Are You Creating Wealth or Creating Value?
At the risk of sounding like a Mark Carney fanboy (yep, second blog in a week), the brand shiny new Governor of the Bank of England told the BBC:
“I think finance can absolutely play a socially useful and an economically useful function but what it needs in order to do so, the focus has to be… on the real economy… And it’s the loss of that focus, it’s finance that becomes disconnected from the economy, from society, finance that only talks to itself and deals with each other, that becomes socially useless.
One of my other responsibilities is chairing the Financial Stability Board and a lot of what we’re doing there internationally is to strip out that type of behaviour.”
This is all music to my ears as I believe too many people, particularly in the City, mistook ‘wealth’ for ‘value’ – and that’s why the system imploded. We should all be striving to create value in business – particularly what Umair Haque of HBR calls ‘thick value’ – economic benefits which enhance society and the environment, as opposed to ‘thin value’ which creates wealth by depleting either or both.
Carney is right – every business must have a social purpose, creating value for others – preferably thick value – otherwise it is simply a leech on the rest of us.