The Brave Pursuit

Judy Samuelson's Six New Rules of Business and Real Value Creation

The Aspen Institute’s Judy Samuelson says profit maximization is not going to cut it in the long term — to attract top talent and create real value for people, society and the planet, business needs a new set of rules

Reva Bhatia

Judy Samuelson, founder and executive director of the Aspen Institute Business and Society Program, has dedicated a large portion of her career to challenging short-termism in corporate America. She writes, “Tell me which of the pressing issues of our time keep you awake at night, and I will tell you how the old rules of profit maximization and short-term thinking contribute to those problems.”

We sat down with Samuelson to discuss her new book, “The Six New Rules of Business: Creating Real Value in a Changing World.” In it, she lays out a forward-looking guide to how businesses can find long-term success through purpose, authenticity and accountability.

Here is an excerpt from that conversation. Watch the video for the full conversation.

Still image of Judy Samuelson with her book

Publicis Sapient: Can companies really afford to serve a broader purpose and a greater good right now?

Samuelson: They can't afford not to. Something like 80 or 85 percent of valuation is connected to intangibles, not things that are easy to put on the balance sheet – trust, reputation, the ability to attract and retain talent, the license to operate. I don't think there's any stepping back from this moment. I think we're seeing a change that is going to continue to carry us forward in interesting ways.

Publicis Sapient: Throughout your book, you give several examples like Walmart's hurricane support and Pepsi's healthier product mix where profit isn't the obvious result, let alone the primary goal of their intentions. But the Merck story that you highlight consistently throughout your book really brought this home. Can you share that example?

Samuelson: The CEO of Merck, a couple decades ago now, Ray Vagelos, was seeing a moment where the drug discovery process had produced a drug called Mektizan that didn't have any commercial value, but it was a cure for a devastating disease that was found in the river valleys of Africa and beyond. No commercial value in the sense that none of the victims of this disease, who would be cured by accessing this medicine, had an ability to pay for it. They also had no ability to get this drug to people easily. It's not like, you can roll into your local drug story and pick it up. So it required the executive in this case to step back and really revisit why are we in business and what is going to be absolutely critical for us to not only survive, but flourish over time? And it is a stunning example of doing the right thing and it built remarkable good will over time. It's not the only time that Merck has done this. And it is still a highly regarded company that continues to attract the best possible talent and leadership.

"Something like 80 or 85 percent of valuation is connected to intangibles, not things  that are easy to put on the balance sheet — trust, reputation, the ability  to attract and retain talent, the license to operate. I don't think there’s any stepping  back from this moment."
— Judy Samuelson

Publicis Sapient: You mentioned the premise of Roy Vagelos doing this largely for the scientists, to attract top talent. Could you unpack how these efforts really do motivate employees and how it gets them out of bed in the morning to work for a company that ladders to that greater purpose and actually exemplifies it?

Samuelson: Young people today, they're looking for their CEO to mirror their own kind of concerns. And that's something we've seen in space over last few years. But I also think that, to do this well, companies have to be assured that their purpose, what they stand for, really connects deeply to the business model. This is not about philanthropy. This is not about the things you do down the hall when you have extra time and extra money. This is about, what is our business model actually designed to do? To quote Indra Nooyi, the last CEO of a Pepsi, it's about how you make your money, not about how you give it away.

Publicis Sapient: Senior level leaders are primarily incentivized to drive near-term value through stock price and equity, and you discuss a little bit about why a change needs to happen. Can you unpack that in more detail?

Samuelson: It is the case in the U.S. with public companies that the loudest signal in pay packages is TSR, total shareholder return. So there's a lot to say about that as being a central problem of pay, but we're stepping back and saying, what are we really paying executives to do? Talking about the CEO’s, motivation – money is not the motivation. The motivation is doing a decent job. The motivation is intrinsic. The motivation is solving complicated problems. The motivation is creating goods and services. That's why people go into business. If you manage the business and really focus on the business, it creates greater value over time. And the shareholders will also benefit.

Publicis Sapient: I love the example that you give of the New Yorker cartoon, which I swiftly Googled as I was reading the book. The subtitle reads, “Yes, the planet got destroyed, but for a beautiful moment in time, we created a lot of value for our shareholders.”

Samuelson: The reason we're having this conversation is we need business at the table to address these complex problems. Businesses are well-equipped – and we need government too, that needs to be in balance and work well together – but we don't crack the code on a virus without business collaborating.

Publicis Sapient: I'd love your take on how the leaders of tomorrow should be educated.

Samuelson: We need to change it up. It's a problem because it's hard to in business schools, train people to make sure they can get an entry-level job, but also train them for what they will need when they grow into jobs that require different kinds of management skills and understanding of humans and how to influence others and bring about change and systemic change and the kind of things that they have to think about when they move into leadership positions. Business education has got to be about continuous learning.

Publicis Sapient: There certainly is more work to be done because, again, people leave school focused on profits and as their careers evolve, unfortunately, their thinking doesn't always.

Samuelson: There certainly are a lot of change agents and people who have been at this for a very long period of time in business education. It may be that they teach in ethics classrooms or that they're teaching in organizational behavior or in parts of the curriculum that are well-equipped to bringing up these kinds of complicated ideas, but I don't think it's about social impact. I really think it's about a well-run business today. And hopefully that attitude is what will carry us forward.