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Books 11 August Aug 2020 2132 11 August 2020

CEO of Aboca, Mercati: “Companies are living systems that generate value”

Why are companies founded? The answer would appear to be simple: to generate ‘profit’. But nowadays, explains Massimo Mercati, CEO of Aboca, that is not enough. We need to add words like ‘responsibility’, ‘sustainability’ and - above all - ‘value’.

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Adriano Olivetti explained that by pursuing value, material assets will follow by themselves. Far removed from idealism and driven by the very real idea that organisations, profit and social impact are closely intertwined, Massimo Mercati, CEO of Aboca, has put forward an innovative idea: think of a company as a living system. As a system capable of generating and preserving value based on the predominant pattern in nature: the network organization.

What does generating value mean for a company? CEO of a group with more than 1,500 employees, Mercati also founded Farmacie Apoteca Natura and is chairman of the Farmacie Comunali di Firenze (Florence’s city owned pharmacies). In answer to this and other questions, he has written a book: L’impresa come Sistema vivente (Companies as living systems). In it he deals with topics such as leadership, organisation, sustainability and social responsibility and takes a closer look at networks and productive processes.

In a world and in societies that have reached a high degree of maturity, Mercati explains how “the perception of value changes, different and more refined consumer needs arise, values such as personal and work satisfaction, happiness and trust become the new drivers of value.” However, these drivers are difficult to measure, even though they are “the truly decisive factors that affect quality of life and the very survival of companies.” In Mercati’s book, any company with plans for future growth has to question the real creation of value from this new angle. “Such companies look far beyond shareholder profit and take responsibility for their impact on all stakeholders, and as a result also on the environment and the communities where they operate.”

Companies of the future look far beyond shareholder profit and take responsibility for their impact on all stakeholders

Massimo Mercati, CEO of Aboca

Though profit is necessary, it does not create value. But the creation of value does generate profit. It is not about selling to create value but creating value in order to sell. With the new model, any company embracing this new outlook will need to realign its value propositions to become an innovative, hybrid form of enterprise.

This is what the Benefit Corporation movement is all about. Founded in the US in 2006, its aim is to give substance to a new way of running companies by certifying their impact according to John Elkington’s Triple Bottom Line framework.

B-corps, Mercati reminds us, allow their impact on the environment and society “to be measured and evaluated on a scale from 0 to 200.” They need a score of at least 80 to be certified and companies that do not fulfil this requirement are defined as ‘negative’, in other words they are taking more than they are giving back. Scores above this threshold show that the company has the capacity to generate not only profit but also a contribution to the common good. Value. On the wave of the B-corp movement, in 2015 Italy approved legislation on Benefit Corporations. A first step towards an organizational and system model. This was an important step because once a company has become a Benefit Corporation “not only can it, but it must strive for the common good.”

Though not yet central to the regulation of corporate activities in Italy, categorized for the time being as a provision of special rights which refers back to the basic regulatory framework, the certification of Benefit Corporations in Italy should be encouraged so that it becomes a rule rather than an exception. Mercati explains that consumers are “tired of being defined as such, they are looking for new models for using goods that are socially and environmentally sustainable.” The market is slowly moving in this direction.

For this reason, Mercati concludes, a new model of enterprise is essential: “because our economic success will depend on the answers we give to the questions being raised by consumers and by the younger generations about participation, responsibility, sustainability and the ability to generate value.”

“The goals of enterprises and the dignity of work are not topics to be confined to a management handbook. Instead they provide an opportunity to reflect on why we do what we do, why developing a community is worthwhile, on the real conditions that lead to happiness or unhappiness on a daily basis” as an immaterial part of the value that companies know how to and can generate.

As entrepreneurs, employees and as companies – seen as living systems closely connected to the community and the environment – “we will be called upon to make our contribution, a great opportunity to once again give a purpose to our companies and our lives.”

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