This interview first appeared in April 1998, Issue 11 of the FT Mastering Management Review If business becomes friendlier towards the environment, can it still remain competitive? It won't be easy, says Hungarian thinker Ervin Laszlo, but it can be done and it must be tackled soon. Tim Dickson met him in London. Ervin Laszlo, founder and president of an informal association of writers, artists and scientists known as the "Club of Budapest", defies easy categorisation. But the main pillars of his long and varied career have been music and philosophy. Born in Budapest in 1932, he was a concert pianist in his teens and early twenties before turning to academic life and a string of permanent and part-time university appointments, including fellowships at Yale and Princeton and a chair in philosophy at the State University of New York. He has published more than 60 books and some 400 papers and articles, which have been translated into 16 languages. A growing interest in systems theory and its application to international affairs led to senior posts with international organisations, notably the United Nations, where he was programme director for the UN Institute for Training and Research. He is still advisor to the director-general of UNESCO. Laszlo's preoccupation at the moment, however, is with the aims and ideals of the Club of Budapest, a descendant of the widely known Club of Rome, which first captured international attention (if not widespread support) in the 1970s by proclaiming the limits to economic growth. The Club of Budapest's call for a new planetary consciousness and a less self-centred spirit in the face of avid consumerism, ecological damage and continued militarisation might sound like just another well-intentioned New Age message as we reach the start of a new millennium - but its original visionary believes that business leaders are starting to listen. Where exactly is the human race going wrong? In my view there are two problem-generating trends with overwhelming significance the worldwide growth of the human family and its use of the planet's physical resources, and the accelerating depletion of many of these resources. Julius Caesar wrote that men willingly believe what they wish. The fact that myths abound is in itself neither wrong nor surprising but modern mythology has become a threat: it has not kept up with people's way of life and society's organisational forms, technologies and environmental impacts. For example, a belief in the law of the jungle encourages tooth-and-claw competition that wastes the potential benefits of co-operation. The dogma of the "trickle-down effect" and the "invisible hand" promotes selfish behaviour - in the comforting but unwarranted belief that these effects benefit others. They polarise society into the privileged and the disenfranchised. Keeping up with technology will become an ill-affordable luxury when economic growth curves slacken, markets become saturated and the environment approaches the limits of its capacity to absorb pollution. Aren't these questions for governments and international organisations? Is it fair to expect business people to get involved? At the United Nations I came to realise that, at a personal level, ambassadors, delegates to the General Assembly and those on committees are very interested in issues like co-operation, sustainability and ethics. But when it comes to action, national politics tends to dictate what they do - anyone who gets too far out of line is simply moved from New York to Iceland! The UN is meant to be global, but when it comes to decision making the interests of the different members emerge - if these happen to coincide you can make progress but if not you have a deadlock. You start looking for the lowest common denominator, which is sometimes very low. If you're looking for the movers in the long term the private sector is very important, especially multinational and transnational businesses. If you want to make an impact on the world you have to talk to the people who have some freedom of decision, those who are conceiving corporate strategy. Is the appeal to business based on enlightened self-interest or is it an intellectual and emotional argument? That is, if managers do not change their ways the survival of their children and their children's children is at stake? I would not discount the personal responsibility angle, especially among younger managers and those just ahead of retirement. But enlightened self-interest does come into it because those who operate sustainably (putting back at least as much as they take out) ultimately will not destroy their own business environment - by which I mean the public's purchasing power, the general educational level, the social system and its natural resource base. Of course you can simply exploit something, then move on but if you do this on a large scale it becomes suicidal for your entire area of business. Surely lots of business people have been paying lip service to these sorts of sentiments for years - but cynically and hypocritically? I really believe that there has been a change at a personal level, though people driving change in companies to some extent face the same problems as those in the UN. In the short term, if you want to make the right investment, to re-tool and change your strategy, you must expect to sacrifice something and you should be on the look-out for free riders. Competitors will undoubtedly be unethical and take advantage of you. However powerful you are, there is a risk. But take a company like Monsanto, which had a terrible image as a polluter and which has now shown - to its benefit - that it can operate in a cleaner, more responsible way. The success of catalytic converters and more environmentally friendly soap products demonstrates that people are sometimes willing to pay a premium. Even so, that's still a minority position. Surely everyone has to work together - or sign up to a code of conduct - to make it work. The transformation required for an industry to achieve stakeholder responsibility is likely to require a joint effort. There are numerous precedents for this: partners and competitors in the information and communication industries, the electronics, airline, automobile and pharmaceutical sectors often join forces for purposes of R&D, production or marketing. There is no reason why market leaders could not also forge partnerships in the interest of developing a stakeholder responsibility culture in their branch of industry. "Total Responsibility Management" needs to be embraced to complement Total Quality Management. Do you know of companies that would sign up in this way? We have people at the very top of companies who are looking at the proposition about two dozen senior managers, all assured of anonymity. Chief executives need to develop teams of responsible managers to outline the issues, to give them a voice and to make overtures to other companies. There are managers who have already been successful, who want to make a lasting contribution towards making their company more ethical. I would like to see a council of top managers - perhaps just retired - actively advising younger managers who feel a sense of responsibility. What should managers do if they sympathise with your call for a new "planetary consciousness"? Having a "planetary consciousness" means being able to see the forest and not just the trees. The forest today is global and it is in danger: many trees are dying and we must create the right conditions for their renewal. This means having the right concept and the right vision - and translating it effectively into action. Assuming that you do have the right concept and the right vision, what do you do on Monday morning? If you are a leading manager the first thing you need do is to share your insight and communicate the sense of concern and responsibility that goes with it. You can do this by bringing together your closest collaborators for informal "fireside chats", whether in the office or in a more relaxed setting, on issues of common and basic concern. As a first step this helps create a management culture that incorporates enlightened self-interest - and in today's world this has to be globally conscious self-interest. Your collaborators, who need to be given real responsibility for translating insights into action, will tell you who in the company is likely to respond and how they can best be reached and organised. But by Friday afternoon things may not be quite so simple. Your staff as well as your board will tell you that if you try to apply your vision at the cost of any reduction in competitiveness, you will be out of business in a year - or three at the most. This will make you look at the situation of your suppliers, distributors, partners and your major competitors. Where are the areas in which you can have a joint stake in making your industry more sustainable and "evolvable"? Where can you play "win-win" games instead of playing against one another? Platforms for informal and off-the-record discussions do exist: the Club of Budapest for one. Just what would globally conscious managers be doing when the Club of Budapest helps them get the key players together? An effective agenda for such "total stakeholder responsibility" councils and consultations would include the creation and assessment of medium-to-long-term "if-then" strategies. First you should identify points of unsustainability in the industry's wider environment. The truly sensitive points refer to critical thresholds in society (due to growing polarisation between rich and poor, the spread of unemployment and consequent social and political unrest with massive local or transborder migration, for example) and in nature (the impoverishment of the local biological life-support systems or the exploitation and exhaustion of the industry's natural resource base). A comparison of alternative "if-then" strategies will take you further: it will prompt a discussion of the conditions under which desirable and realistically achievable strategies - strategies capable of averting the breakdown scenario - can actually be implemented. You'll need consensus among your partners and fellow industry leaders and this consensus might then generate a code of conduct that could put the entire industry on a sustainable footing. If it were properly conceived and enforced, such a code could genuinely overcome the problem of unethical competitors and free riders. It would also head off trends that would otherwise lead to the point where external regulatory forces - that is, government or legal - are likely to come into play. The rule "either timely self-regulation or untimely regulation by others" applies not only to individual people and companies but to entire sectors of industry and is part and parcel of what I mean by a "planetary consciousness". This is the kind of foresight that responsible managers need to share their with their collaborators, partners and competitors. Our business environment is globalised but it's also crisis-prone. Aren't business people, particularly in consumer industries, successful precisely because they are good at predicting how, for better or worse, people actually behave rather than how you or I would like them to behave? It's in the interest of every company to anticipate trends and sooner or later society is bound to move in a direction which doesn't endanger its own survival. People are not crazy. If you know you're polluting the air you're ultimately going to pay for technologies that don't do that. Values change. If you look at surveys in the US you'll find that around 24 per cent of the population - or 44m people - subscribe to what they call the culture of "creatives": they display different consumption patterns, have different lifestyles and ambitions. This has increased from 5m in 1990-91. The implication is that if you don't anticipate what's happening you'll end up as a dinosaur. <IMG SRC="pichome/fh.gif" BORDER="0" ALIGN=MIDDLE WIDTH="100" HEIGHT="