July 6, 2022 6:30 AM EDT

Reproductive rights will likely be the most intense test of corporate leaders’ evolving willingness to take stances on societal issues.

In the wake of the Supreme Court decision overturning Roe v. Wade, businesses that speak out or facilitate employees’ access to abortions will certainly find themselves in conflict with politicians and members of their staffs and conceivably even risk legal prosecution.

How this plays out will tell us with greater certainty the extent to which the focus of business leaders has truly expanded beyond shareholder profits, given the legal complications and controversy.

Tomorrow’s Capitalist, a recently published book by Alan Murray, CEO of Fortune Media, with Catherine Whitney, describes the evolution over roughly the past decade of CEOs’ engagement with such issues and concerns that were traditionally viewed to be outside their purview.

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Murray—arguably the journalist most plugged into the c-suite of corporate America (and my former manager at The Wall Street Journal)—believes that there has been a real shift and that CEOs are truly committed to what’s known as “stakeholder capitalism,” pursuing other interests besides investor returns.

“Do they really mean it?” he writes. “I believe they do, for a mix of positive reasons—a new generation of CEOs includes many who are committed to the idea, a growing army of employees are demanding it, and even some customers are beginning to value it—as well as a negative reason: the political environment continues to look very threatening to business these days.” (p. 189)

Tomorrow’s Capitalist doesn’t offer any clear insight into where most big company CEOs will land on abortion rights over time. (Murray cites a 2021 Fortune survey indicating CEOs are evenly divided on whether or not they should be speaking out on any societal and political issues.) And the book stands in contrast to others like Davos Man and Winners Take All that are less convinced that, whatever their progressive rhetoric, business leaders are truly acting to reduce inequality and protect the planet.

Murray concludes that they are taking it seriously, in any case. A central message of the book is that “a new age of business” requires leaders to focus on purpose rather than putting profit first. He argues that there is a good business reason to do so. “In the long run, there is no tradeoff between purpose and profits,” he writes. (p. 175) “You can’t have a successful company in the long term if your employees can’t make a decent living; you can’t have a successful company if social turmoil is undermining the community, the society, or the political context you must operate in; you can’t have a successful company if the climate is creating chaos.” (p. 37)

One true indicator of whether a company is living up to its purpose, Murray notes, is what employees think. “They see every day how decisions are made and how culture gets formed. And they can tell you if it’s purpose washing or true lived purpose.” (p. 190) He also argues for more extensive metrics to track companies’ efforts and hold them accountable.

At the core of Tomorrow’s Capitalist are highlights from interviews with the biggest US CEOs (many originally for Fortune events, newsletters, and podcasts) about stakeholder capitalism. Some of the highlights:

  • “The structure believes that it owns these roles, it owns these seats,” said former Xerox CEO Ursula Burns, when asked why corporate boards were still not more diverse. “The structure is a white male structure. We have to change everything about how we approach this.” (p. 105)
  • Tristan Walker, founder and CEO of Walker & Co. Brands, believes that the demographic shift toward a majority US population of people of color and the cultural influence of Americans of color mean it’s inevitable that there will be more successful Black entrepreneurs like him. He thinks the pandemic is creating “a crop of really successful culture-less companies,” where people can better take care of themselves and their families rather than doing the exact same things as their colleagues during the workday. (p. 109)
  • Beth Ford, CEO of the Land O’Lakes farmer cooperative, emphasizes her company’s obligation to rural communities. “A third of the schools in rural America lack broadband. Most of these families take their kids to a parking lot an hour away that has the best wifi so they can finish work on their phone. This is simply unacceptable. It leaves us so uncompetitive,” she says. (p. 140)
  • “Nike is a global brand that has strong connections with many diverse cultures,” Nike CEO John Donahoe said, explaining its controversial decision to spotlight Colin Kaepernick, whose NFL career ended after he protested racial injustice. “We understand that not everyone’s going to agree with our perspective, but we view social and social and ultimately economic justice to be an extension of our core purpose as a company.” (p. 184)
  • CEO Ryan Gellert shared the questions Patagonia asks to decide whether to speak out on a societal issue: “How does the issue affect the company? Does Patagonia have credibility on the issue? Is it something that the company has spoken out about before? Does Patagonia have its own house in order on the issue? How are the employees going to respond? Is Patagonia’s statement additive—in other words, does it bring something to the discussion? And finally, are the words combined with productive actions?” (p. 201)

In chapter 12—which crisply encapsulates his views—Murray shares the critiques Fortune readers have sent him about his belief in stakeholder capitalism, such as whether businesses will become complacent if they focus on considerations other than profits. His response to that one: “The rapid pace of technological change and the onslaught of disruptive innovation have left most big companies anything but complacent.” (p. 208)

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To be sure:

  • The book’s great value is as an expression by a respected mainstream business figure of ideas about the need to change the way companies operate that have been expressed elsewhere.
  • Murray’s approach is to largely take what CEOs say on face value, focusing on how they say they’re doing good rather than the many places where they’re falling short (apart from former ExxonMobil CEO Rex Tillerson, who Murray skewers for climate-change denialism.) Thus JPMorgan Chase CEO Jamie Dimon, for example, gets credit in the book for his role in the Business Roundtable’s statement promoting stakeholder capitalism while escaping criticism for his bank’s failure to pay living wages.
  • Murray similarly devotes limited space to areas where business leaders have traditionally hurt other stakeholders, enriching themselves while pay stagnated for lower-wage workers, using poorly-paid contract workers to reduce labor costs, and deploying schemes to reduce taxes. He briefly mentions this analysis—by Judy Samuelson of the Aspen Institute—and concludes only that it “will have to be resolved before stakeholder capitalism reaches its full promise.” (p. 210)

 

Memorable anecdotes and facts:

  • Murray describes a 2008 speech by Bill Gates at the World Economic Forum annual meeting as a first sign of the rethinking of corporate capitalism.
  • Researchers found that consumers’ intent to buy Apple products went up overall after they were exposed to CEO Tim Cook’s statements criticizing Indiana legislation that discriminated against LGBTQ individuals.
  • Murray describes the outpouring of corporate statements following the April 2021 conviction of Derek Chauvin, the police officer who had knelt on George Floyd’s neck until he stopped breathing, as a watershed moment. “Leaders now felt sure their employees expected it of them and interpreted silence as a lack of concern.” (p. 162)

 

Choice quotes:

  • “The main challenge of the modern leader is less about husbanding physical and financial resources, and more about attracting the very best talent and giving that talent an environment that ensures they provide their best work efforts.” (p. 21)
  • “If people should have values…then companies should have values, because it’s just a collection of people.” —Apple’s Tim Cook (p. 25)
  • “The outpouring of CEO sentiment after the George Floyd killing wasn’t just because ‘woke’ CEOs suddenly decided to speak up. It happened because talented employees demanded it, and talent is today’s top driver of corporate value.” (p. 58)
  • “This idea of just counting on market forces to create a just and equitable society isn’t working.” —PayPal CEO Dan Schulman (p. 95)
  • “Making profits is not a purpose of business. It’s a derivative. A purpose is what problems it is solving for us as customers and communities.” —Colin Mayer, Oxford professor (p. 179)
  • “The forces are now in place to bring about capitalism 2.0—a capitalism that is more human, more conscious, more creative, more inclusive, more focused on creating shared value, more dedicated to solving the problems of people and the planet.” (p. 211)

 

The bottom line is that Tomorrow’s Capitalist offers a clear case for steering corporations to goals other than profit and examples of how companies are doing that. This is not a new argument—but the marshaling of the voices of top CEOs in this book provides a timely and important response from corporate America to criticism that they’re just “woke CEOs” bending to liberal employees when they focus on inclusion or societal and environmental issues.

You can order Tomorrow’s Capitalist at Bookshop.org or Amazon. (We may make a commission if you purchase a book.)

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