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Stop, look, listen:

The Word Economic Forum

by Simon Longstaff

Carried along in a whirl of change, we've found ourselves at one of history's crossroads ... but we must take care we don't get run over.

This much is certain – our world is in a period of profound transition. Critical advances in science and technology, the end of the Cold War and America's ambivalent attitude to world leadership, a significant increase in the power and reach of business (and an accompanying public cynicism) have all contributed to the peculiar character of the times in which we live.

Living through this process can make it difficult to judge the significance of how our society is being changed and challenged. We are just too close to events to achieve a proper degree of perspective. But this is exactly what we need when standing at the centre of one of history's crossroads.

Deep down, I think each of us recognises the importance of the choices before us; we know the decisions we make will shape the future for many generations to come. And what is true for us as individuals is increasingly true for organisations, especially those in business.

A number of developments likely to have a significant impact on business.

First, the conduct of business will become increasingly transparent. The Internet, combined with a global media that can disseminate information everywhere, in an instant, means there are very few places where a corporation can bury its mistakes.

One effect of this is that a corporation's name can be undermined, with significant stock value being wiped out in an instant. At the same time, governments are likely to demand greater transparency when dealing with business, especially in cases where government activities are outsourced. The markets will also require better information about the manner in which corporate performance is achieved.

Governments are going to be under increasing public pressure to review economic policies that carry a social cost. For example, corporations are increasingly being required to repair any damage to the physical environment in which they operate.

It is quite likely that business will be judged not only on financial performance, but on social responsibility and environmental sustainability, too. Many business people will argue that such expectations are unrealistic and misplaced. But even companies as large as Royal Dutch Shell have accepted a wider accountability is inevitable.

And there is evidence that, in the United States at least, prospective employees are already interviewing employers (and completing reference checks) to determine the ethics of the company that wants to employ them.

In some parts of the US unemployment is as low as 2% and a company's reputation is the critical factor in being able to attract even the least skilled employees. Potential employees will expect that a company can articulate its core values and principles, and apply them consistently across all relationships.

Technological developments are generating issues that people in business have not had to deal with before. For example, to what extent should an employer monitor employees' email? Is it the moral equivalent of monitoring their phone calls, or reading mail written and posted from work?

To what extent should insurance companies seek information about the genetic characteristics of potential policyholders? Should companies introduce new technologies into communities if they will radically alter the indigenous cultures? In an age of instant communication, how can business resist the pressure to focus on short-term and sustainable value? When should we say no? What (if any) is the role of business in preventing a social divide between the information rich and the information poor? The list of such questions could go on, and on – and does!

In the future, success in business will increasingly depend on the ability of boards and senior managers to navigate this challenging ethical landscape. But there is little evidence that business is adequately prepared to meet this challenge. It's not that there's a lack of goodwill. It's more that too few business people – and particularly company directors – have made an effort to adapt their skills to master the strategic role they now need to play.

This is why the activities of the World Economic Forum, through meetings such as its Melbourne summit, are so important. It is not simply a matter of allowing Australian business to become better acquainted with issues of global importance and local significance.

It's an opportunity to think outside the box, to discuss the undiscussable, to play with dangerous and exotic ideas that would rarely, if ever, be heard in day-to-day business dealings. To fail to do so, is to fail to prepare for a future in which Australian business can carve a major role, rather than following where others lead. It's a future that is already here.

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