Successful organizations create and deliver value, partly through the product or service that helps them gain revenue. Additionally, a company’s core product mix is how they primarily interface with their customers, representing their primary interaction with the world. This interaction is where an organization’s impact on the world begins. In a virtuous organization, the firm’s core product mix actively avoids causing harm and ideally makes the lives and wellbeing of their consumers and communities better.
The core business of a virtuous organization actively avoids restricting any person from achieving their basic human needs or rights; rather it helps people to achieve some element of at least one human need. Consistent with the deep why approach to organizational mission, Maslow’s hierarchy of needs can be a framework for understanding the way an organization’s products and services create and deliver value to meet human needs. By understanding how a company’s product mix meets human needs, an organization can use their product mix to help people live their best lives.
In general, products are created for a positive purpose, but they can have negative side effects or be misused in ways that are harmful. Other products are believed to be good at one time, but later on the company or customers discover that the product has negative effects. For example, the many effects of products like tobacco and sugar, or technologies like cell phones and social media platforms, have been understood as negative only with the passage of time. A virtuous organization is responsible and accountable for the impact of its products, services, and processes on people and the world. If a product or service causes harm, the company that produces it should be the first to identify the harm, publicize the harm, and respond in ways that minimize and repair damage.
Even after an organization has identified how their products and services fill human needs, they may face challenges in ensuring that their product is being used in a way that helps people reach their best lives. We have identified four ways that a virtuous organization will respond to this tension.
The first way a company can mobilize its products and services to help people live their best lives is by designing their product with a purpose mindset. Sometimes companies get caught in a product mindset – seeking to improve the features of their existing product mix – instead of a purpose mindset – which leads organizations to innovate solutions to the problem they intend to solve. Organizations who focus on their purpose will identify options that solve the consumer problem in vastly diverse ways. By adopting principles such as those taught in design thinking (prototyping multiple solutions to the same problem based on the insights of those the product is designed for), organizations can consider many paths to solve a single problem and then identify low- or no-harm solutions to introduce while still accomplishing their overall purposes.
Another strategy a virtuous organization may use to help people live their best lives is to nudge consumers to use their product mix in ways that negate unintended harm and increase the positive effects. Behavior economists Sunstein and Thaler explain the idea of “libertarian paternalism,” or respecting people’s ability to choose while nudging them in a positive direction. The heart of this idea is that organizations inherently shape the environment in which people make decisions. Without force, organizations can strive to help customers make the choice that is believed to be in their best interest. For an organization, this may lead to careful, strategic trade-offs to help consumers use their product for its “best life” use rather than for the more lucrative use.
If a virtuous organization finds that their product creates harm, they will actively seek to develop a no/low harm product to replace their original product. After find-ing a solution, they may find a way to subsidize the no/low harm product in order to encourage consumption. Companies who take this path will then find a way to scale and drive down the costs of the more virtuous option until the virtuous product meets or exceeds the profitability of the original product and replaces it in the market. In this way, they are not only promoting the use of better products, but are creating a long-term, economically viable solution for their business that will keep them ahead of competitors.
Finally, a virtuous organization will always acknowledge and be accountable to the potential risks of their product or service. Organizations that find it difficult to introduce changes that lead to better use of their product must educate their consumers on how to reduce the harm that can come from their products. Virtuous organizations will actively actively educate their customers of those risks while working to mitigate or remove them.
In designing, developing, and sharing their product mix with the world, a virtuous organization will recognize the way their products and services communicate their values and help them accomplish their mission. They will strive to deliver value to their customers to help them live their best lives.