Oct 9, 2025
by Colin Mayer (transcript of keynote at the SO:25 conference in Berlin, video here)
Hello, good morning, bonjour, guten Morgen. I want to make four simple points. The first point I want to make is that business is a solution, as well as the source of the problems that we all face. Secondly, the purpose of business is a key determinant of which those business does. Thirdly, ownership is critical to the determination of the purpose of business, and steward-ownership is the potential solution to ensuring that business solves our problems.
The business that we know is a source of some of the most important aspects of our lives. It clothes, feeds and houses us. It employs us and it invests our savings. It's the source of economic prosperity and the growth of nations around the world. At the same time, it's increasingly being realized to be a source of growing environmental degradation, pollution, global warming, inequality, social exclusion, and mistrust. And the reason why it's had this very mixed record is the fuel that drives capitalism, the source of the resources of business, the incentive that motivates it: profit.
Without profit, there's no capital in capitalism. But we're mis-diagnosing the nature of profit. Profit derives from the Latin: profit carry profactors to advance and progress. And that is precisely where a profit should come from: advancement and progress. But too often it comes from advantage and regress. It comes at the expense of others. It's wealth transfer, not wealth creation. And to understand this, one has to understand the reason why business exists, the reason why it's created, its reason for being, namely, the purpose of business.
Milton Friedman, obviously, 60 years ago, simply said that the reason that business exists is to make money, profit. Well, he was right to emphasize the importance of profit, but he was wrong to suggest that is the purpose of business. It's not. It's derivative of. It comes from a successful purpose of a business. A purpose of a business is to solve problems. To solve problems that you and I face as individuals, societies and the natural world. But a particular challenge that business has in doing this is: it's not about philanthropy or charity, it's about hard nosed business. It therefore has to be profitable, and that means that business has to solve problems of people and planet profitably, and in particular not profit from causing problems for either. Or to put it simply, profit without harm.
Profit without harm is the business equivalent of the Hippocratic Oath and medicine of do no harm. Business cannot possibly do no harm. It's always having to make hard trade-offs, but it shouldn't profit from imposing harm.
Now, this notion of a profitable solving purpose is not about corporate social responsibility. It's not just something you do on the side. It's core to what a business does. It's the overarching framework within which its strategy lies. And furthermore, it's not simply about ESG. It's not just another risk for business. And it's not just another cost center. It's a value driver. It's a way of creating financial value for companies.
Now critical to doing this is the ownership of companies. And the reason why ownership is so important is that ownership has two components to it. The first is the financing aspect of ownership. The provision of finance to business and the earning of return for doing that in the form of return on capital and cash flow. And the second is in terms of its control over business. And owners therefore have rights to cash flows and they have control rights.
Now those two aspects of ownership relate to those two components of the purpose of a business that I mention. First of all, about being profitable, profitable solutions, the financing aspect. The return on the capital. And the second is in terms of the problem solving nature of earning that profit. And that's where the control comes in. In ensuring that the company has the resources, the investment, the assets it needs to deliver on its problem solving, and secondly, to ensure that the company and its investors do not profit from creating problems for others, but instead from solving those problems.
And that's where steward-ownership comes into the story, because what steward-ownership does is to provide the basis on which one can establish the type of ownership that is required to ensure that companies can solve their problems. It needs a form of commitment, commitment to ensuring that there are the assets and the investments needed to solve those problems, and ensuring that the companies that employ those assets have the right objectives in terms of their problem solving purposes.
Now those two elements have to sit side by side. And so frequently, what one observes is a combination of ownership of companies, a sort of dual parallel system by which there are providers of capital from the capital markets, from the stock markets, or from private sources, from private capital, from families or from other types of private owners. And then alongside those are the steward-owners, the steward-owners who in many cases have controlling domination of a company to ensure that that financial capital is employed. The scale that's needed and also for the purpose of solving, not creating, problems. Now that duality of ownership is critically important because that is what one observes in many of the largest companies around the world.
And I'm just going to end by illustrating this in relation to a particular form of steward-ownership that demonstrates its real practical relevance in terms of not only solving problems, but also creating real value for us as societies, individuals, and the natural world. And that is enterprise foundations. Enterprises that have foundations as significant controlling shareholders of their companies. And one obvious example of that is clearly Novo Nordisk.
Novo Nordisk has as its ownership, first of all, the fact that it is listed on Danish stock markets and the New York Stock Exchange actively traded. And that is the basis on which, for a period of time, it became the most valuable company by stock market capitalization of any company in Europe. Those outside shareholders have 75%, as this slide shows, of the cash flows of Novo Nordisk, but only 25% of the voting rights.
The voting rights, or 75% of them, reside with the Novo Nordisk Foundation. The Novo Nordisk Foundation therefore controls the business and the Novo Nordisk as its purpose has the purpose that was established by its founders in perpetuity. So it is a long term ensurer of the underlying problem solving purpose of the company.
That's one example. A second example is from a family owned company, another Danish company: Lego. There, the family has 75% of the ownership of the company and recently set up a foundation that has 25% of its ownership.
Now, the important point that I want to make from these two examples is what that steward-ownership has allowed those companies to do. Many of you will know that Novo Nordisk, in the process of seeking to solve diabetes around the world, stumbled across a weight losing drug, Wegovy, which became a blockbuster that propelled it to being the most valuable company by stock market capitalization.
But then it was subject to competition, in particular from Lilly, US, from other pharmaceutical companies developing similar products. And its stock market capitalization plummeted by more than 50%. Now, most companies whose stock market capitalisation plummets by that amount would be subject to a hostile takeover bid, a hedge fund activist within a short space of time, which would deflect it from its purpose.
Instead, that has not happened to Novo Nordisk because of the foundation control, and Novo Nordisk has been able to pursue its objectives and to develop new forms of the weight losing drug that are beginning to re-establish its position.
Lego, as a second example, produces these beautiful little bricks that we all love. The only one problem with them is: They're made of plastic. And that is a dead product, and Lego knows it. And it's investing huge amounts in terms of finding ways of substituting or improving the environmental nature of its product. And that is extremely hard to do because of the small and delicate and strong nature of each of those bricks. Now, again, the presence of a steward-owner allows it to focus on that objective and invest to the extent that's necessary to solve that problem.
So to sum up, what I'm saying is that ownership matters for purpose. Purpose matters for us. And steward-ownership is the way to ensure that what matters for us is delivered to us. Thank you.
(watch keynote here)