What would the world look like if businesses led a purpose driven life rather than focusing solely on shareholder value?
Should companies strive to be good or simply set the bar at ‘don’t be evil’?
I recently read a great post by Scott Anthony at Harvard Business Review that explores the question ‘How will you measure your company’s life?’. Scott’s post relies on the writing and thinking of Clayton Christensen encapsulated in his book ‘How will you measure your life?’
Both questions fascinate me. I especially appreciate the perspective taken by Clayton and Scot since they approach the questions from a business and data driven perspective; and how could a data geek like me not love that approach?
Many books exhort you to live a purpose driven life. But the notion of trying to lead a purpose driven business is rarely discussed outside faith based organizations. In fact, companies, along with officers and directors of the company, are often sued for doing anything other than worrying about maximizing shareholder value.
Scot’s review of Clayton’s original work makes this point:
The root problem from Christensen's perspective is that "they didn't keep the purpose of their lives front and center as they decided how to spend their time, talents, and energy." A steady stream of incremental decisions without a clear focus on purpose too often led to unanticipated outcomes.
I don’t want to get bogged down into a political debate around the question of whether or not corporations are ‘people’ with access to certain rights. But I would like you to consider a few questions..
What would it look like if a company led a purpose driven life?
I won’t try to define that purpose driven life for any given company should be. I will go out on a limb and suggest that the life of that company would address topics well beyond beyond maximizing shareholder value.
What would the lives of people around you, as individual, look like if part of your purpose was to leave the world a better place, even if it was in just some small way, perhaps affecting just one other person.
What would the world look like if a majority of people led their lives that way?
Here’s the kicker.
What would the world look like if businesses led a purpose driven life as well?
Scot’s blog post points out:
“the intent to maximize shareholder value has resulted in myopic management overly obsessed with short-term financial returns. Much has been lost in this shift, with thought leaders increasingly arguing that new models need to emerge (the most recent issue of Harvard Business Review had an article in this vein by Jay Lorsch and Justin Fox, "What Good Are Shareholders?").”
Can a business serve shareholders, be profitable, and have a goal or purpose that rises above the holy grail of shareholder ROI? More and more, the most cutting edge business research is suggesting yes.
I’m a strong capitalist. I’m conservative and skew libertarian in many ways. I’m not suggesting that any of this be regulated or forced. It wouldn’t work. I don’t think that maximizing profit is inherently wrong. However, I do believe that an exclusive focus on this tenet of capitalism can and does lead to destructive greed and poor decisions that make our world and lives less than they can be.
I’m also putting my money where my mouth is. I started my first company more than a decade ago and I recently launched Linchpin People LLC ( www.linchpinepeople.com ) with Andy Leonard (@AndyLeonard) last year. Our motto is ‘Change the World. One Career at a time’. We’re intentionally building our company and culture with an eye towards goals that are measured more by how we help other people rather than a focus on profits. I don’t know if we’ll make any money doing that but it’s nice to new leading researchers from Harvard endorse the approach. J
My friend and colleague Steve Jones explores his views on this topic in a post called ‘The ethics of companies’ http://blog.dkranch.net/2012/07/the-ethics-of-industries.html. I know that Andy and I aren’t the only ones pondering these questions.
I don’t want to pick on Google. I like the company and use many of their products. I have great respect for them. But I’ve always thought their tag line of ‘don’t be evil’ is lame. I believe they have good intentions behind that motto, but seriously? Don’t be evil?
Let’s see. You certainly need to do better than the devil. I’m guessing you need to top Hitler and probably Charles Manson. ‘Don’t be evil’ doesn’t set the bar very high, does it?
What if a company like Google or Microsoft or the candy store down the corner set the bar at a purpose driven corporate life that included good? What if all companies did that? What if your company did that?
What would the world look like?
P.S. I read the HBR blog on a regular basis. Great stuff. This time I stumbled across the posts I mention here after seeing a tweet from Kevin Kline (@kekline). Thanks Kevin for making me aware of this interesting work!
P.S.S. I strongly encourage you to read the two following blog posts and perhaps even watch Clayton’s TEDx talk on the topic.
Here are the two blog posts:
and here is Clayton’s TEDx talk