Business Must Do Good

By Neil Tambe
October 10, 2013

Earlier this week, I penned a post titled, "Can business do good?" which I wrote in response to a bit of disillusionment I was feeling about the profit-maximizing vibes I've felt in business school and a near radio silence about the role of business in society. To be fair, I'm only in core classes now, but it's still disappointing...at least to me.

Earlier I took the approach of being a gadfly - being critical without offering an alternative point of view. I'd like to present that alternative, more provocative point of view: businessmust do good. Not business can do good, not business should do good, but business must do good. Here's why I think so:

The Metaphor
To have a healthy body, one must eat a variety of foods, at least in the long run. Let's say you grow your own food and you need fruits, vegetables, grains, and proteins to be healthy. Say you run out of fruits in your refrigerator, and you're hungry and the store is closed. So you eat vegetables, grains, and proteins. Say you don't eat fruits for a week. You'll still probably be okay, though you like fruits. You just go about your activities and you have lots of grains and proteins. You don't worry...you just keep eating.

But say it's been several weeks. Now, unfortunately, you're starting to feel weary. You really need the nutritional value of the fruits. You start to catch more colds and generally feel malaise when walking around. But uh oh, now you're out of vegetables too. This only makes things worse and you start to feel worse whenever you get sick. Thankfully, grain is still cheap and easy to grow. Your ability to eat meat, however, is fading because you're less and less able to work hard in your garden to grow the things required to support livestock. In fact, your family tells you to stop raising and eating meat…saying you should focus on growing and eating grain.

The problem is, your body is less and less resilient the more you eat only grain. There's no telling how you'll react when you get sick. You'll probably respond very badly to ailments and will probably have to go to the hospital. Unfortunately, the hospital is expensive and it will take you a long time to pay off the bills…especially if you go back to a diet of grains after you're released.

The Metaphor, Explained
This is a metaphor for how I think society works. We consume a lot of different types of value: economic, social, civic, and spiritual (grain, vegetables, meats, and fruits, respectively). And we can subsist on one type of value, perhaps, for a long time. The consequence is that it makes our society - the living organism that it is - weak and more unable to respond to shocks.

Economic value, much like grain, is easy to grow in a variety of climates and is reasonably consistent across the globe. It provides energy. It's satisfying and makes you feel temporarily at ease. It's easy to measure and store. It doesn't spoil quickly. It fills you up.

Civic, social, and spiritual value are much like vegetables, fruits, and meats. Everyone has different preferences with those kinds of value. They are harder to classify and they decompose much more quickly. It takes getting used to them to like them. They don't always fill you up as quickly as grain, so they seem less important to eat.

But these types of value are needed, much like in the example of the farmer, to have a healthy society. We need a mix of value being created to be able to prosper, I think. To put it into the nomenclature of a 4 year old and his parents…we need to eat our vegetables, which is to say that we need to create value beyond that which is economic to have a healthy society.

Note that there's a difference between the vehicle creating value (e.g., business, government, non-profits, hybrid organizations, informal organizations, etc.) and the value that those vehicles create. For example all these types of organizations creative a mix of value (e.g., non-profits create economic, social, and civic value…as do the rest of the value creating vehicles I've mentioned). I'm concerned with the value that's created and consumed, regardless of the vehicle that creates it.

The Argument For Why Business Must Do Good
I'd contend that business is the vehicle that creates the largest amount of value in society (not necessarily the most important value…just the most). Think about how the largest companies have more assets and people associated with them than some nation states. They also make the resources of non-profits look like pennies on the dollar. This is especially true because government has become weaker in the past several decades, in no small part because of the influence of business interests. 

I'd also contend that the majority of the value that businesses create - especially in this unfortunate era of shareholder capitalism - is economic value. When it comes to civic, social, and spiritual value, businesses might even consume more than they replenish.

Because they are the greatest force in creating value of all kinds, and they are severely skewed in the type of value that they create, I'd contend that businesses must do good. Let me even reframe this notion…I contend that businesses must create economic value, but at very least also leave behind more civic, social, and spiritual value than they consume. If their net value creation leaves our stocks of value (e.g., the total amount of social, economic, civic, and spiritual value) lopsided, our society will be unhealthy.

They way I see it, in the long run if business does NOT do good, our society will collapse. Which is to say that if their net value creation doesn't preserve the balance and growth of civic, social, spiritual, and economic value, our society will collapse. As a result, I'd contend that business must do good.

The Corollary
I don't think the other value creating vehicles that exist (government, non-profits, churches, etc.) are off they hook. They ought to help in striking the balance of value that's needed. I don't implicate them here because they're proportion of value creation is smaller and they're more conscious of the balance they need to strike (in my humble opinion) than is business.

I strongly believe, also, that we are all much better off when these stocks of value are in balance because they create synergies when they interact together. In other words, when these stocks of value are in appropriate proportion, our total amount of value grows bigger and faster than it would if our stocks of value were lopsided.