Judy Samuelson ’82 Says Today’s Corporations Follow New Rules
The author of Six New Rules of Business: Creating Real Value in a Changing World discussed the shifts that are pushing corporations toward creating long-term value in a Zoom conversation.
By Sarah Goldberg
“The corporation is our greatest tool to assure collective survival. True or false?” asked Judy Samuelson ’82 in a discussion titled “Creating Real Value in a Changing World,” hosted by the Yale School of Management student-run Net Impact club during its first annual Social Impact Week (February 28 to March 6).
The crowd of MBA students in attendance voted “false” by a strong majority. Their response didn’t seem to surprise Samuelson, founder and executive director of the Aspen Institute Business and Society Program, which works with business executives and scholars to align corporate decision-making with the long-term health of society.
Corporations, she argued, are neither intrinsically good nor bad—though, she suggested, “they increasingly have the will to be at the table to solve our most complex problems.”
She recalled the 2019 statement released by Business Roundtable in which 181 CEOs of leading American companies newly defined the purpose of a corporation, overturning a 22-year-old policy of shareholder primacy.
“The question that’s most often asked of me today, when we think about this [Business Roundtable] moment, is whether or not these intentions are real. And how do we know if they are?” said Samuelson.
The answer comes down to the organizing principles for business: the decision rules, the incentive systems, and the scaffolding of a corporation. While a corporation may define a purpose through stated intentions, its real purpose is revealed through actions and impact.
Samuelson pointed to the example of Royal Caribbean, the cruise line censured in the 1990s for dumping spent fuel and toxic waste in the Caribbean Sea and U.S. coastal waters. In the short term, the cruise’s decision to dump fuel and waste helped to cut costs, but these actions violated the public trust, damaged the company’s reputation, and seemingly flew in the face of its own long-term interests since they diminished the very ecosystem customers were booking passage to visit.
There’s an important distinction between value extraction and value creation, Samuelson said, citing recent debates over the prevalence of contract work in the tech industry and retailer business models like Amazon that are built around price and convenience for customers. She encouraged students to think about who bears the cost of a corporation’s short-term extractive financial gains.
The success of a corporation, Samuelson explained, is no longer measured only by what’s on the balance sheet. Fundamental changes in the world over the last 25 years have outmoded the rules of profit maximation and prioritized intangibles such as reputation, trust, talent retention, and access to natural resources.
This new primacy of intangibles over hard assets is one of the rules Samuelson has written about in her recent book, Six New Rules of Business: Creating Real Value in a Changing World. Together the rules represent the shifts that are pushing corporations toward creating long-term value, including the growing scope of corporate responsibility and the role of employees in keeping companies accountable. In a lively Q&A session, she and the students explored how such changes are operationalized within corporations, discussing the effectiveness of linking CEO compensation to climate targets and new methods for quantifying a corporation’s culture using AI and LinkedIn.
Samuelson reminded students that there is no finish line when it comes to changing the rules of business. If corporations continuously re-assess their measures for value and success and adopt new mindsets as the world and our planet evolve, then they may prove to be the greatest tool for ensuring our collective survival after all.
