Magazine Fall 2010 Big Idea: Leading Sustainable Organizations

How to Do Well and Do Good

The key to achieving both of those goals together? Integrate societal benefits with company strategy.

Rosabeth Moss Kanter Reading Time: 5 min 

Topics

Leading Sustainable Organizations

Corporate adoption of sustainable business practices is essential to a strong market environment and an enduring society. What does it mean to become a sustainable business and what steps must leaders take to integrate sustainability into their organization?
More in this series
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Rosabeth Moss Kanter, professor of business administration at Harvard Business School

Can companies do well by doing good? That question is asked frequently – but beware of false choices when considering it. In business, there is not a strict dichotomy between doing well and doing good; it is not an either-or proposition. Instead, social good and profitability are among the criteria by which companies make choices. In reality, any company is better off creating both bottom-line and societal benefits – and creating synergies between them.

That does not mean executives should lose sight of the goals and mission of the business, however. There is no reason certain kinds of good works – say, merely giving away money to areas unrelated to the business – should provide particular strategic advantage for a company. But if a company can integrate the benefits that it offers society more closely into its existing business, that integration can be very sensible and beneficial for the business. For example, people within the organization may recognize internal capabilities which they can build and develop to address a problem in society while simultaneously enlarging the company’s market.

As I describe in my book Supercorp, some smart companies are finding that including a focus on benefiting society in their mission can help yield competitive advantage. These companies, which are in the vanguard of creating a new business model, have discovered that a commitment to tackling societal problems can be one aspect of creating a corporate culture that leads to high performance and profits. (However, it is important to note that no company exemplifies this aspirational approach to management completely; all companies have flaws, and none live up to their ideals all of the time.)

There are a number of reasons why incorporating social good into strategy can help a company’s long-term performance. For one thing, it can help strengthen a company in the eyes of a number of important constituencies: its customer base, its employee base and the general public. In particular, a mission that includes serving society can help motivate employees – especially a younger generation of employees who seek meaning in work.

Topics

Leading Sustainable Organizations

Corporate adoption of sustainable business practices is essential to a strong market environment and an enduring society. What does it mean to become a sustainable business and what steps must leaders take to integrate sustainability into their organization?
More in this series

About the Author

Rosabeth Moss Kanter is the Ernest L. Arbuckle Professor of Business Administration at Harvard Business School. She is the author of numerous books, including Supercorp: How Vanguard Companies Create Innovation, Profits, Growth and Social Good (New York: Crown Business, 2009).

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Comments (2)
Ram
Dear Prof Moss Kanter,

While I am a keen follower of yours on twitter and read all articles of your with avid interest, I am afraid that it leaves me sometimes with the feeling that you are either not aware of what is happening in some of the companies in Corporate America or chose to blissfully ignore it so that you do not need to focus on the muck and the mire that exists there.

The days of CEOs taking care of their Employees are long over. Todays CEOs like the guy who is in charge of a High Technology US Company even today behaves and acts like a used car salesman. He sees his Company as a huge "Junk"...to be sold for whatever value he can get. He has his Board to back him up. He will sell his own parents to anyones who gives him money. He wants to be in those business that has no competition and just shuns competition.

He has slit the throats of thousand of his employees, frozen salaries, why even reduced salaries but has increased his own by multiple times ( obscene number - over 800% )during the same period.

How can Corporate America tolerate such characters ? It is like Corporate America calling Alsop  Chainsaw )Dunlop a hero one year and then calling him a villain the very next year.

People like you should come out openly and publicly call for a stoppage for such carnage. The Wall Street ? It is the one that rewards by upping the share price of those companies that resort to layoffs - correct ? So what CSR are we talking about / It is high time we stop being hypocrites and flush out these monsters from the Corporate world.

Who will have the guts ?
Milan Moravec
Step down into what's taking place in business and public institutions Rosabeth. Employee loyalty is dead: rest in peace. Rx for employee loyalty reform. Business and the public sector are into a phase of creative disassembly where reinvention and adjustments are constant. Hundreds of thousands of jobs are being shed by United Technologies, GE, Chevron, Sam’s Club, Wells Fargo Bank, HP, Starbucks etc. and the state, counties and cities. Even solid world class institutions like the University of California Berkeley under the leadership of Chancellor Birgeneau & Provost Breslauer are firing staff, faculty and part-time lecturers. Yet many employees, professionals and faculty cling to old assumptions about one of the most critical relationship of all: the implied, unwritten contract between employer and employee.
Until recently, loyalty was the cornerstone of that relationship. Employers promised job security and a steady progress up the hierarchy in return for employees fitting in, performing in prescribed ways and sticking around. Longevity was a sign of employeer-employee relations; turnover was a sign of dysfunction. None of these assumptions apply today. Organizations can no longer guarantee employment and lifetime careers, even if they want to.
Organizations that paralyzed themselves with an attachment to “success brings success’ rather than “success brings failure’ are now forced to break the implied contract with employees – a contract nurtured by management that the future can be controlled.
Jettisoned employees are finding that the hard won knowledge, skills and capabilities earned while being loyal are no longer valuable in the employment market place.
What kind of a contract can employers and employees make with each other? The central idea is both simple and powerful: the job or position is a shared situation. Employers and employees face market and financial conditions together, and the longevity of the partnership depends on how well the for-profit or not-for-profit continues to meet the needs of customers and constituencies.  Neither employer nor employee has a future obligation to the other. Organizations train people. Employees develop the kind of security they really need – skills, knowledge and capabilities that enhance future employability.
The partnership can be dissolved without either party considering the other a traitor..