Several events this week point to increasing efforts by major brands to distinguish themselves through altruistic integrity moves. Are they succeeding? With the help of my author and business psychologist friend Dr. David Gruder, here’s a closer look at announcements from Starbucks and several other sources this week.
Starbucks announced a decision to cover half the cost of an online bachelor’s degree for employees who work at least 20 hours a week in their cafes, roasting plants and offices. But there’s a rub. In the San Diego Union Tribune reporter Dan McSwain stated, “… a natural question is whether altruism or good business is behind the Starbucks policy.”
But by what rationale does their motivation have to be either one or the other?
Says Gruder, “I don’t believe this is a ‘natural question’ at all.” He points out the widespread and unnatural polarization in current popular thinking that either 1) you must sacrifice integrity, relationships and social responsibility to be profitable, or 2) on the opposite pole, that in order to preserve integrity, relationships and social responsibility you must sacrifice profits.
By this reasoning, businesses that lack integrity exempt themselves from being socially responsible, and anti-business groups justify their reasoning that businesses should be more altruistic than profitable.
To which I pose the question, “What could possibly be honorable about running an unprofitable and unsustainable business?”
Gruder disputes McSwain’s voicing (and probably unintentional reinforcement) of this polarization through his “natural question” remark. “I would propose the ‘natural question’ be ‘Why don’t we passionately support businesses that use their creative talent to be sustainably profitable by doing the right thing, while speaking out against businesses that abuse their creative talents to find ways to be profitable at the expense of doing socially responsible things?”
Image courtesy of CNN Money.com
If the new Starbucks policy supports their ability to become more sustainably profitable in socially responsible ways we should be applauding them, he says, instead of calling them out for a “Savvy Stunt” as McSwain’s page 2 headline maintains.
Finding Opportunity Sweet Spots for “Conscious Capitalism” is the Key
The move to “Conscious Capitalism,” Gruder says, is about finding the Opportunity Sweet Spots between doing the right thing and being profitable. Here are three examples of this:
- On June 12, 2014, Tesla Motors announced they will make a number of their patents “open source,” as long as they are used in good faith. Tesla ran contrary to the tradition of closely guarding patents to preserve competitive advantage because they believe this is more aligned with their corporate mission, which is to accelerate the advent of “sustainable transport.” This is a great example of an Opportunity Sweet Spot, Gruder says: “If Tesla took the short view on profits they would not have recognized that making some of their patents ‘open source’ gives them a better chance of expanding manufacturing, infrastructure development, and consumer demand for electric vehicles than if they were to hold all of their patents close to the vest.” In other words, they would have been blind to an opportunity to ultimately increase the demand for Teslas.“To me, this is conscious capitalism at its best: refusing to choose between profits and ethics by discovering ways to enhance long-term corporate sustainability rather than caving in to pressure to increase short-term profits at the expense of corporate social responsibility.”
- This approach is similar to the strategy Tony Hsieh has used at Zappos.com, by rebuffing pressure from investors to sacrifice mission in favor of greater short-term profits. He has stayed true to the company’s long-term values and replaced board members and investors who would not support this commitment. This is the kind of mission-centered backbone that business leaders who believe in corporate ethics must develop, Gruder says.
Speaker, author, and business psychologist Dr. David Gruder (Image courtesy of DrGruder.com)
- Also on June 12, 2014, the U.S. Supreme Court opened the way for companies to enforce honest labeling practices, ruling that one company can sue another for false advertising when product labeling is believed to “mislead and trick consumers.” From Gruder’s perspective this ruling “shifts responsibility back to each industry to police itself for good behavior instead of leaving it to big government to do the dirty work. This makes it possible to start reversing a type of social irresponsibility in which businesses and consumers have relied on government agencies to enforce good behavior. He further observes that industries like his own field of psychology, which have taken proactive responsibility for self-enforcing ethical standards, have been subject to far less government regulation than, for instance, the food industry, which has had far more lax ethical standards and is therefore far more regulated by government. “When an industry is regulated by government instead of itself, corruption dramatically increases due to vastly-funded lobbying efforts to water down regulation in favor of profits over ethics,” he says. In contrast, Gruder asserts, when an industry enforces ethical profitability among its members, corruption becomes less common and less extreme. Furthermore, this breakthrough ruling by the Supreme Court could go far toward shifting government-regulated businesses back toward ethical profitability with less need for government regulation, which in turn can lead to lower taxes. And he believes that the more this shift toward industry integrity self-policing occurs the more the American public’s anti-business attitude will shift in a positive direction.
In his training with leaders and teams on the psychological skills that make integrity and collaboration profitable, Gruder concludes by noting “the age of profit over ethics is gradually giving way to the understanding that integrity creates profits.” I entirely agree.
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