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Amidst all the buzz about geopolitics, climate change, social inequality, and the risks of powerful AI falling into the wrong hands, we are underappreciating another defining megatrend: the end of opacity.

With over six billion people connected to the internet and rapidly advancing AI capabilities, we are living in times of radical transparency. The actions of businesses, governments, and individuals are increasingly visible and easily scrutinized by everyone. Welcome to the Naked Economy, where the rules of value creation are fundamentally different.

Adapt or Perish

For almost 200 years, business growth philosophy has remained largely unchanged: maximize profits while doing no wrong. Milton Friedman said it best in 1970:

"...there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

A Friedman Doctrine—The Social Responsibility of Business Is to Increase Its Profits
(The New York Times)

In more opaque times in the recent past, companies could rely on information asymmetry to shape perceptions and, in some cases, even mislead stakeholders without technically breaking the law. Entire industries, from tobacco to sugar to chemicals, benefited from this imbalance.

Today, information is democratized and constantly verified. Consumers, employees, and customers are empowered as never before. When given a choice at similar price points, they increasingly prefer companies that create value, not just for shareholders but for society and the environment. Conversely, they will “cancel” companies and products they don’t trust and will not hesitate to use the power of social media to be heard.

In the Naked Economy, the do-no-wrong strategy is grossly inadequate. Trust has now become an extremely important driver of profitable growth. As the nakedness becomes even more pervasive in the coming years, the “trust premium” will be the only sustainable competitive advantage. To remain profitable and continue to grow, businesses will need to do well by doing good.

Yet, many organizations have not fully grasped this shift. They continue to pursue profit maximization using outdated assumptions, grossly underestimating how quickly they can reshape their business outcomes. Recent instances, from public backlash against certain AI applications, where companies had to drop their forays into adult content, to ordinary people winning in court against a couple of big tech companies’ use of addictive social media algorithms, to broader legal challenges over harmful digital practices, demonstrate that even the most powerful companies are no longer immune to accountability.

The implication is clear: businesses must rethink how they create value.

Steward Leadership: Maximizing Profit by Maximizing Purpose

In the Naked Economy, business growth will be driven the old-fashioned way – by solving pressing human problems. Business leaders must run their organizations with values that align with this new reality and pursue a purpose that integrates shareholder interest with those of society and the environment.

In this brave new world, pursuing profitable sustainability will create sustainable profitability.

Business leaders must therefore unlearn traditional MBA thinking and understand that, to maximize profit, they must first maximize purpose. And considering the speed at which AI is evolving, it is in their own self-interest to do so fast.

In the Naked Economy, traditional leadership models must be replaced by steward leadership, which is the art of doing well by doing good. Steward leaders:

• Design interdependent strategies for wealth creation by developing profitable solutions for societal or environmental pain points.
• Adopt a long-term view on business growth by earning trust at each step, shunning short-term opportunities that might hamper trust in the long run.
• Take ownership to proactively make business a force for good, for their own good.
• Build a culture of creativity and resilience to spur innovation at every level within the organization.
• Elevate their understanding of integrity from legal integrity to ethical integrity: moving from “staying within the rules” to proactively considering ethical implications of actions.

Steward leadership must not be confused with servant leadership. The latter requires relinquishing self-interest to serve others. Steward leaders pursue self-interest without apologizing, but they do so with a strong belief in interdependence and innovation. They aim to achieve personal fame and fortune by making the world a better place.

Intangibles replace Tangible Assets in the Naked Economy

As AI becomes ubiquitous, it will be used by both good and bad actors. In an environment where it will be difficult to distinguish between real and fake information, cultural assets like trust, human touch and ethical integrity will drive both profitable growth and business longevity. Steward leadership is not just virtuous; it is a strategic imperative.

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https://www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html