The case for putting philosophers into company boardrooms; Businesses must satisfy; philosophy is concerned with what makes a good life

January 1, 2014 5:21 pm

The case for putting philosophers into company boardrooms

By Alain de Botton

Businesses must satisfy; philosophy is concerned with what makes a good life, says Alain de Botton

From a distance, it does not seem as if philosophy and business would have anything to say to one another. Businesses are concerned with meeting strict targets under time pressure, maximising revenue and outwitting competitors. Philosophy is concerned with the largest and most impractical questions about the meaning of life; it sets itself no targets and has no practical outcomes.But in reality, business and philosophy have a huge amount to say to one another. Beneath their interest in profits, businesses are forced to engage with nothing less than the question of how to satisfy their customers, a subject full of contradictions and complexities. For its part, philosophy has spent most of its long history investigating the ingredients of a good life, what Aristotle called eudaimonia, a Greek word translated as “flourishing” or “fulfilment”. In their different ways, philosophy and business have to work out what satisfies people – and therefore how they tick.

Most businesses – outside a tiny crooked minority – have to be committed to promoting the flourishing of their customers. Their long-term survival depends on it. Perhaps they are selling people hand-dryers or household insurance but, ultimately, their livelihoods depend on the accuracy with which they have discerned the true needs of those they have set out to serve: profit is the reward for working out those of your clients ahead of anyone else.

In order to work through the psychology of their clients, businesses commonly rely on market research, carried out for them in focus groups and interviews. But they do not typically step back and properly think about human nature from a 2,000-year cultural perspective, and their analyses of their customers suffer as a result. An ordinary business would ask: “How do I improve my margins in the ski business?” But a philosopher would ask: “Where is the need to ski routed in the human soul?” Eventually the philosopher would find a way back to the balance sheet, but the starting point would be higher and broader, and the results often more interesting. With a proper philosophical perspective on the needs of customers, businesses can start to see new market opportunities, rather than being left to fiddle with margins, wages and logistics.

Asked to analyse a business, a philosopher would typically start by asking what its deep purpose was: that is, what its eudaimonic promise to its customers was made up of. Then he or she would look at how well the company was living up to the promise, before suggesting new products, services or brand messages that would align it more closely with its implicit promises.

Imagine an ambitious luxurious hotel trying to stay afloat in a competitive market. The hotel would tend to imagine it knew what it needed to do for its customers; the struggle would be all about delivery. However, what tends to be rushed is the definition of what exactly a good night in a hotel is. Where do the sheets and the minibar fit into this? What is the role of the soap and room service? What if one went back to the drawing board to address the question of what a hotel is?

There are many problems that can destroy a night in a hotel. Here are some of those that tend not to be thought about (they are too philosophical). One might feel anxious, or confused. One might be lonely. One might have an argument with one’s partner. One might feel disconnected from the culture of the country all around. Typically, hotels do not think these sort of problems belong to them. They limit their focus to the soap and the bed. In other words, they are forgetting the full range of implicit promises they have made to their customers: you will be happy with us.

A hotel that took fulfilment very seriously might be led to develop a whole range of new services and products. Hotels, like so many businesses, are only at the dawn of understanding their customers’ real needs because they operate with too narrow a definition of happiness.

Similar issues bedevil financial services. Take wealth management. On the surface, this is a business that promises customers a certain return a year on their portfolios. But the deeper implicit promise is: “You will live well with money around us.” However, very few firms tackle the implications beneath this grand claim, rendering them intensely vulnerable to competition and downturns in their financial performance. A wealth management firm under philosophical guidance would not stop looking after money in the standard ways, but it would also be asking how money can properly contribute to clients’ happiness. How well are the clients’ children relating to money? How has money affected the clients’ friendships? What is the point of philanthropy? What has been the meaning of their lives? As with the example of the hotel, these are questions that implicitly fall under the remit of a particular business but that business is not looking at them squarely and imaginatively.

Letting the odd philosopher into a business is not an indulgence. It would help management think more deeply about what a business should properly be trying to do with the customer’s life in order to improve it. There is (fortunately) no enduring conflict between understanding the psyche and making some money.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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