Public Management

Balancing act between business and society

July 15, 2015

Public organizations and private companies are all looking for new business models, says Professor Marc Vermeulen. And in that quest, they can learn a lot from each other.

Image: © Nationale Beeldbank

Doing the right thing is becoming increasingly important to companies This is their response to the financial crisis. Companies are no longer in business for the money alone, they have noticed that focusing on financial return does not produce the desired effect. Companies also want to deliver value for people and the environment.

Because of that same financial crisis, money is being spent on rescuing financial systems. Governments have financial problems. The welfare state is no longer affordable.

While, on the one hand, businesses focus less exclusively on their financial performance, on the other hand, public organizations are more driven by financial results.

Do not overdo it

But we should not get carried away either. Doing business is first of all about making money. The public sector's main task is to provide value to society. Both sectors are searching for their boundaries. How much can a company spend on corporate social responsibility? At what point will social values be jeopardized when public organizations make decisions based on cost considerations?

This discussion is also conducted at the TIAS business school, where we believe that economic success and social progress go hand in hand. Take a participant who researches new production options for his organization. It turns out that the cheapest solution would be to move the production to Bangladesh, a country where exploitation of workers is the order of the day, and the participant suggests this. Do we approve such a thesis or do we suggest that the participant should look for other solutions?

Balancing act

In my experience, the world of business and the public sector are walking a tightrope. They are both involved in the balancing act, but they start from different sides. They both try to keep the balance between doing the right thing and being cost efficient. The conditions are different, the questions are different, but the quest is the same. Therefore, the business and the public sectors can learn a lot from each other. Let Unilever think about the reorganization of child welfare. At TIAS, we have knowledge of both sectors and we can facilitate that cross-fertilization.

Organizations must realize that now is the time to think about new models. It is not a matter of copying from each other, but of the parties talking to each other. Never waste a good crisis, start looking for new solutions.

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