The Business Roundtable recently announced that the purpose of a corporation was no longer merely to maximize shareholder value.
“Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity,” wrote the lobbying group. They argued that the primary responsibility of companies should be to their stakeholders — delivering value to their customers, investing in employees, dealing fairly and ethically with suppliers, supporting the communities in which they operate, and generating long-term value for shareholders.
CEOs of large global companies are rightfully concerned about the increasing fragility of liberal democracies and the threat to capitalism. The focus on shareholder capitalism has contributed to the decimation of a strong and healthy middle class in this country — you can only crush the lower and middle classes for so long before they stand up and say, “We’re done.” A recent Gallup poll showed that only 45 percent of Americans ages 18 to 29 view capitalism positively.
So, while this change, in some ways, may be driven by self-preservation, corporate America realizes that there needs to be a better balance.
At the same time, this is a huge opportunity for higher education, reminiscent of 1947, when the Truman Commission on Higher Education called on the liberal arts to ensure the humanism of future leaders in the wake of the atomic age.
We have the opportunity to remake our educational approach for a new generation of college students who understand how businesses and markets operate, and also how human beings think and what they need. Stakeholder capitalism requires thinking about everything from retaining workers to creating goods and services that people need and want, to balancing short- and long-term needs, to uplifting the very communities in which companies operate.
This is where colleges and universities can make a difference.
By revolutionizing their educational approach, they can mint a new generation of college graduates who have the skills to effectively lead companies in ways that meet the needs of the wide range of stakeholders who depend upon the work of those companies.
Most of what students need is already being taught on college campuses, but most students don’t have pathways to take advantage of it. Over the last few decades, there has been an expansion of the curriculum on most campuses, but students are often forced into majors that are narrow.
For example, the typical undergraduate business student is not being prepared to think critically enough about commerce, the impact of business on communities, and organizational development. They’re being more than sufficiently trained to continuously find efficiencies and achieve short-term profit. Too often, engineering and computer science majors aren’t getting enough exposure to history, philosophy, sociology, psychology or other disciplines that are crucial to stakeholder capitalism.
We need to move from a world of “or” to a world of “and.” In other words, eliminating the false choice of either liberal arts or preprofessional training, to emphasizing career training and the liberal arts. We need it all in the corner office. A student graduating from college should have the skills that companies need in entry-level employees, but they should also have a broad background in how history unfolds, why culture matters, how people think, and other classic liberal arts frameworks that will help them successfully manage and lead companies as their careers progress.
This doesn’t mean sprinkling a little bit of ethics on top of everything else colleges and universities are doing. This is much deeper — we need a reinvention of academic majors and graduation requirements so that our graduates can think both critically and practically at the same time. There also needs to be a more purposeful connection between the curricular and cocurricular experiences of students so they graduate with a much wider set of skills, values, habits, networks, and experiences.
Stakeholder capitalism requires students who are broadly trained, and who can think critically, understand profoundly, connect broadly, and who are eager to learn across their professional lives. What we need is already on our campuses, but we need to create a different set of pathways for our students. We need to train them narrowly while educating them broadly.
Not all of this will be easy. Academia can be slow to change. It will take inspired leadership and curriculum adjustments that we’re perfectly capable of with the faculties we already have. We just have to be more agile and organize things in slightly different ways. Some universities, like Denison, are already making progress by evolving curriculums and expanding student experiences outside of the classroom.
This is an exciting opportunity to pick apart what stakeholder capitalism can mean and what future leaders will need in order to manage a company with a broader focus beyond shareholder return.
Adam Weinberg is president of Denison University in Granville, Ohio.