In Business, Sustainability Starts With Purpose
Fishbanks is a business simulation exercise in which teams compete to build the most profitable fishing fleets. Over the years, I’ve played the game with hundreds of MBA students and executives.
The result is always the same: The ocean runs out of fish every time.
The participants in the simulation are highly educated and enlightened. They know they’re taking part in a session about sustainability, and they’re not even playing for real money. But without fail, the competition heats up. Teams build up their fleets and vie to extract more and more fish from the sea.
As the game progresses, the players become aware of the dangers of overfishing. Yet they continue to buy more ships and send them out to sea. As the fish run out, teams desperately try to sell boats nobody wants anymore. It’s like Monopoly for sustainability, with one crucial difference—in Monopoly someone has to win. There are no winners in Fishbanks. Everybody loses. Every time.
Once they have played the game, participants remember the key lessons for a long time. Year after year, I have witnessed hallway conversations and graduation speeches that refer to the ocean running out of fish. But what have participants actually learned, and how will that knowledge inform their choices during their careers?
The Common Good
The fishing simulation is a stark demonstration of a phenomenon called the “tragedy of the commons,” an economics illustration about a common pasture ruined by overgrazing. The example was popularized by the American ecologist Garrett Hardin in a 1968 article in Science.
Current events such as COVID-19, global warming, and instances of racial injustice prove that not much has changed in business or individual mindsets in the half-century since Hardin’s groundbreaking article. Despite corporate sustainability pledges, few businesses have changed their practices with the goal of protecting the environment. Managers externalize the costs of pollution, as well as the health and well-being of their workers. They blissfully maximize their companies’ gains without regard for the collective losses borne by society.
Yes, a few small companies—such as the makers of Ben and Jerry’s ice cream and Patagonia outdoor clothing—have made substantial progress on environmental and social issues. Still, most of the world’s biggest companies have done little to avoid the disasters that follow resource degradation and depletion. They have not adopted sustainable business models. They have not instituted practices that would save their businesses—and society—from disaster.
But the most serious threat of all is waiting in the wings. This is the disaster of all of disasters. It’s climate change.
The behaviors we are observing during the COVID-19 pandemic are a stark reminder of the tragedy of the commons. When people don’t wear masks, they put their own interests above the well-being of others. When hordes attend large social gatherings rather than maintain social distancing, they place entire segments of the population at risk. When stores and restaurants keep their doors open in defiance of state shelter-in-place orders, business leaders are placing profits above the welfare of their workers.
More collectivist societies—such as those in Scandinavia, South Korea, and Singapore—have done a far better job of containing the pandemic than more individualistic societies such as the U.S. That pattern is likely to repeat when we face new pandemics in the future.
But the most serious threat of all is waiting in the wings. This is the disaster of all of disasters, something as terrifying and destructive as the “White Walkers” from Game of Thrones. It’s climate change.
What are we to do?
Lessons in Sustainability
To avoid the tragedy of the commons when it comes to climate change, I believe society must educate individuals about the dangers, illustrating these dangers in present-day, real-world terms. This education should start when people are very young and continue throughout their lifetimes.
For instance, children need to learn about the pitfalls of maximizing self-interest at the expense of the collective. They need to know where their products come from, who makes them, and where the items go after they’re discarded. Children also need to understand that global warming is largely a result of overconsumption. They can be taught to use carbon calculators to track their individual and family footprints. This is a simple exercise I require my MBA and executive students to complete in class, and they are routinely astonished at the results!
These lessons should continue at the high school and university levels. Older students can witness the effects of environmental and social injustice by completing experiential learning projects, participating in climate change simulations, and volunteering in underprivileged communities. They also should get a chance to see firsthand what happens when humans try to live beyond their means in a finite resource environment. This means that university leaders who arrange student travel and study abroad initiatives should send students to mining communities, water-stressed areas—and, yes, villages located by overfished oceans.
For students in the sciences and humanities, these lessons are just as important as courses in math, physics, and chemistry. For students in business programs, these lessons are just as essential as courses in accounting and management. It is high time for business schools to move beyond teaching the short-term, shareholder-centric model of business popularized by Milton Friedman, who famously opined in 1970 that “the social responsibility of business is to increase its profits.”
Instead, we need to focus on making businesses sustainable. And this means making sure business students and business leaders understand the purpose of business. Business leaders need to answer the all-important question, “Why do we do what we do?” Once they have defined their raison d’etre, they can begin to transition to a sustainable business model.
When a business defines its purpose, employees feel that they are working for a cause that is bigger than the money. They are working for the common good.
A great jumping-off point for defining the purpose of business is to have our students consider the value business creates for society. This means that, from Day One, we should incorporate into our curricula compulsory courses on “corporate purpose.” By tracing the history, evolution, and impact of business over centuries, such courses would provide foundational support for classes in other disciplinary branches, such as marketing, finance, and operations.
Visionary leaders already understand the link between purpose and sustainability. Paul Polman, former CEO of Unilever, was one of the people I interviewed for my 2019 book Small Actions, Big Difference. He told me, “Sustainability is totally driven by purpose. It starts with the overall firm belief that we are here to serve society and that you’re not here for yourself nor for your shareholders.”
When a business defines its purpose, the link between the business and the collective becomes much clearer. Employees and stakeholders realize that the organization exists to improve the lot of society, and they feel that they are working for a cause that is bigger than the money. They are working for the common good.
‘Business Exists in Society’
Without a new generation of purpose-driven leaders, we have no chance to handle the crises facing us. In addition to these leaders, we need a generation of “sustainability generalists”—business graduates with a solid knowledge of sustainability—working in fields as diverse as marketing, human resources, and investor relations. When all of these individuals take small actions within their spheres of influence, collectively they can make a big difference.
We have lost sight of why business schools exist in the first place. It’s time to remember, and teach our students, that business exists in society—not the other way around.
It’s time to change. Our oceans are running out of fish.