Generating Systemic Wealth — Part 14: Generating Wealth for the Investors
Investors invest in the ongoing efficacy of money as a means for developing the capacity for exchange and prosperity. They invest in steadily increasing their reach and effectiveness in the world. They also invest (to a greater or lesser extent) in their own integrity and credibility, which is connected to their faith that capitalism (in spite of its frequent failures) has the potential to create more just, equitable, and healthy societies.
The investments of most adults and most institutions are managed by others on their behalf. They expect that their money will be managed in a way that progresses the industry it is invested in — in terms of capacity, character, and asset value. The investor counts on the manager to understand the complex forces at play and leverage resources in a changing world to produce global effects and evolution of an industry. Ultimately, they expect those managing their investment to help evolve investing itself.
How does a business find the most leveraged way to engage its investors in wealth creation? I suggest that given the many corporations competing for the responsible investor, that a great contribution (and one where I have seen few examples) would be to restore investment to being a responsible endeavor, and the idea of capitalism back to its highest potential.
I don’t always agree with Warren Buffet, but there are some arenas where he sets the standard — especially with regard to his insistence that wealth generation is about building capacity and releasing potential. I believe this foundational premise has led him to make generally good investment decisions — it has certainly earned him loyal followers who invest for life. The returns Buffet gets are based on him standing for a couple of things. One is value investing — that is, “Buy what you know and what produces something of value.” In other words, he looks for what is truly value-adding, not just value-added. This is based in a deeper philosophy: “We have a system that works. It unleashes human potential.” For Buffet, this is the purpose of the capitalist system. It does get overwhelmed by fear or greed on occasion. But even with setbacks, it continues to progress. That is because there is always more human potential to unleash.
Buffett is also aware of himself as an avatar for investing. He is mindful of his affect on markets and on the idea of investing itself. Though I might occasionally counsel him to proceed differently (e.g. I want him to consider the investment of more than just the financial stakeholders) I applaud him for stepping up to the role of improving what capitalism can represent when it works well — unleashing human potential. His transparency in educating all investors, not just his own, has been a real contribution. Buffet takes questions from the floor at shareholder meetings from shareholders and journalists. He encourages journalist to solicit questions from their readers and pick some tough ones. By doing so he opens up the question pool to the general public and becomes a humble steward not just for Berkshire but for the entire financial world. Through this simple and courageous act, Warren Buffet is willing to be responsible for a significantly greater whole. I believe that if he added the rest of the stakeholders to his thinking, he could make an even bigger difference for the financial industry and the future of capitalism.
This story is part of a series on regenerative economics and generating systemic wealth. To read the rest of the series, see the links below.
- Regenerative Economics and the Pentad Framework
- What is Real Wealth?
- Misconceptions About Wealth Generation
- A System of Wealth-Generating Sources
- The First Wealth-Generating Source: Biotic Life
- The Second Wealth-Generating Source: Minerals
- The Third Wealth-Generating Source: Assets
- The Fourth Wealth-Generating Source: Ideas
- The Fifth Wealth-Generating Source: Thinking Processes
- The Sixth Wealth-Generating Source: Paradigm Shifts
- Evaluating Wealth Generation for Each Stakeholder
- Generating Wealth for the Co-Creators
- Generating Wealth for the Earth
About Carol Sanford
Carol Sanford is a regenerative business educator, the award winning author of The Regenerative Business: Redesign Work, Cultivate Human Potential, Achieve Extraordinary Outcomes, and executive in residence and senior fellow in social innovation at Babson College. She has worked with fortune 500 executives and rock star entrepreneurs for 40 years, helping them to innovate and grow their businesses by growing their people. Learn more about Carol and her work at her website.