There was an intriguing article on HBR last month, titled “Can Companies Both Do Well and Do Good?” It was based on a research that looked at the correlation between the financial performance of firms and their social & environmental performance. At the corners of a grid made of both kinds of performances on X and Y axes respectively, are Idealists (great on socio-environmental, but low on financial performance) Trendsetters, Exploiters and Laggards, in the clockwise direction. As should be expected, there are companies all over the chart, and the correlation is near zero! There were outliers, of course, but not really a pattern.
It made me think whether it was possible for the corporations we see around to do good and well. I am not talking of CSR or ad hoc sustainability projects that would temporarily bring them to a Trendsetter level, but a radical shift that would stand the test of time. We are seeing a paradigm change in the way business is done, but this era is only the beginning of that transformation. In general, the entities we see around are hard wired to maximise profit and not really to spare a thought on the social/environmental or I daresay human fallout of their activities. These are large corporations with individual personnel, processes, shareholders who are used to a certain perspective. These are systems with a single point agenda. Is it really possible to shift them without a huge investment of all kinds of resources – time, energy, money – with no guarantee that this would really benefit the firm in the long run?
So does this mean that in the medium-long term, these corporations are destined to fail as our understanding of achieving a balance between profit and being ‘good’ matures, and only those which have started/start now with a DNA that is meant to achieve this balance will do well? Or is it that as the individual and societal mindset gradually change, and as social business evolves, corporations will also be able to use that time to slowly transform themselves? I do wonder. What do you think?
until next time, become the change you want to see