Can a corporation be good?
Last week I attended a one-day conference called “Leading For Good” at Loyola’s Baumhart Center for Social Enterprise and Responsibility, aimed at bringing together social and civic minded corporate executives from around the Chicago area. The connections and conversations were good, but in all honesty, I left frustrated that the conversation still mostly centered around whether or not a business should be doing good, rather than how it should go about doing it.
I guess I shouldn’t have been surprised. We have no common definition of business “purpose”, and no shared ethical framework for how to evaluate whether or not the decisions made by a business can be considered “good.”
I’m reminded of the recent aftermath of the now infamous Gillette ad. There were undercurrents of whether or not Gillette, and more broadly, Procter & Gamble, should even be trusted with a message about toxic masculinity.
Two apropos sentiments were pointed out to me on the 18 Coffees Slack shortly after the ad hit the market:
Gillette is a company trying to make money. Don't laud them—or any company—into being moral arbiters. They would have made an ad praising rugged manliness if they thought it would have led to more buzz and higher sales. Companies aren't our friends.
— Dana Schwartz (@DanaSchwartzzz) January 15, 2019
We are living in an era of woke capitalism in which companies pretend to care about social justice to sell products to people who pretend to hate capitalism.
— Clay Routledge (@clayroutledge) January 15, 2019
Some believe that it doesn’t matter at all what Gillette says. Procter & Gamble is still a profit-seeking company, and we should always be wary of what they’re trying to sell us, even if the message seems positive. After all, we have tons of examples of profit-seeking companies with “woke” advertising and morally questionable real-world policy.
Note that this same sentiment doesn’t often apply to small businesses. Even though they can be bad actors just as much as large corporations, their individual decisions don’t tend to reverberate as much as larger companies. Plus they often don’t carry the baggage of well-known brands.
So for larger, complex organizations—and especially for publicly traded corporations with big footprints—the question becomes: Under what circumstances can we trust a company to do the “right thing,” and how many right things does it have to do to be considered a “good” company?
Three things seem to affect our point of view on the above:
How we judge “good” behavior versus bad;
How we view institutions, and the role of business in society;
How we view capitalism.
I’m not interested in getting into arguments about the merits or pitfalls of capitalism (though I am interested in how that plays out in the upcoming presidential race, particularly between Elizabeth Warren and Bernie Sanders, whose policy positions are relatively similar but have differing views on competition and ownership of the means of production). So let me focus on the first two, and specifically try to make the argument that we can and should expect corporations to be a force for good.
Maybe the strongest argument in favor of better corporate citizenship is that they have been granted, especially in a post-Citizens United world, many of the same rights as an individual. If we ascribe responsibility to ourselves to both use our freedom to create meaning in our lives and to actualize the freedom of others, to use the ethics of Simone de Beauvoir as an example, why shouldn’t we hold corporations asking to be seen as people to the same standard? We should therefore judge the behavior of a company—the products and services it sells, its supply chain, its labor force treatment, etc.—by whether or not those actions create a society that is more or less free.
But wait! What does that have to do with increasing shareholder value? Didn’t Friedman teach us that making as much money as possible for stockholders was the ultimate responsibility of a corporation, and that firms should leave adjudicating social issues to the political and legislative arenas?
Not only is this reductive thinking that doesn’t appreciate the complexity of a modern world, it doesn’t acknowledge the incredible power government has handed to modern corporations. Both Friedman and his forefather Adam Smith anticipated a “framework of law” that would incentivize profit-maximizing firms to behave responsibly. In the United States, we’ve largely ceded a strong regulatory state. Our framework of law looks more like a fishnet of prayers.
Our modern corporate culture has been so influenced by the shareholder primacy era that we’ve almost forgotten that this wasn’t always how business worked. Even Drucker called it a “fair-weather model that works well only in times of prosperity.” Business doesn’t have to be this way.
What is more, people expect that business can move faster than government to solve urgent problems, and have been conditioned in a digital world to understand the immediacy of those problems. They want CEOs to be social leaders. We can’t ask business to solve everything—we’re going to need public engagement, policy that often hurts in the short term, to solve the issues of today. (As a former political operative, I’m sensitive to the critique that solving systemic social problems takes people-powered political movements, not just business acumen.). But to tackle existential problems like climate change, for example, we need all hands on deck: both aggressive policy solutions and business self-regulation.
I’d argue that the hardest challenge for a company shouldn’t be answering the question of whether or not it should focus on doing good, it should be asking how it is going to accomplish it. Modern business decisions are complicated enough that senior leaders can’t expect platitudes about values dictated from the top to carry through the entire organization.
Complexity theorists like Edgar Morin have argued that most errors in judgement stem not from the false logic of individual actors, but from the organization of our knowledge in systems of ideas. Think of how we organize teams within an org chart: operations, marketing, customer service, R&D—hyper-specializations that assume a blind intelligence, making it harder to see the complexity in a larger framework. To make hard ethical decisions, organizations have to create a paradigm that can see systems in relation to their environments and ecosystems; that can understand actions not only as linear rationality, but as circular rationality.
Corporate ethics requires a sort of double consciousness: building decision-making frameworks for today, while constantly remaining vigilant about the ethical limits of those models. It is constant preparation for the unexpected, acknowledging that there is no perfect solution to any given problem—and especially no inherent rationality for organizational decision-making.
It’s only by acknowledging that “doing good” is actually a hard, complex process—one that requires constant moral imagination, and a willingness to think creativity about the role of profit-sharing in a multi-stakeholder society—that corporations can earn a kind of public trust. Otherwise, we’ll see the same kinds of meaningful critiques of hollow “brand purpose” that come with saying one thing and doing another.
Let’s stop talking about whether or not it’s worth the effort, and get started.