Business Thought

Intro to The Virtuous Organization | About CVO

For centuries, a common model for achieving good in the world through business has been what essentially boils down to a two-point plan. 

Step one: generate a lot of wealth. 

Step two: donate a lot of money to social or environmental causes. 

In many ways, this has been the culmination of the American dream, the final pinnacle of success: If you are fortunate enough to have more wealth than you need, you can donate to charity. Just like Carnegie. Hughes. Gates. The beauty of this plan has been that you create social good even as you generate your wealth – as your business grows, you employ more people, which sustains livelihoods and families. The economy grows. Society benefits. Everyone wins. 

The trouble is that this ideal hasn’t really passed the American hypocrisy “sniff test.” In 2018, when Amazon founder Jeff Bezos tried to follow this time tested pathway to social good by launching his own philanthropic initiative, the public lambasted his efforts. “If Jeff Bezos wants to help low-income people,” asked The Guardian’s Marina Hyde, “why not just pay them better?” Hyde’s op-ed was one of dozens on the subject of Bezos and other corporate and philanthropic efforts that miss the mark. 

Amazon is not alone in being critiqued for missing the mark, not only in philanthropy but on the integrity of core business practices. In 2017, Uber received hit after hit of negative publicity for everything from evading to the law to sexual harrassment and discrimination. It has been estimated that the valuation of the firm dropped $10 billion dollars, or more than 15% of their total value prior to these events. 

And consumers are not the only ones raising their expectations of corporate behavior. 

Over the past decade, a new generation of workers has begun to demand more of their employers. The Millennial generation, made up of individuals born roughly between 1980 and 2000, places a higher emphasis on social impact, and they want more input in creating a socially responsible corporate culture. 

It’s no longer acceptable to make money by any means necessary only to make restitution for a lifetime of corporate sins by throwing some money (or a lot of money!) at a social cause (or several causes!). 

We demand more of American business at every level. 

We demand virtuous organizations. 

But how do we achieve this overwhelming ideal? For a moment, social entrepreneurship seemed to be the way forward, and TOMS Shoes seemed to be among the trail blazers leading the charge. Here was an organization that set out – from its very inception – to do well by doing good. Their business model included the donation of a pair of free shoes to people in developing nations for every pair sold to its primarily middle-class consumers. 

But then studies found that the flood of free goods into developing markets might actually be hindering rather than helping nascent developing economies. To their credit, TOMS changed their approach when they learned it was causing damage. And they continue to innovate in the social enterprise space. But a large component of their updated model reverts back to the two-point plan: TOMS now engages in a great deal of traditional corporate philanthropy. 

So the question hangs in the air of American commerce: If even social entrepreneurs have a hard time creating truly virtuous organizations, what hope does the rest of American business have? 

Is there a pathway that can be followed by any organization – not just nonprofits or social enterprises, but also by the tiny mom-and-pop dry cleaner on the corner and the multi-billion-dollar, multinational oil corporation? Can this same path be followed by imaginative entrepreneurs to a virtuous end?

Is it possible to create organizations that are truly, deeply, admirably good? 

We believe so. But we don’t believe that there is an “end.” We don’t think any organization will ever be virtuous enough to stop, sit back, and say “we’ve done enough.” Virtue is a path, not an endpoint. A process, not a result. A mindset, not a milestone. 

The goal of this initiative isn’t to help organizations achieve perfection. There is no such thing. In a rapidly changing, innovative, growth-mindset world, virtue is a moving target, and it’s always ahead of us. Therefore, we should always be striving to improve, constantly committing ourselves to become just a little bit better. 

What we have written is not a goal or a prescription. Rather, it is a set of principles that can be implemented by any leader with the resources and stewardship in their purview. We hope that these ideas are contagious – that they shift not just the practice of business, but the norms, processes, and systems proximal to anyone practicing the art of the virtuous organization. 

In order to develop principles that can really make a difference, we leverage current research, theory, and principles from sociology, economics, business management, nonprofit management, and public administration. It is important to point out that cases in this book are selected to highlight principles and practices, not organizations. We are not in the business of certifying organizations as “virtuous” or “not virtuous.” Rather, we provide a pathway for continuous improvement and leadership that we hope will transform the practice of business throughout the world. 

This project is designed to propel us toward a new norm for the practice of business. We believe that every organization can become an exemplar and that each organization can pursue virtue even in the face of the harsh realities of doing business in a complicated, interconnected system of profit-centered commerce. 

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