Business Thought

Evaluation: Introspection | Creating the Virtuous Organization

Many of the most powerful contemporary business concepts originate from introspective processes. Businesses that do not learn, grow, adapt and change are likely to face irrelevance and obsolescence as the rapidly changing social and technological environment continues to evolve. Like people, organizations can learn. Organizations can try new things and adapt to change. Organizations can evolve not only their production processes and technologies, but also their social awareness, their impact on society, and their commitment to upholding core values. 

A virtuous organization evaluates everything. The organization that produces a product or uses a process should know the most about those products and processes. If the product or processes cause good or harm, the organization should be the first to know about these effects and the first to take action, either celebrating success or taking steps to mitigate problems. The consequences of not conducting regular and rigorous self-evaluation may cause a business to miss opportunities at best, and undercut or destroy the business at worst. 

An introspective organization takes a progressive approach, accepting that it will never reach perfection in any value area, but determining nevertheless to continue moving in a positive direction. Similar to individuals (but perhaps with more data), organizational introspection allows for an examination of sources of stress and misalignment. Introspection invites an examination of culture, an acceptance of responsibility for actions, and then moving on from mistakes by charting a new course. 

Self-evaluation can be painful, or even threatening for a business because it requires acknowledgement of fault, weaknesses, or failures. Yet, it is through this process that an organization maintains freedom to determine its own future and success by choosing to operate more aligned to signature strengths. 

Conversely, the lack of introspection in an organization can play out very loudly, as has been seen recently in some of the failings of Big Tech businesses. Many of these businesses have included “making the world a better place” as part of their brand, but have been brought under strict scrutiny for unethical practices that have been harmful to their stakeholders. Facebook hit organizational unreadiness on issues like privacy rights, content moderation, the use of data, hate speech, election interference, and cryptocurrency. The issues were so serious that the CEO was called to testify before the U.S. Congress multiple times. Lawyers for Apple, Amazon, Facebook, and Google have also been questioned by lawmakers on their particular business practices. 

A virtuous organization, in contrast, follows some key principles to ensure that they are avoiding harm and maximizing value. This includes self-regulation, involving stakeholders, measuring social impact, using mission-informed metrics, and actively responding to their findings. 

Self-regulation. A virtuous organization, instead of being held to standards of external pressure from government regulation, consumer blowback, or market pressures are first to identify the harms and benefits of its products and processes. In this way, virtuous organizations are self-regulating. Industry and government regulators will seek to enforce ethical standards and certain types of change, but virtuous organizations are ahead of regulations and go beyond what is required. They truly view their purpose as serving the customer and society, and will make necessary adjustments to their product to help their stakeholders in the long-term. 

Involving stakeholders. Virtuous organizations establish processes to assess progress on forward thinking goals in employee development, customer experience, environmental stewardship, and shareholder involvement. By actively including their stakeholders in the ongoing process of reviewing efforts, outcomes, and future expectations, the organization puts information about their mission alignment efforts into the hands of their most dedicated brand champions. 

Measuring social impact. For the virtuous organization, a regular and hard look at the metrics and accountability in place for corporate responsibility initiatives are as important as financial reports. Virtuous organizations go beyond tracking outputs and outcomes and move deeper into measuring impact. 

Using mission-informed metrics. In conducting self-evaluation, a virtuous organization judges its own performance against predetermined criteria. Businesses have very clear scorecards, most of them related to efficiency and profitability. Other measurements may be used, but often not with rigor or not at all. 

Virtuous organizations are open, even hungry, for feedback and data on all parts of their business, When a vision, mission, or value is used as the predetermined criteria for measurement and feedback, there are powerful examples of how the company and even entire industries are affected. 

Actively responding. Since virtuous organizations strive to be the first to know the negative and positive impacts of their products and services and are first to share that impact with users, this information can fuel an openness towards change, improvement, and innovation that benefits all stakeholders. Virtuous organizations are also confident enough in their own products and services to be using them internally and evaluating how they are being helped or harmed by their own product. The way a business uses information they gain from self-evaluations, through reporting and change, is an indication of their commitment to virtuous practices. 

Years ago Google, another data obsessive company that uses its own core competencies on itself, made news for creating a position for a “design ethicist.” Google’s mission statement is “to organize the world’s information and make it universally accessible and useful.” This has meant getting more people to spend more time on the internet, not less. Yet, internally, Google employees also shared the value that “great technology should improve life, not distract from it.” A manager, concerned that Google was not living this value, circulated a slide deck called “A Call to Minimize Distraction and Respect Users’ Attention.” He wrote, “Change like this can only happen top-down, from large institutions that define the standards for millions of people. We’re in a great position to do something about all this.” 

Google began to create tools and features that help consumers better understand their tech usage, disconnect when needed, and create healthier habits. Instead of telling people to use their product differently if they have a problem, companies are starting to self-evaluate and design technology in a way that cares about people first, whether the issues are mental health, loneliness, or addiction. These tech companies have reacted fairly quickly to calls for change, with products and solutions no external force would have known to ask for. 

Rigorous and honest self-evaluation with the intent to mitigate harm and maximize value is core to the activities of a virtuous organization. Through intentional self-regulation and by actively responding to the results of their self-evaluation, a virtuous organization continues to push itself toward practices that improve its own products, services, and processes to elevate society. 

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