The Drowning Liberty installation at Flatiron Plaza in New York, U.S., Photographer: Michael ... [+] Nagle/Bloomberg

In a New York Times magazine article, published on 13th September 1970 and headed 'The Social Responsibility of Business is to Increase its Profits', the economist, Milton Friedman, argued that the sole purpose of business is to generate profit for its shareholders.

He went on to say that, "Acorporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible".

And for decades to follow, that was the accepted wisdom of the function of business, to generate profit for its owners and shareholders. It shaped corporate goals and objectives, and made many people very wealthy.

It spawned the 1980's frenzy of spending, it fed the thinking of Ronald Reagan and Margaret Thatcher andled to the 1987 film 'Wall Street' where we faced the unsavoury face of capitalism,as portrayed by Michael Douglas as Gordon Gekko:

"Greed is good. Greed works.Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind".

The world today, however, is a very different place. Because today we have climate change, we have oceans filled with plastic,we have fast fashion, we have a returns epidemic, and we have sustainability issues.

And this got me thinking. What are the implications for retail and just where is all this heading?

When Retail Goes Wrong

Let's be in no doubt, retail is not only the most exciting sector, it is also the one which is closest to all of us. We build relationships with retail businesses, from the corner store to the largest department store, in ways that we would never do in other sectors.

Have a favorite utility provider? Thought not. No, retail has a place in our society, in our communities if you will, like no other. But in this new, enlightened age, this is both a blessing and a curse.

We've witnessed the impact of when retail goes wrong on many occasions - horsemeat, accounting scandals, faux fur versus real fur and the collapse of BHS spring to mind - and when it does, it does so, often in spectacular ways.

There's no keeping it under the radar, it's front-line and in our faces, and while the supply chain can often be complex and difficult to monitor, we don't concern ourselves with that, it's always the retailer's fault.

New Decade, New Retail Model

This all means that retail is in a unique position. Because, just like greed is now perceived to be a bad thing (was it ever anything but?), as we move into a new decade, does rampant consumerism now conjure up similar sentiments?

The plastic straws we drink from, that T-shirt we only wore a handful of times, that single use plastic bottle we threw away, that steak we had for dinner. What was once acceptable is now more likely to raise an eyebrow, or more.

Because, the transition from raising an eyebrow to out and out resentment is not a huge step to take. And that's where we've arrived at as we welcome in the New Year.

And just like the teachings of Friedman, retail has largely existed to make a profit. To encourage us to buy more stuff. More clothes, more food, more electricals, more and more stuff which ultimately finds its way to landfill.

Enlightenment

However, will the twenties be the decade of enlightenment? The decade when we finally conclude that businesses, retailers especially, exist not to generate profit but to do good. Do good for communities, for society and for the planet.

The decade when wealth won't be measured by the size of the bank balance but by the impact left on the planet. The decade of not just credit scores but carbon scores. The decade when the very purpose of business will be challenged.

Idealistic? Maybe. But one thing is clear. We can't continue in the current direction of travel, it's simply unsustainable. Something has to give. And retail needs to be proactive in its response to growing public sentiment.

It needs to re-evaluate its place in society because we now know that neither greed nor rampant consumerism is good. The wind of change is blowing down our high streets, but just how many retail businesses will embrace it? Because for those who don't, the future looks very bleak indeed.

Originally posted here:
The Business Of Business, Why It Is Changing And Why Retail Must Take The Lead - Forbes