Business Thought

Coorperate Responsibility & Integrated Goodness | Creating the Virtuous Organization

This is an exciting time for those who care about integrating their desire to improve the world with their day-to-day work life. From social enterprise to corporate responsibility, from green workplaces to diversity and inclusion, organizations are creating and sustaining social value in ways never seen before. Doing good is no longer the mandate for just nonprofits, and using sophisticated analytics and management approaches is no longer expected of only governments and corporations. The roles, definitions, and strategies of organizations across the sectors are blurring. This is particularly true when it comes to the desire to leverage organizational resources to do good. 

Corporate responsibility initiatives have become increasingly common and expected from companies around the globe, and current efforts can fall into three broad categories: philanthropy (donating time, money, product, or expertise), integration (building more equitable practices into regular business), and innovation (developing new business models that inherently address social and environmental challenges). The organizations who are best at corporate responsibility ensure their initiatives across these three segments, support and leverage one another, are effectively measured, and are unique to their organization’s assets, resources, capabilities, and mission. 

However, as organizations reach this new level of maturity in their explicit social impact and corporate responsibility initiatives, several common mistakes still plague these efforts. We’d like to address four of the most prevalent critiques. 

1. The minuses of the credits/debits approach. “If we do harm here, then do good there, it all evens out.” At its most innocent, this attitude reflects a lack of strategy in an organization. At its most pernicious, this attitude reflects a conscious attempt to misdirect the public with falsehoods about an organization’s value commitments as seen in practices like greenwashing or pinkwashing. Virtuous organizations seek to maximize value in all facets of their operations. This means working to maximize wealth and prosperity, the inherent benefits of the product or service being sold, and the good that comes from strategically related efforts like philanthropy, while simultaneously minimizing harm. 

2. The hazard of haphazard giving. This refers to the lack of systematic care in the use of funds and other resources toward social or environmental causes. Why donate a dollar when giving an aligned dollar could easily triple the impact of the social investment? Organizations can create the greatest good by leveraging their proprietary mission, capabilities, talent, and other assets to make a unique, strategic contribution in an area that aligns with their expertise, industry, and values. 

3. The problem with doing well by doing good. While well intentioned, emphasizing the primacy of financial outcomes as the rationale for corporate responsibility can actually be counterproductive. Instead, for virtuous organizations, the rationale for doing good is integrated with the case for every other activity carried out by the organization. 

4. The ignorance of the “we know best” approach. Rather than assuming they can do it best, virtuous organizations focused on mission fulfillment partner with organizations that deeply understand the roots of social and environmental issues and choose to employ approaches to corporate responsibility that uphold the dignity and wisdom of the communities they serve. 

Virtuous corporate responsibility rests on two foundational principles of strategic alignment (using unique strengths, capabilities, assets, and mission to elevate society through a social mission) and value maximization (multiple objectives for multiple groups is simultaneously achieved). The implementation of these principles together often divides virtuous organizations from organizations that engage in current corporate responsibility.

Virtuous organizations inextricably weave their prosocial intentions and practices throughout their systems, rather than building a corporate responsibility program that may be a loose appendage to the mission, core product, and stakeholders of an organization. 

This perspective is derived from the internalization of the virtuous organization mandate to deliver value to multiple groups of stakeholders, recognizing that their responsibility and opportunity goes beyond simply enriching shareholders. This value maximization philosophy enables organizations to solve some of the world’s toughest challenges, by seeking to maximize both financial and social value for all their stakeholders. 

The roadmap, then, for developing more virtuous corporate responsibility includes choosing initiatives that strategically align the organization’s mission, vision, and values with an important social and/or environmental challenge. Once this congruence is in place, initiatives are designed in partnership with the people they are meant to serve and by defining a clear theory of change. As with the most critical parts of business, these programs have metrics that are developed and deployed to track performance and impact. Rather than considering corporate responsibility as a separate function of the organization, virtuous organizations consider the creation of social value to be an integral part of their strategy. 

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