Successful Organisations & Management Principles - A New Paradigm Presentations at the Latvian and Norwegian Baha’i summer schools Riaz Rafat July 2004

2 Agenda  1. What is EBBF?  2. Virtues and values in business  3. Case studies: VimpelComVimpelCom Ford & ToyotaFord & Toyota  4. Successful organisations & management principles

3 What is EBBF?  A Network of 350 men and women in 48 countries  Founded in 1990  Vision: To enhance the prosperity of humankind To enhance the prosperity of humankind  Mission: To promote ethical values and moral leadership in business To promote ethical values and moral leadership in business EBBF home page:

4 EBBF’s 7 Core Values  Ethical business practices  Social responsibility  Stewardship of the earth’s resources  Partnership of women and men  New paradigm of work  Consultation  Spiritual principles, or human values, to solve economic problems

5 The Importance of Spiritual Principles "There are spiritual principles, or what some call human values, by which solutions can be found for every social problem. Any well-intentioned group can in a general sense devise practical solutions to its problems, but good intentions and practical knowledge are usually not enough.” The Universal House of Justice: The Promise of World Peace, p. 28, Wilmette, 1985

6 Business Virtues and Societal Values  Business virtues: Those characteristics that contribute to the success of the business.  Societal values: Those qualities or characteristics that contribute to achieving an ideal view of society, the common good of the people. Business virtues may coincide or contradict societal values. The ideal business enterprise would achieve business virtues and would simultaneously also create societal value.

7 Business Virtues & Values  Efficiency of capital deployed – return on investment  Human productivity – output per hour/day/year  Growth in revenue, profit margin and market shares  Product and service innovation  Product or service quality – customer satisfaction

8 Ethical or Societal Values  Honesty – the foundation of all virtues  The spirit of service  Justice – the trainer of the world  Consultation – decision making in the knowledge world  Unity – the circle of commitment  The abolition of extremes of wealth and poverty  World citizenship – the field of action  Universal education – building social capital

9 Corruption & Other Unethical Business practices During the past few years, a number of leading and previously well-respected companies have been charged with corruption and/or other unethical business practices. Which major values were violated? Case studies: Worldcom Worldcom Enron Enron Arthur Andersen Arthur Andersen ABB ABB Yukos Yukos Statoil Statoil

10 Major Principles of Business “Every business company should be established on divine principles. Its foundations should be trustworthiness, piety, and truthfulness in order to protect the rights of the people." ‘Abdu’l-Bahá “Commerce is as a heaven, whose sun is trustworthiness and whose moon is truthfulness. The most precious of all things in the estimation of Him Who is the Sovereign Truth is trustworthiness: thus hath it been recorded in the sacred Scroll of God." Bahá’u’lláh

11 Moral Leadership for Organisations “Trustworthiness and an active morality must become the foundation for all leadership if true progress is to be achieved. Moral leadership, the leadership of the future, will find its highest expression in service to others and to the community as a whole.” “Valuing Spirituality in Development”, Bahá’í International Community

12 Consultation as a Decision-Making Tool  “In all things it is necessary to consult. The maturity of the gift of understanding is made manifest through consultation.” Bahá’u’lláh  “No man can attain his true station except through his justice. No power can exist except through unity. No welfare and no well-being can be attained except through consultation.” Bahá’u’lláh

13 Case Studies  VimpelCom change program  Ford vs. Toyota

14 Successful Organisations and Management Principles OLD PRINCIPLES:NEW PRINCIPLES: Profit, growthMaximising interests of all stake-holders Centralized, verticalDecentralised (structure/power) Command and controlConsultation Scientific managementEmpowerment (e.g.: ‘lean’ production’) Motivation: For payFor self realization (in future: for service) CompetitionCooperation Male dominationMale & feminine balance People as a costPeople as assets Long working hoursWork-life-family balance Capital & labour conflictsProfit-sharing – limiting labour-union influence & strikes