The Creative Capitalism Dialogue Continues

One of the more interesting conversations that occurred at Davos 2008 was the conversations between Bill Gates and Mohammed Younis in which Gates first mentioned "Creative Capitalism"  Michael Kinsley, Editor-at-Large of the Guardian of London has taken up the theme and started an on-line book experiment under the title of Creative Capitalism: a conversation. What attracted me to this blog was the transcript of a luncheon conversation between Warren Buffett and Bill Gates that Kinsley put on for them. In it Gates flounders around trying to describe "creative capitalism." The transcript of the entire luncheon is fascinating reading as well as the comments the blog attracted. I will be following this thread as it really takes the idea of capitalism into the realm of social inclusion - an important new direction from the market rules coterie.

Here is Gates opening statement....

You often hear people saying that companies should do something besides profit maximization. And it’s amazing how strong a message is hidden in words like “diversity” or the broad term “corporate social responsibility.” Warren and I were just at the Microsoft CEO Summit for the last couple days and it was amazing how many of the talks were about how a company needs to have core values of who they are and what they do as the thing that makes the employees feel they have a purpose and guides their action. And how that needs to be really at the center, even more so than the short-term profit metrics. Jack Welch was very good on that and Lee Scott [CEO of Wal-Mart] was very good on that, I think in a very sincere way. I think it’s more true all the time.

Bill George [of Harvard Business School] ran the leadership panel, and he was saying how the younger generation really wants to go to work with people who have a purpose. So what I’m saying is when people write down that purpose, when they write down their values, that an element of that should be: what can we do based on our skill set, our innovators, whatever unique capacities we have as a company--what can we be doing for the poorest 2 billion? And that can either be taking more risk in terms of trying to develop markets there, which is C.K. Prahalad-type stuff, or just doing things like the Merck donation that are not profit seeking and yet not giving up huge percentage of profit.

So somebody can read the words “creative capitalism” and say, “Okay, Bill Gates said that you should serve the poorest 2 billion and ignore profit.” That is not what I intend to say at all, but then I am being a bit ambiguous about how far you go in being willing to give up something. Am I saying one percent? Two percent? Three percent? Nobody who sets these dual roles is very good about being clear. I mean, what do they say you’re supposed to give up for corporate social responsibility. Well, they’re not willing to be numeric because they feel like the two goals, profit and social responsibility, aren’t totally at odds over time—or diversity, or whatever the value is.

I understand it best in terms of the big companies of the world: pharma, banks, technology companies, food companies. Buying from the poor world, supplying to the poor world, having scientists and innovators who come together to think about the poor world. It’s best defined for me there, and then I think, “Okay, how concrete is this?” I go back to this thing of: Okay, if all companies did as well as the best do, then it would be pretty dramatic in terms of the rate of improvement for the poorest. And a year from now I’ll know a lot more about this, because in my new time back at the Foundation I’ll meet with heads of pharma, heads of food companies, heads of…I’ll meet a lot of these companies and try and get a sense of, do they agree that in their hiring it would help them, do they agree that in their reputation and maybe seeking long-term markets it would help them and see how concrete a response is possible.