The pervasive belief that social responsibility and financial success are diametrically opposed seems more ingrained in our culture than ever. Headlines reinforce this belief, pitting industry against the government, environment and human health and well-being. The cover article in the most recent New York Times Magazine chronicles the 12 year legal battle of a West Virginia community against DuPont chemicals for their knowing disposal of hazardous wastes that contaminated local water supplies (to bring this particular issue closer to home, Issaquah was listed as one of the cities with higher than average concentrations of fluorocarbons in the water supply). The structure of the US regulatory system further strengthens the people vs. corporations sentiment.
“Under the 1976 Toxic Substances Control Act, the E.P.A. can test chemicals only when it has been provided evidence of harm. This arrangement, which largely allows chemical companies to regulate themselves, is the reason that the E.P.A. has restricted only five chemicals, out of tens of thousands on the market, in the last 40 years.”
Given the lack of tools that we have to control our own safety, and the drawn out process by which we can fight for them (12 years is a long time between the public recognition of a toxic problem and the beginnings of its resolution, of course the 30 or so years that DuPont knew about the problem raises other questions) it is hard not to feel victimized by uncontrollable profit hungry businesses.
The idea of creating shared value seems to be an oasis in this harsh climate. This thinking moves beyond zero sum capitalism into a means of doing business that results in social benefits that concurrently strengthen the bottom line. Yvon Chouinard, in his manifesto The Responsible Company: What we’ve learned from Patagonia’s first 40 Years tracks their company’s direct experience with this ethos. By creating a positive work environment and ethical products, they have found that the loyalty they have created has generated more value, and revenue, than a purely profit oriented strategy could have.
This effect is valid within companies too, as Simon Sinek demonstrates in his discussions of leadership. Citing numerous instances where companies think first about the environment they create within, the results are more creativity, resilience and profit. He argues that when a company makes its employees feel safe by not resorting to layoffs, reducing competitive promotion tactics and allowing mistakes; people are willing to commit long term to that company, even at a lower wage, and are more creative in their work resulting in solutions that generate the kind of sustainable profitability that defines the shared value approach.
As a consumer, these companies suggest that they have our interests in mind. By demonstrating that they think beyond the bottom line, I believe we are more likely to trust them, give them the benefit of the doubt, or be willing to engage them in a constructive rather than adversarial dialogue. But, I think the biggest question is how to transition from these intermittent examples of success to an economy where creating shared value is the norm. I would wager that there is even a tipping point at which enough ancillary value is created to generate a more robust economy, and therefore provide more opportunity for businesses. But to reach that point, I believe it will take two strategies: the first is regulatory and the second is emphasizing the perception that the fellow companies are operating and succeeding this way. Maybe a good topic for next week…