The world continues to battle a global pandemic, but I am confident that with our determination and capacity for innovation, we will ultimately prevail. What COVID-19 has made clear, however, is that we cannot build a sustainable future unless we resolve global challenges: inequality, human rights, and climate change. Many have come to realize that the current form of capitalism is at the heart of these challenges. While a global discussion on redesigning capitalism has begun, a new and more suitable model has yet to be found.

One of the critical points that a new model of capitalism should be able to address is how to measure the value of a company. For a sustainable future, we need to make the most of companies’ innovations and growth potential. Traditionally, the value of a company has been judged primarily by its market capitalization: the profit generated is the basis of the valuation. Companies must indeed achieve profits to ensure their own sustainability. Still, companies exist to provide social value, such as by creating and delivering products or services people need or desire. In doing so, they contribute to improving people’s lives, increasing people’s happiness, and solving social issues. If companies optimize only their shareholders’ value and not the value of their multi-stakeholders, society cannot be sustainable.

Last year, the sum of the market capitalization of the five U.S. tech giants exceeded that of all the 2,170 companies on the First Section of the Tokyo Stock Exchange combined. However, I do not believe that those five companies provide more value than the 2,170. For example, SOMPO’s nursing care business serves 80,000 senior citizens. If our nursing care business, which replaces part of the public health care system, generates no profit, can it be said that this business has no value? Determining the value of a company should include a metric of the worth it provides to society, not just its financial profit.

To develop a new measure of corporate value, companies, governments, and citizens need to collaborate to set shared goals for the common good of society. How can we optimize people’s happiness, and how do we balance it across various measures, such as money and quality of life? Multi-stakeholders should discuss and decide this together.

Then, each of us must play a role in realizing our agreed-upon goals. Businesses must return to what is truly important. Companies need to achieve organizational ambidexterity; committing to creating social value in the long term based on their purpose while generating profits in the short term.

I recently wrote a book entitled “Bushido Capitalism.” It draws on the moral code of Japan’s Samurai. I believe the “Bushido” framework could help us think about the future of capitalism and that critical point – a new measure of corporate value. Bushido is based on the belief that a person cannot live without society. It prioritizes the common good over personal interests. It emphasizes a balance between self-interest and altruism, total optimization and harmony. Bushido is not a religion or an abstract philosophy, but practical wisdom for the sustainability of society and a code of conduct for people and companies that should be truly respected. Bushido leads to the “Golden Mean,” which emphasizes a balanced middle path between extremes, and “Sanpo-yoshi,” which translates as three-way satisfaction through business transaction: good for the seller, good for the buyer and good for society. The focus is on multi-stakeholders.

The theme for the World Economic Forum in 2022 is “working together, restoring trust.” I believe the Bushido framework can serve as a compass to guide world leaders to work together based on trust and tackle global challenges.

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