Before we go any further, let's take a moment to ground our next step in ethical theory. It's disheartening to note that discussions about business ethics, particularly in business schools, often display a blatant lack of regard for the fundamental principles of ethics. All too frequently, morality is reduced to a mere cost of compliance or reputational risk. This is a grave misconception. As leaders, it's imperative that we grasp the true essence of ethical behavior, as a considerable portion of our most important business decisions hold moral significance.

That said, the understanding the concept of "good" can be a challenging endeavor. In our exploration of various theories, we encountered several misconceptions. Some argue that "good" doesn't exist because it isn't scientific. However, this is a category error, as "good" is a normative philosophical question, not a matter of scientific description. Others believe that "good" is purely personal and subjective, leading to a proliferation of egotism and individualism. While we all have the right to our opinions, it doesn't mean that all opinions are inherently good. Additionally, some contend that morality is a matter of culture, and teaching values is colonial. While there is some truth in cultural relativity, in a global society, we need shared criteria for making global choices. In fact, ethics isn't confined to Sunday sermons; it serves as a dynamic bridge between individual, community, and societal interests, with the ultimate aim of creating a good society that benefits everyone.

So, let's to explore some philosophical theories. In essence, moral philosophy delves into wide and broad questions of what is morally right and wrong, while ethics seeks to more practically help us to choose morally sound courses of action. In this context, we can distinguish three "grand theories of ethics," each offering a distinct perspective on how to act well. These are: a) Utilitarian Ethics, which deems an action as good if its net consequences or utility are favorable for the majority; b) Deontology, where an action is considered good if it adheres to rational rules and laws; and c) Virtue Ethics, which regards an action as good if it is grounded in virtues and contributes to a "good life." In other words, an action is virtuous when the actor is good. We'll explore this concept further in a moment.

How does this relate to our inquiry into purpose? The perspective we adopt on what is considered "good" has profound implications for how we steer our business or the economy. Utilitarianism often legitimises the reckless pursuit of individual freedom, self-interest, or maximum profit without fully accounting for the interests of all stakeholders, society as a whole or future generations. It can justify a multitude of negative actions as long as they are offset by a slight surplus of good—we all have come across notions such as "net zero" or "net positive," or indeed a typical business case. Deontology, on the other hand, tends to reduce ethical conduct to mere rule-following, often crowding out an individual's intrinsic inclination to act ethically. Before we know it, we're merely ticking boxes to meet minimum standards and compliance, relinquishing our moral responsibility to think holistically. Moreover, rules often cannot tell us how to bring out the best in a specific situation.

Today, utilitarianism triumphs. By glorifying utility, efficiency and profit we have turned the question of what is good, of what is beautiful into a question of return on equity. This shift has propelled companies to move at lightning speed from collective endeavors for the public good towards a form of casino capitalism serving only a privileged few. Our "Corporate Society" became an aristocracy of wealth and self-centered consumerism.  Alas, when rational living is reduced to a cost-benefit calculation, life loses its depth, becoming synonymous with bank balances, conspicuous consumption or the pursuit of likes on social media. Ironically, we've even labeled those who resist the utilitarian folly and the transformation into the dystopian homo oeconomicus as irrational - overlooking the fundamental truth that utilitarian instrumental rationality itself is irrational in the first place. And this leads us to an important insight: Adam Smith was right. The invisible hand exists. It is in the way we think, which undergirds our behaviours, institutions and economic models. To restore meaning, we must therefore revisit the fundamental question: Why do we get up every morning and go to work? What is the true value of investing an average of 100,000 hours of our lives? In other words, we must choose an ethical foundation for life which is appropriate for our times.

After engaging with numerous philosophers, we've come to believe that virtue ethics might offer the most compelling option. So, what virtue ethics say about life? Consider its inventor, the great philosopher Aristotle, roaming the Lyceum in Athens 2500 years ago, pondering exactly the same questions we're grappling with today: What is our life's purpose? Like us, he contemplated the myriad goals we could pursue. After much reflection, he concluded that the ultimate purpose of life, its "telos," is life itself. It entails realizing our highest human potential and flourishing – what he termed "eudaimonia," which translates literally to being guided by a benevolent spirit or guardian angel. His perspective is entirely pragmatic: We can flourish if only we are able to cultivate our character and bring wisdom to our actions. We become by doing. Leading a good life is a process, not a fixed outcome. It's not about following rigid rules or chasing profits; it's about the continuous pursuit of excellence.  And here virtue ethics also differs from some of the other wisdom practices we might know, where restraint is required to enable revelation – virtues are not about limiting our emotions and feelings because they are bad; it is not at all a reason-above-feelings narrative – on the contrary. Every single person carries a potential for good inside their soul, as part of a shared spirit of human possibility. Our emotions are giving us the energy to bring the good to life in our actions, but we need to learn to order and emphasize them in the right way. If we temper an emotion or need, it is therefore not just to suppress it, but to enable and emphasize a desire that is most adequate in fostering our best self in a given circumstance. Aristotle emphasized that attaining wisdom requires discipline and ongoing development, by being healthy, cultivating our intellectual and personal qualities, nurturing friendships, and seeking mutual fulfillment within society.

Beyond the many intricate details, I think what truly matters is that virtue ethics offers a new narrative. Aristotle paints a hopeful vision of human beings as ends in themselves, not mere means to an end. According to him, every individual can inspire their life and, through their roles in society, actualize their unique potential as an integral part of the common human good. External goods like status, money, and selfies are only relevant insofar as they enable what truly counts – the realization of our best selves. A wise person wouldn't seek more of these external goods than necessary for their flourishing. Aristotle emphasizes the significance of community, not as a matter of deontic principles, human rights, or religious mandates, but because we all carry only a small part of that essential human spirit, constituting the human good. So we are not simply to "actively listen" to one another, but to actively seek and embrace the inherent good in each other, which we can seek to emulate in our own lives. By the same token, virtuous economic competition isn't about mindlessly beating others, but rather a collaborative challenge aimed at excellence and at discovering the possibilities of our shared humanity.

Want to learn more? Watch Otti's presentation at the HR World Congress 2022 - https://youtu.be/dpNZ_zoQfSQ

Let's assume that the purpose of a good life is to flourish, and consequently, a good society is one that fosters the flourishing of most, if not all of its citizens. This perspective potentially enables us to further define the purpose of the economy and the organizations within it.

Our first challenge is that scaling virtue ethics to political systems, as envisioned by philosophers like Aristotle in his "Politeia" and Plato in his "Republic," is a complex endeavor. While both philosophers advocated for the cultivation of virtuous citizens, the practical implementation of virtue ethics within large and diverse contemporary political communities is challenging. Achieving goodness and justice within a political framework based on virtue ethics necessitates careful consideration of how to instill moral virtues, foster inter-independence in the political community, and ensure wise governance, always maintaining a balance between individual liberties and the common good. The possible tension between individual freedom and the collective good in particular complicates the translation of (universal) ethical principles into workable political systems, making it a complex and ongoing philosophical and practical challenge. In a democracy, for example, political power may not necessarily be tied to moral virtue. As Aristotle pointed out, a democracy is governed by the will of a potentially uninformed and self-interested majority, and the character of elected officials or citizens may vary widely.

That said, if we assume that the legitimacy of an economic framework is contingent upon alignment with the values and principles of the prevailing political system, we can further develop our thinking about the good economy. Assuming a virtuous society, however institutionalised, the adoption of virtue ethics in the economy calls for a nuanced approach of "threefolding" that bridges the moral development and virtues of individuals, the ethical character and conduct of businesses, and the collective objective of advancing the common good, recognizing that an economy must always operate as a vital contributor to the ethical and moral fabric of the society it serves.

In this context, we draw inspiration from the insights of Antonio Genovesi, an 18th-century Italian philosopher and economist who, a decade before Adam Smith's "Wealth of Nations," underscored the link between economic well-being and the moral fabric of society. A good economy must remain embedded between philosophy and politics. While Smith's focus was on the pursuit of individual wealth as the primary driver of economic progress within a self-regulating market, magically adjusted by an "invisible hand", Genovesi's approach prioritises ethics, community, and the common good. He empathizes the significance of civil virtues in economic activities, insisting on the importance of relationships, solidarity, and reciprocity in far from anonymous economic transactions. This stands in vivid contrast to viewing economics as a purely technical or amoral field, as proposed by neoclassical economics. In a civil economy, market participants are encouraged to contribute their personal best to the shared endeavor of building a good society. This collective effort aims to enact fairness, social justice, and sustainability through economic activities, providing an alternative to purely market-driven or state-controlled economic models. It places ethics, virtuous community, and social well-being at the heart of economic decision-making.

Within the framework of a civil economy, every company is expected to shoulder responsibilities that transcend profit maximization:

• Human Development: Companies must support the personal and human development of employees and the community
• Fair Employment and Labor Practices: Firms must prioritize equitable wages, safe working conditions, and the overall well-being of their employees.
  
• Ethical Conduct: Companies are urged to operate with unwavering commitment to ethical behavior, treating employees, customers, suppliers, and stakeholders with fairness, respect, honesty, and integrity.
  
• Transparency and Accountability: Companies should maintain transparency in their business practices, financial reporting, and governance. They are also held accountable for their actions.
  
• Stakeholder Flourishing: Firms are expected to engage with a diverse range of stakeholders, including employees, customers, suppliers, and the broader community, in order to better understand their needs and concerns, and contribute to their flourishing
• Supporting the Local Economy: Companies are encouraged to bolster the well-being of the communities they operate in by supporting local businesses, contributing to economic development, and creating employment opportunities.
  
• Sustainability: Companies are entrusted with the responsibility of ensuring sustainable business practices that consider the long-term consequences of their operations on the environment, society, and future generations.
• Societal Responsibility: Firms are called upon to actively engage in activities that advance the interests of society and the common good.

The key point in a civil economy is that it goes beyond simply making businesses "responsible." Instead, organizations should serve as vehicles to collectively bring out the best in us, contributing to the betterment of society as a whole. A civil economy is designed to help us lead good lives within and in support of a flourishing society. While business viability is important, it should always be a secondary consideration. The primary goal is not profit maximization; rather, it's about earning a fair profit that enables meaningful work. In a civil economy, businesses function as integral components of a good society, not merely tools to pursue personal pleasure, profit, or wealth.

But how to measure good organisations? Assessing the sustainability of economies and organizations presents a significant challenge, largely due to the prevailing reliance on traditional metrics such as GDP and profit, which often fall short in capturing the full scope of societal and environmental impact. Proposals like the Stiglitz Report have highlighted the limitations of using GDP as a sole measure of economic well-being, emphasizing the need for broader societal indicators. However, implementing these alternative measures has proven to be a complex task, as it requires widespread adoption and consistent data collection. By the same token, assessing sustainable business success is challenging, as effective measures across different industries and regions are lacking, and attempts to act sustainably are often crowded out by the persistence of a shareholder-centric economic paradigm. Today, many different sustainability standards and ratings are available to assess a business's environmental, social and ethical performance. These include ESG (Environmental, Social, and Governance) ratings, Triple Bottom Line (TBL) Reporting, the Global Reporting Initiative (GRI) standards, Corporate Social Responsibility (CSR) Reports, B Lab's B Impact Assessments, as well as certifications such as Fair Trade, Organic, and ISO standards. The choice of indicators may vary depending on the specific context, but common indicators include:

Environmental Performance:

• Carbon emissions and energy efficiency
• Water and resource use
• Waste reduction and recycling
• Biodiversity conservation
• Sustainable sourcing and supply chain practices

Social Impact:

• Employee well-being, including health, safety, and job satisfaction
• Diversity and inclusion
• Community engagement and philanthropy
• Stakeholder satisfaction and relations
• Human rights compliance in the supply chain

Ethical and Governance Practices:

• Ethical leadership and corporate culture
• Governance and risk management
• Anti-corruption and bribery measures
• Transparency and disclosure
• Legal and regulatory compliance

Social Responsibility and Impact Reporting:

• Reporting on sustainability initiatives and performance
• Compliance with recognized ESG (Environmental, Social, Governance) standards
• Alignment with international sustainability goals (e.g., Sustainable Development Goals)

Long-Term Value Creation:

• Emphasis on creating value for all stakeholders, not just shareholders
• Strategic vision and planning for the long term
• Sustainable growth and competitive advantage
• Demonstrated commitment to societal and environmental well-being

One specific approach we have found appealing is based on the Economy for the Common Good (ECG). In the ECG framework, businesses are assessed based on a set of common good criteria, which evaluate their social and environmental contributions. Instead of focusing solely on financial profit, the ECG encourages businesses to calculate their Common Good Product (CGP) which assesses a company's positive and negative impacts on various societal and environmental aspects, such as human dignity, social justice, ecological sustainability, and democratic co-determination. Businesses are expected to transparently report their CGP and provide detailed information on how they meet the ECG's common good criteria. This reporting helps stakeholders assess the company's overall contribution to society. The ECG also encourages third-party audits of the common good reports to ensure credibility and transparency. Additionally, the ECG proposes integrating the CGP into the legal and regulatory framework, so that responsible businesses could receive legal benefits, such as tax breaks or easier access to capital, based on their positive CGP balance.

Of course, the ECG approach also faces important challenges, including the complexity and subjectivity of both the selection and the assessment of common good criteria, the absence of universal standards and auditing protocols, resistance to legal integration, the need for a fundamental shift away from profit maximization, the risk of greenwashing, and the requirement to motivate businesses to voluntarily adopt the framework.