to nudge as many others as possible. Find common ground with associates, family and friends; introduce social and environmental issues gently at first, while citing the least controversial facts. Do this knowing that all the electric cars, cheap renewable energies and recyclables in the world won’t prove sufficient to save the planet. Human culture must transform to reject unbridled growth and embrace equality and conservation.

Business leaders and students require scientific, social and environmental learning to overcome short-term biases in decision-making, as well as emotionally intelligent communications skills to get their messages across effectively.

Climate change threatens to destroy business and capitalism.

While the world awaits a consensus for action from business, the sectors most at risk, including insurance, have begun to act. Weather-related destruction has accelerated markedly this century, costing insurance firms trillions. In response, some have raised premiums or refused coverage in risky regions.

“Increasing commentary, both partisan and nonpartisan, is making it clear that the…position of denying climate change is becoming untenable.”

Business leaders and students should take heed of shifting opinions around climate change. Environmental groups – such as the Sierra Club and Friends of Earth – once considered radical, now enjoy mainstream respect. Worldwide, youth activists, led by Greta Thunberg, have shamed business and political leaders who consider themselves at the forefront of climate and social advocacy. Almost two-thirds of Americans reported concern or alarm over climate change in 2018 versus fewer than half in 2013.

With this shift in attitudes, opportunity awaits the business leader willing to join the fight. This includes activism and conversations aimed at reversing the trend of polarization, without which, progress will stall. Business leaders have the credibility and obligation to contribute. They must acknowledge the need for fundamental cultural transformation in the way humans think and live.

Don’t blame others or yourself; instead, act.

Individuals and leaders can’t keep sheltering the rich and upper-middle classes from the effects of climate change and social ills. For example, valuing a forest for its cumulative lumber or potential crop value – even its value as a tourist attraction – must give way to ecosystem thinking, which vests in the exponentially greater value a forest offers to its inhabitants and the systems around and within it. Consider, too, a forest’s non-business and non-scientific contributions, including spiritual and emotional value to every living being on Earth.

“Life in the Anthropocene is the ultimate ‘commons problem,’ in which our survival depends upon our collective actions and the morality of individual actions takes on new meaning.”

Notwithstanding sometimes lofty ideals, including plans to become social or environmental entrepreneurs, business school graduates face pressure – including increasing student debt loads – and powerful incentives to pursue lucrative careers that harm society and the environment. Don’t judge them. Don’t judge yourself too harshly, either; acknowledge that you face a similar paradox. You may want to contribute to the good of society and the environment, but, for example, you may still fly, eat meat or drive a gasoline-fueled car.

To take action, first think about the future by isolating one trend – for example, the shift to electric vehicles. What will change when gas and oil demand drops to almost nothing, when gas stations disappear? Imagine the future you want to see and set about creating it. Rather than contribute to the evils of capitalism, ask what you might do, as a corporate leader, to leverage the influence and power of business for good.

Three future scenarios exist: collapse, market-driven decision-making, or transformation.

The climate crisis highlights an existential challenge facing humanity, for whom one of three potential futures exist:

1. Collapse – People and leaders don’t cooperate. Polarization deepens. Warnings from the UN, WHO and private citizens go unheeded as fake news proliferates. Cities bake and dry up, markets fail, revolts become commonplace – societies collapse.
2. Market dictates – In this most likely scenario, markets continue to dominate the discourse. Solutions center on growth and money-making technologies or replacements, including electric cars, renewable energies and conservation, so long as doing so generates equal or greater financial returns than doing nothing.
3. Fundamental transformation – As the world rejected superstition in favor of rationality during the transition from the Middle Ages to the Enlightenment, foundational change occurred. It can again if forward-thinking leaders embrace cultural transformation and a new capitalism. In this scenario, corporate priorities shift to social and environmental renewal. Working conditions evolve to become more humanistic and purpose-driven. This is the most hopeful and least likely scenario.

“Making the ‘business case’ to address climate change is as absurd as making the business case not to commit suicide.”

Today’s challenges may well constitute history’s greatest. Change on this scale will take time – generations, in fact – but business can lead so long as business schools nurture students’ passion for purposeful, pro-social and environmental careers.

About the Author

Holcim Professor of Sustainable Enterprise at the University of Michigan Ross School of Business, Andrew J. Hoffman received the Page Prize for Sustainability Issues in Business and the ONE Teaching Award.

Review

Introduction

Andrew J. Hoffman’s “Management as a Calling: Leading Business, Serving Society” is a thought-provoking book that offers a unique perspective on management and its role in society. Hoffman, a renowned management expert and academic, challenges the conventional view of management as a profession and argues that it should be seen as a calling, a vocation that requires a deep sense of purpose and social responsibility. In this review, we will delve into the book’s key themes, arguments, and insights, and evaluate its contributions to the field of management.

Key Themes

• The Evolution of Management: Hoffman traces the history of management, from its origins in the industrial revolution to the present day, highlighting the ways in which it has evolved to address new social and economic challenges. He argues that management must continue to evolve to meet the needs of a rapidly changing world.
• The Call to Management: Hoffman emphasizes the importance of a sense of purpose and social responsibility in management. He argues that managers must be motivated by a desire to serve society, rather than simply to maximize profits.
• The Role of Leadership: Hoffman discusses the role of leadership in management, highlighting the importance of ethical leadership and the need for leaders to inspire and motivate their teams.
• The Importance of Purpose: Hoffman stresses the importance of purpose in management, arguing that organizations with a clear sense of purpose are more likely to be successful and sustainable in the long term.
• The Changing Nature of Work: Hoffman explores the impact of technological change and other factors on the nature of work, arguing that management must adapt to these changes in order to remain relevant.

Arguments and Insights

• Management as a Calling: Hoffman makes a compelling case for management as a calling, rather than a profession. He argues that managers must be motivated by a desire to serve society, rather than simply to maximize profits.
• The Importance of Purpose: Hoffman emphasizes the importance of purpose in management, arguing that organizations with a clear sense of purpose are more likely to be successful and sustainable in the long term.
• The Role of Leadership: Hoffman discusses the role of leadership in management, highlighting the importance of ethical leadership and the need for leaders to inspire and motivate their teams.
• The Changing Nature of Work: Hoffman explores the impact of technological change and other factors on the nature of work, arguing that management must adapt to these changes in order to remain relevant.
• The Need for Adaptability: Hoffman stresses the need for managers to be adaptable and to be able to navigate complex and changing environments.

Strengths

• Hoffman provides a comprehensive and nuanced analysis of the evolution of management and its role in society.
• He offers a compelling argument for the importance of purpose and ethical leadership in management.
• The book is well-researched and well-written, making it an engaging and thought-provoking read.

Weaknesses

• The book may be too theoreticwal for some readers, who may find it difficult to apply the concepts to their own work.
• Some readers may disagree with Hoffman’s arguments, particularly those who prioritize profit maximization as the primary goal of management.

Conclusion

Andrew J. Hoffman’s “Management as a Calling: Leading Business, Serving Society” is a thought-provoking and insightful book that challenges conventional views of management and offers a unique perspective on the role of leadership and purpose in organizations. While it may have some weaknesses, the book is overall a valuable contribution to the field of management and is likely to be of interest to anyone looking to gain a deeper understanding of the challenges and opportunities facing management today.