One of the ways the new consumer sensibility of authenticity manifests itself today is in the desire for people to buy from businesses to do good — to make a difference for the environment, for social justice, for the poor, etc. Many pundits say that companies can profit — both economically and in reputation — by such Corporate Social Responsibility (CSR) activities and thereby “do well by doing good”, as it is often put.
If you’re looking for a sane and proudly capitalist voice on CSR, The Economist consistently fits the bill whenever it covers the topic.
Take as Exhibit A its Special Report in the January 19th issue (yes, I’ve been a bit remiss in getting to this topic in our Journal) by Daniel Franklin:
Just Good Business
And the accompanying unsigned editorial:
“How good should your business be?”
Here you’ll find a lucid discussion of the issues of which every person in business should be aware. Here are just a few of its points, verbatim from the Special Report and bookended by two comments from the editorial, with my comments in italics:
* Some people complain that this sort of “good corporate citizenship” is merely another form of self-interest. Correct — and good. That’s the way capitalism works. Adam Smith was right: Businesses have done more good for the planet by pursuing their own self-interest than any other earthly entity.
* With a few interesting exceptions, the rhetoric falls well short of the reality. . . . [If CSR is] done badly, it is often just a figleaf and can be positively harmful. Done well, though, it is not some separate activity that companies do on the side, a corner of corporate life reserved for virtue — it is just good business. Shouldn’t all business be virtuous — and edifying? * The lesson for firms is that they have been far too defensive about their contribution to society. That’s the contribution of their business, not any CSR programs. If efforts to do good become a distraction from the core business they may actually be downright irresponsible. After all, a socially conscious but bankrupt business is no good to anyone.
* The simple solution is that businesses should concentrate on the sweet spot where initiatives are good for both profits and social welfare. Never do something just because it plays well with CSR advocates and the like; do it because it makes solid business sense to do the right thing.
* Involvement in social programmes, especially in poor parts of the world, is an increasingly fashionable way for a company to burnish its brand and, with luck, protect itself from attack. Which self-respecting CEO these days wants to be caught doing nothing for Africa? And companies should be doing more to find good business models for the “bottom of the pyramid” as C. K. Prahalad puts it.
* True, much of what is done in the name of CSR is nothing of the sort. It often amounts to little more than the PR department sending its own messages to the outside world. How authentic is that? Yet in a growing number of companies CSR goes deeper than that and comes closer to being “embedded” in the business, influencing decisions on everything from sourcing to strategy. These may also be the places where talented people will most want to work. An underappreciated business reason for doing good. The more this happens, ironically, the more the days of CSR may start to seem numbered. In time it will simply be the way business is done in the 21st century. For again it will be in the proper self-interest of businesses to do so.
* A dangerous myth is gaining ground: that unadorned capitalism fails to serve the public interest. Profits are not good, goes the logic of much CSR; hence the attraction of turning companies into instruments of social policy. In fact, the opposite is true. The main contribution of companies to society comes precisely from those profits (and the products, services – experiences and transformations too! – salaries and ideas that competitive capitalism creates). If the business of business stops being business, we all lose.
Precisely. It’s not that businesses should do well by doing good; rather, the fundamental principle businesses should follow is doing good by doing well. Examine your business, your strategy, your offerings — are your methods for making profits doing good in the world today? If not, perhaps you take a closer look at what your customers really want today.
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