Abstract
Raj Kumar’s The Business of Changing the World and James O’Toole’s The Enlightened Capitalists offer complementary narratives: Kumar critiques the global aid industry, arguing how and why aid organizations need to learn from businesses to improve their cost-effectiveness; O’Toole examines historical cases of where business leaders have tried to combine business and social mission, the challenges they faced, and why—more often than not—their efforts failed to be sustained in the long term. Both examine the interface of profit and purpose, advocating individuals, organizations, and initiatives that try to “do good while doing well.” Both are targeted mainly at corporate leaders who they encourage to adopt such practices and philosophies. Both join a growing list of authors who, from various perspectives, criticize the way contemporary philanthropy and contemporary business are organized, and the need for (r)evolution in each: Bishop and Green (2008), McGoey (2015), Callahan (2017), Reich (2018), and Giridharadas (2019).
Despite these parallels, Kumar and O’Toole address markedly different questions. Kumar asks whether aid works and how it needs to change to eliminate extreme poverty by 2030; O’Toole asks the more ideological question of whether “virtuous corporate leadership is, or can be, compatible with shareholder capitalism” (p. 478). The authors themselves also differ: Kumar is an aid industry practitioner who founded Devex, a social enterprise that serves as a media platform and recruitment services provider for global development organizations; O’Toole is Professor Emeritus of the University of Southern California’s Marshall School of Business with some 50 years’ experience researching and writing about business leaders. The result is two books of distinct writing style, approach, and focus.
Kumar’s The Business of Changing the World can largely be separated into two halves. The first half critiques traditional aid before examining the billionaire philanthropists, social enterprises, corporations, and nongovernmental organizations pursuing “new” models and practices. In the second half, Kumar presents his overarching vision for an individualized, data-driven approach to aid that he deems capable of addressing the Sustainable Development Goals. Here, Kumar primarily argues for transparency in the aid industry, encouraging aid organizations and philanthropists to report on their resource use and cost-effectiveness. Kumar calls the result “open source aid” (Chapter 7) where accurate, real-time data are available to donors, allowing them to better decide who to give their money to. This, Kumar argues, will both introduce competition into the aid industry, improving cost-effectiveness, and enhance learning among aid providers, sharing experiences of what does and does not work. Kumar concludes by summarizing what stakeholders can do to support this “new aid,” advocating for NGOs to behave more like investment funds and for funders to behave more like venture capitalists.
A key strength of Kumar’s book is his own practitioner experience; arguably Kumar is one of the “tech disrupters” of which he writes. This experience affords him extensive knowledge of the aid industry, and access to and interviews with organization leaders and philanthropic elites including Bill Gates (of Microsoft and the Bill and Melinda Gates Foundation) and Matt Damon and Gary White (co-founders of water.org). This gives the book an air of credibility and authenticity while also benefiting from the insights of key players. These and other examples offered across the book are useful illustrations of Kumar’s arguments, enriching his discussion.
Overall, Kumar provides a comprehensive account of the aid industry and convincing justification of the need for change. There are, however, several points at which his arguments would benefit from further discussion and evidence, particularly in Chapter 6. In this chapter, Kumar introduces his concept of “retail aid,” a shift from the “wholesale,” project-based focus of “old aid,” to a more individualized approach. Here, in discussing microfinance—the provision of small loans typically to entrepreneurs in developing countries—Kumar bluntly dismisses evidence that shows limited-at-best benefits of microfinance (e.g., Banerjee et al., 2015) as “not an entirely fair assessment” (p. 127). Yet in his attempt to defend microfinance, Kumar uses limited data, predominantly relating to the scale of a few microlending organizations rather than evidence of their impact. In a later example, Kumar offers support to initiatives requiring beneficiaries to pay for some aid provisions, such as using a toilet. Although acknowledging the potentially controversial nature of such a position, Kumar supports his stance by stating the cost of providing toilets to the 2.5 billion people who need them would otherwise be $46 billion annually, without providing reference for these figures. Furthermore, Kumar’s apparent argument that these sanitation services would otherwise be too costly to provide neglects other considerations he himself makes elsewhere in the book when advocating for initiatives he supports, such as the savings made thanks to improvements in public health, or that local workers could be given responsibility of the toilets and provided a stable income. Also in Chapter 6, Kumar states on several occasions that an increase in data availability on and cost-effectiveness of aid organizations will lead to more donations—a statement he provides no reference or evidence to support. Given the central argument of Kumar’s book was an advocation for greater transparency and data, these omissions weaken his argument by his own standards.
An additional shortcoming of the book comes in Chapter 5 where Kumar summarizes the efforts of several large corporations (e.g., Patagonia, TOMS) that explicitly incorporate social mission into their business goals and organization. In an otherwise strong and interesting chapter, Kumar briefly notes that the number of corporations adopting such strategies remain relatively small but without examining or questioning why. For Kumar, such models of business are viewed as supreme both ethically and productively. Yet he does not explore the potential challenges involved in forming and operating such organizations, or the possible limitations these business models may have. It is to this exact end that O’Toole’s The Enlightened Capitalists is written.
Structured across three parts, O’Toole’s book provides a coherent and comprehensive analysis of more than 30 individuals who sought to embed social responsibility in their business. O’Toole calls these individuals “enlightened capitalists”—“business leaders who attempted to do good while at the same time doing well” (p. xii). Part 1 examines the early “pioneers” who between 1815 and 1970 represented the first efforts O’Toole identifies to integrate social and business missions. With each chapter focusing on a specific case, O’Toole discusses in depth the context from which these efforts emerged, the individual’s backgrounds and motives, the practices they undertook, and the extent to which they were sustained. The result is an engaging and nuanced insight into each “pioneer.” Part 2 continues in a similar format, moving on to the “golden era” of 1970–1990, a period which O’Toole notes led many—himself included—to believe “enlightened capitalism” would become the norm. Part 2 ends with an extensive review of the different models of ownership and governance—such as family- or employee-ownership and co-operatives—that can, although, as O’Toole astutely notes, not always, support more ethical business practice.
In Part 3, O’Toole synthesizes and discusses key conclusions drawn from these first two sections, taking stock of the main lessons to be learnt and presenting his core arguments. They are, first, that “enlightened” practices can support more profitable enterprise, despite operational and philosophical difficulties involved in running such businesses. Second, based on past examples, such efforts are likely to be successful and sustained only if they: (a) include employees meaningfully in corporate decisions and in the distribution of profits and (b) embed social responsibility within the company culture rather than remaining dependent on a visionary leader. Third, O’Toole concludes with the reluctant pessimism that unless financial markets and investor behaviors drastically change, enlightened practices will not become the norm, succumbing instead to the dominant pressure for short-term profits and shareholder returns.
Throughout his book, O’Toole offers well-detailed and evidenced analysis, drawing predominantly on (auto)biographies of the individuals covered, alongside personal and company records and reports. Like Kumar, O’Toole has also benefited from access to some of the individuals examined in his book: thanks to his lengthy career as a leadership scholar, O’Toole has met, interviewed, and in some cases befriended, several of the more contemporary leaders he writes about. It is to his credit, that even in cases where O’Toole openly discloses his friendship with the individual examined, he does not shy away from critical discussion of their practices. Indeed, a key strength of his analysis is his unwavering focus on the complexities of these individuals: these were not simply good or bad people, but humans who for all their faults and merits succeeded in some areas while failing in others. Take, for example, Milton Hershey—of Hershey’s Chocolate—who promoted a sense of job security in his company but was known for occasionally firing employees for arbitrary reasons, who “personally enjoyed fine wines and brandy on his travels” yet would fire employees for drinking in Hershey (the company town he built) (p. 81), and who enjoyed gambling $50,000 a month away in Cuban casinos and importing expensive luxuries for his wife, but “harshly reprimanded employees who ‘wasted’ electricity by turning on extra lights needed to do their tasks” (p. 81). O’Toole’s analysis of these complexities provides both an objective, thorough account of these individuals and an understanding of why they were simultaneously praised and condemned by their contemporaries.
One topic on which O’Toole would have benefited from greater discussion is how he chose the cases on which he wrote. Beyond constraining his focus to the United States and the United Kingdom, and describing the individuals selected as his “heroes” (p. xii), O’Toole offers no method or reasoning as to why these cases were selected over others. Such insights could have explained the notable lack of women in his book: only one woman—Anita Roddick of the Body Shop—was discussed in detail in the book’s more than 500 pages. Figures such as Madam CJ Walker, Lillian Vernon, or Dame Stephanie Shirley—each of whom founded their own successful company within the time periods O’Toole covers and ran them in accordance with their ethical principles—bear strong parallels with the cases examined by O’Toole and would have offered more diversity to his stories. Even without such examples, O’Toole could have addressed this lack of women: given a focus of many of the enlightened capitalists he did write about was the advancement of women (including promoting them to managerial positions), the persisting lack of female business leaders could be interpreted as a failure of these men’s efforts. Such discussion would have provided an additional layer to O’Toole’s analysis.
Taken together, these two books supplement each other well, at times making similar arguments. For instance, O’Toole concludes from his analysis that those companies who successfully sustained “enlightened” practices beyond their initial founder-leader, and continued to be profitable, included their employees in decision-making practices about core operations and policies, especially regarding how best to support said employees. Accordingly, he criticizes business leaders who assumed, rather than asked, what their employees needed. In a similar vein, Kumar argues that beneficiaries need to be included in the design and implementation of aid interventions to deliver more effective solutions that meet their needs while fitting their lives and circumstances. Noting the colonial roots of traditional aid terminology such as “third world,” “the field,” and even “beneficiary,” Kumar suggests instead conceiving aid recipients as “consumers” capable of making decisions, and donations as “investments” in people. Although this restores a sense of agency to recipients, it is a shame Kumar does not consider the potential implications of this market-based rhetoric, such as embedding marketized ideologies while excluding those unable to conform (Bajde, 2013; Kohl-Arenas, 2016).
Overall, Kumar’s book reads like an optimistic manifesto for how the aid industry should look and operate, all based on an internalization of market-based values to help the most people. One wonders whether, had he examined the historical cases provided by O’Toole, he would have remained so optimistic or whether he too would have concluded that until short-term profit-seeking markets and investors have a complete personality shift, such efforts are unlikely to be significant or sustained.