Articles Steward Leadership

How to build communities as business models through Steward Leadership

Organisations must go beyond profitability and contribute positively to society and future generations. In an increasingly complex business landscape, a new perspective on governance and sustainability is needed.

governance community businessmodel leadershipmodel profit values

Arnoud De Meyer

Professor Emeritus @ Singapore Management University

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Posted 05/02/2025

The role of private enterprise has undergone significant transformation over the years. From early partnership models like the British East India Company to the era of "big statism," where governments dominated industries, and finally, to today’s private-for-profit market entities, each phase has reflected the values and challenges of its time. Now, we stand at the threshold of another shift.

Modern organizations can no longer ignore the environmental and social consequences of rapid industrialization and consumerism. But does addressing these issues mean sacrificing profitability? I argue it does not. To explore this, let’s begin with a brief look at history

A Brief History of Private Enterprises

Large private enterprises, as we know them, are a relatively recent invention. Before their rise, other organizational models were common, as previously mentioned, such as partnerships like the British East India Company, small artisan workshops, and even community-based systems like the Commons in English towns where the community collectively herded cattle.

These large private enterprises emerged in the 19th century to raise the capital needed for significant investments in physical assets. Think of industries like transport, chemicals, and other big industrial companies of that time.

Over the years, perspectives on the role of private enterprises in society have shifted. After World War II, some championed "big statism," where governments took the lead in industry. Then came the 1980s, the heyday of private-for-profit market fundamentalism, inspired by thinkers like Milton Friedman and Friedrich Hayek. Back then, the sole focus of enterprises was seen as maximizing shareholder value.

However, those philosophies about governance are now seen as outdated.

A New Perspective on Governance

As Chair of Stewardship Asia Centre, I approach governance differently. I believe private companies operate with a license granted by society—or the community, if you prefer—to use resources provided by that community. With this license comes an obligation to return value to society in some way. They must be good steward leaders of the resources entrusted to them.

For me, steward leadership is both a mindset and a practice. It’s about creating value by considering the needs of stakeholders, society, future generations, and the environment. Three essential aspects stand out:

1. Value creation: At its core, businesses must succeed and thrive. It has to do well.

2. Responsibility to society: They must create value in a way that acknowledges their broader social obligations.

3. Planetary stewardship: Businesses must commit to preserving the resources of our planet for future generations.

Is Steward Leadership Good for Business?

In my experience, absolutely! While there may be short-term challenges, businesses that embrace steward leadership tend to perform better in the medium and long term. These organizations gain greater acceptance from their communities, face less resistance, and discover new opportunities while lowering costs. In short, steward leadership pays off.

The Steward Leadership Compass

At Stewardship Asia Centre, we’ve developed a Steward Leadership Compass to guide decision-making. It’s built on four core values:

1. A Long-Term View

Steward leaders prioritize enduring returns over short-term gains.

They build organizations that benefit current and future generations.

2. An Ownership Mentality

They take responsibility for creating a positive environmental and social impact.

Their mantra? “If it’s to be, it’s up to me.”

3. Interdependence

Recognizing that success is interconnected, they reject the idea of a zero-sum game.

They aim for win-win-win outcomes that benefit society, future generations and the environment.

4. Creative Resilience

These leaders are ambitious about contributing something meaningful to the world.

They persist in finding innovative solutions to disruptive challenges.

These values must of course align with your personal and organizational values. Together, they help define a purpose that creates a better future for a variety of stakeholders while connecting with them on an emotional level.

But to make this happen, we need to regulate free markets. Markets only work well when they follow good governance principles. Governments and International Institutions have an important role in regulating markets and reminding enterprises of their role in the community. But I also believe there is a role for communities to self-regulate.

Communities as Business Models

Let’s revisit communities as a form of organization. Communities that create value together are actually much older than modern companies. Examples are the commons in English towns or the community-managed water use in Javanese rice terraces.

In the mid-20th century, however, the concept of community-based systems took a hit. The ecologist Garrett Hardin’s introduced in his 1968 essay the "Tragedy of the Commons," describing how individual self-interest could lead to the overuse and depletion of shared resources. He cited many examples of overfishing, overuse of agricultural resources, etc.

But here’s the good news: 2009 Nobel laureate Elinor Ostrom argued that communities can govern commons effectively. Her research highlighted numerous real-world examples where communities managed resources like forests, irrigation systems, and public utilities sustainably and efficiently—often outperforming state or privatized alternatives.

Conditions for Effective Community Power

For communities to succeed, certain conditions must be met, according to Ostrom:

• Locality: Communities should be close to the institutions that serve them.

• Autonomy: They need control over resources and decision-making.

• Diversity: A mix of people with different needs and preferences strengthens decision-making.

• Social Trust: People must feel that their voices and actions matter.

When we apply these simple principles to communities, I am convinced that they can play an important role in self–regulation, underpinned by the values of steward leadership

And What About AI?

I am a big user of AI, and I am convinced that it offers incredible potential to transform communities positively, including:

• Expanding access to healthcare and education.

• Building smart cities.

• Enhancing services for people with disabilities.

• Improving disaster prevention and response.

However, harnessing this potential requires a steadfast commitment to the values of steward leadership, ethics and integrity, as there are risks if AI is left unchecked, including:

• Job displacement.

• Widening the digital divide.

• Social polarization.

• Bias and discrimination.

• Loss of privacy.

Overcoming the Risks of AI

To minimize these risks, we must:

1. Invest in education and reskilling to help communities adapt to AI-driven changes.

2. Ensure ethical AI development, guided by steward leadership, by prioritizing transparency, fairness, and accountability.

3. Regulate AI responsibly with clear guidelines for sensitive applications.

4. Encourage community participation in AI decision-making to reflect local needs and values.

5. Close the digital divide by improving infrastructure and technology access.

In conclusion, whether we’re talking about private enterprises, communities, or emerging technologies like AI, steward leadership offers a guiding philosophy. By integrating long-term thinking, responsibility, and resilience, we can create value that benefits everyone—now and in the future.

(A first version of this article was presented at the Institute of Policy Studies in Singapore on 20 January 2025.)

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