Organizational purpose is why a business exists. But a virtuous organization’s mission expands at the purpose of a business well beyond producing products or generating profits. Virtuous organizations address the most essential and enduring human needs. By identifying and aligning to a deep purpose, a virtuous organization is able to elevate society.
A virtuous organization’s mission reflects and enlarges the most core values and purpose of a business as it simultaneously allows and encourages individuals to pursue their values. When people are empowered to express their values, including as stakeholders in business, society will be elevated.
The deep purpose of an organization is caught and communicated in vision, mission, and value statements. When an organization clearly communicates their purpose and aligns their activities to it, employees, shareholders, and consumers become increasingly committed to and engaged in the success of the organization.
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.
Since Milton Friedman’s assertion that the social responsibility of business is to make profit and distribute it to shareholders, several streams of research have examined various roles for the positive impact of business in society. Corporate responsibility research has examined the obligations of business to its various stakeholders, the study of social enterprise has explored the role of organizations with prosocial missions, and still other scholars have examined the shared value proposition that business can create shared value for multiple stakeholders.
However, all of these approaches presume Milton Friedman’s assertion that positive social impact within a business must come at the expense of the business’ core operations. This paper questions that premise, suggesting instead that business has the potential to create positive social value in eight specific ways even in the absence of a prosocial mission, corporate responsibility activities, or public-private partnerships.
By maximizing these eight core prosocial roles of business in society, we argue, business as an institution can maximize its positive social impact and realize its potential as a stabilizing force in global society.
Alyssa Clark set out to study the relationship between justice, business ethics and Virtuous Organizations. Her report contains case studies, discussions and resources to explore this fascinating topic.
Andrew Carnegie is known for being both a monopolist and a philanthropist. He was a steel-industry giant who wrote that the rich have “a moral obligation to distribute [their money] in ways that promote the welfare and happiness of the common man.” At the end of his life, he gave away billions of dollars worth of money to build libraries, donate organs to churches, endow research organizations, and build Carnegie Hall.
His contributions are admirable and many have been long lasting. Yet, in a simple criticism, one of his overworked and underpaid workers quipped, “After working 12 hours, how can a man go to a library?”
Carnegie, like many other wealthy entrepreneurs, followed a two-stage model for achieving good in the world through business: first, gain wealth; second, use that wealth to improve the general welfare of society. The paradox of this model is that many entrepreneurs miss opportunities to achieve good by waiting until they have become wealthy to make donations, rather than embedding pathways for generating social good into their business.
Carnegie’s model of first generating wealth and then donating to social causes has carried on as a dominant strategy for creating social value through business and was reinforced by a 1970 opinion piece in the New York Times Magazine by economist Milton Friedman. He famously wrote: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
Milton Friedman’s theory of shareholder primacy and the drive to maximize profit without considering social welfare has seeped into the norms of today’s business world. Yet, the assumptions upon which his theory is founded, the implications of it in practice, are being questioned and tested in today’s society.
For example, 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.
To many consumers and employees, this model of postponing social good feels somewhere between confusing, unsettling, and wrong. What good is a philanthropist that fails to adequately care for his or her employees along the way? Why wait?
After a many-years build up, the winds are shifting. Both consumers and employees – key business stakeholders – have realized the power the business has to both generate and destroy social value – not after wealth has been created, but now.
These stakeholders are impatiently expecting business to change and adapt, and in order to stay relevant and competitive, businesses must respond accordingly.
The brilliance of this shift is the recognition that businesses can create social value through more than just corporate philanthropy and give-back programs – they can embed it into every element and practice of their business from employee pay and benefits to supply chain management and marketing.
There is no doubt that Andrew Carnegie’s social impact extends well beyond his philanthropic donations. His innovation in the steel industry literally revolutionized travel and transportation of goods as it paved the way for cross-national railways, as one example. Yet, in his effort to prioritize profit, he missed the mark of creating added social value by simply paying his employees a fair wage – riddling his successes with union strikes and brutal responses.
In light of the current shift in conversation, businesses have never been better positioned to assertively center their focus on social value creation as part of their core mission and operations.
Each cohort of the Creating Virtuous Organizations Initiative builds upon the theory already laid down by previous cohorts. This “Librito” is the most current synthesis of the theory to date.
This represents hours of collaboration, thinking, writing and testing by the 4 previous cohorts.
In this Librito you’ll find the principles that make up the Virtuous Organization, along the theory, ideas and practices we’ve developed along the way.
Alyssa Clark set out to identify the Marriott School of Business’ unique school of thought and present those findings to Dean Madrian.
Through interviews and surveys, she concluded that The Marriott School can bring a unique and influential voice to conversations on the purpose of business throughout the world and especially in our Utah community. Understanding, defining, and communicating the Marriott School’s unique school of thought will be a helpful step in moving that conversation forward.
The purpose of this proposal is to request that the Virtuous Organizations Initiative, housed within BYU Marriott, be granted a Learn-Do-Become designation. This proposal will describe the motivation for the Virtuous Organizations Initiative, its content and methodology, and describe why it is a strong candidate for the Learn-Do-Become designation.
Background: The Evolution of the Roles and Responsibilities of Business
At a conference in December 2019, Dean Madrian said, “it is both timely and important to reevaluate the roles and responsibilities of business in society.” As markets have grown and developed over time, the function of business in society has evolved. With recent movements focused on building businesses with purpose, the corporate world has entered into a new phase of values-driven development. This message was amplified by the Business Roundtable’s August 2019 revised Statement on the Purpose of the Corporation which moved away from a shareholder primacy model toward a consideration of all stakeholders. In this statement, they declared their commitment to customers, employees, suppliers, their communities, and shareholders. The creation of social value through corporations has taken center-stage in the current conversation around the purpose and sustainability of business.
Because of this shift in the business landscape, a demand for principles and practices in virtuous organizational strategy has emerged. The Virtuous Organizations Initiative at BYU is an outward-facing, student-centered approach to meeting this demand. By focusing on both problem-based and project-based learning activities, the initiative meets learning objectives that center on the potential social benefit of business activities and provides knowledge, consulting, networking experiences, and other deliverables to outside entities.
The Virtuous Organizations Initiative In Brief
The Virtuous Organizations Initiative builds on an already rich set of experiential opportunities within BYU Marriott, with multiple active pedagogies that include outward-facing, project-based learning. The initiative includes paid student staff (who help to manage both the class and the research endeavors of the initiative) and problem-based learning (in a think tank type environment) with an element of external-facing project-based learning through contractual, consultative work similar to other Learn-Do-Become initiatives at BYU Marriott.
The Virtuous Organizations Initiative uses a co-creative teaching pedagogy in which the students and instructor co-design the course at the outset of each new semester. Following an onboarding period (during which students are oriented to the purpose of the initiative, past student work, and the state of knowledge and ideation within the initiative), the students and instructor collaborate on the design of a problem-based contribution to be made by the cohort. In all cases, as a requirement, this problem-based contribution must include an outward-facing component that involves outside stakeholders (generally business leaders). In some cases, this has included contractual project-based work with community partners. We anticipate an increasingly ambitious and diverse set of projects as the initiative continues, including those that may ultimately include fee-based work, services, or products for stakeholders outside the university.
In a deep mentoring environment, paid student staff in the Virtuous Organizations Initiative have functioned as project managers, research assistants with direct faculty mentorship, and teaching assistants to help supervise and train students enrolled in the course. These students have coordinated independent and collective efforts to explore new research avenues and connect the thought and conversations directly to practitioners through events, gatherings, presentations, and individual interviews.
The initiative has also hosted four cohorts of students enrolled in the Creating the Virtuous Organization course over the last two years. The immersive co-creative methodology uses a flat organizational structure within an experientially designed class to maximize the skills, talents, and curiosities of each student. Each semester, we, as instructors and students, co-design the interaction we want to have with the world of practice, as we identify what we want to learn, and the new thought we want to create and bring to the world. The ambiguity and cross-disciplinary nature of the course and corresponding projects has promoted unique creativity from students and instructors. This methodology, intentionally designed as an inspiring learning initiative, has led to hands-on and directly applied projects. As a result, so far our cohorts have produced the following:
Fall 2018 | The pilot class, consisting of MPA and MBA students, worked to identify and articulate nine core principles of a virtuous organization that ultimately served as chapters for a book draft. These chapters were written by the students and then distributed to 50 social impact thought leaders, from companies like Goldman Sachs, Cotopaxi, OC Tanner, Rakuten, and Google Fiber. These practitioners then came to campus for a half day event, where they were able to directly ask questions and give feedback to the students about the content of their chapters and real-world implementation.
Winter 2019 | This second class, a mix of graduate and undergraduate students, consisted of a lecture series and a lab. The lecture series was co-led by Drs. Eva WItesman and David Kryscynski drawing from their respective expertise in evidence-based innovation and business strategy. The class used the lab time to refine understanding of key definitions and then used those definitions to conduct and code interviews with more than 50 local companies regarding their corporate social responsibility practices, and to write analyses of 15 global companies.
Fall 2019 | The third class involved lectures led by four high profile consultants sharing how they frame their work in nonprofit, government, and corporate consulting settings. Students shaped material from those lectures into their own project-based consulting approaches, and worked with employees from three local companies representing branding, personal wellness, and software industries. The students created, developed, and tested assessment and consultation tools while providing active consultation to the partner businesses. The projects focused on internal diversity and inclusion initiatives, aligning corporate social responsibility with signature strengths, and embedding mission consciousness in marketing.
Winter 2020 | The fourth class focused on designing two convenings: one for business leaders and one for students. The first group planned a gathering of Utah leaders to have a conversation on corporations and social change, mixing in academics, business executives, social responsibility leaders, and the Virtuous Organizations team. When COVID19 changed the plans for convening, the group quickly pivoted to creating a database that tracked 600 company responses to the pandemic. The second group of students used human-centered design principles to shape a university-wide conference for future young professionals. Attendees would understand and utilize personal signature strengths to pursue careers that provide a stable income and meet broader societal meaning and purpose. This team moved the conference planning into a future conference toolkit to be utilized by others.
In addition to our major projects each semester, we used problem-centered learning approaches to develop hundreds of pages of shared work product, all of which is being moved into a website to make the content more accessible to the public. This co-creative teaching style requires deep knowledge of each student and a collective mission and vision. We push each other hard, holding one another accountable for deep exploration. It’s simultaneously a think tank, a network, and a paradigm.
The Virtuous Organizations Initiative as a Learn-Do-Become at BYU Marriott
Though the primary focus of Learn-Do-Become initiatives at BYU Marriott is project-based learning programs, as distinguished from problem-based learning, we believe that Learn-Do-Become status is appropriate for the Virtuous Organizations Initiative for a variety of reasons. These are listed, in brief, below.
Though not all Virtuous Organization cohorts engage in contractual, project-based learning, this is a common and appealing pedagogy within the initiative. Being an approved Learn-Do-Become initiative would provide the same coordination and oversight functions for its contract-based work as for other similar projects at BYU Marriott, and reduce the possibility of missteps when project-based learning is engaged.
The Virtuous Organizations Initiative has used contractual consulting work and convening/conference models to interface its work with outside stakeholders. We anticipate building on these models and ultimately may begin to charge fees for both types of work. As such, Learn-Do-Become coordination and oversight would be an efficient way to ensure we remain compliant with BYU Marriott expectations for fee-based work.
By design, all Virtuous Organization cohorts will be engaged with outside stakeholders, though much of this engagement involves problem-based (rather than project-based) learning. This deliberate outside engagement suggests that consistent branding and oversight may be beneficial in this ongoing effort.
It is our expectation that, as we continue to develop an internally consistent methodology and approach, consulting opportunities and project-based learning will increase over time. Granting Learn-Do-Become status now would anticipate this growth and allow for its proper development.
College-level accountability for outcomes of the initiative, also provides a way to celebrate positive outcomes and learn from less-than-ideal experiences.
Additionally, Learn-Do-Become status may provide some benefits to the Virtuous Organizations Initiative. These potential advantages include:
Coordination and learning in a network of other Learn-Do-Become initiative leaders.
Access to support in managing contracts and work product associated with project-based work.
Marketing and branding support for communication to all audiences.
Possible financial support of mentored student experiences.
Internal and external visibility as a recognizable, outward-facing initiative of BYU Marriott.
By becoming an official Learn-Do-Become initiative, we hope to enhance our contributions to BYU Marriott and to the world of business. In particular, we seek to deepen our positive influence on students, business partners, faculty, and the college.
We would continue to benefit students by:
Developing key workplace skills such as project management, qualitative interviewing, relationship management, innovation.
Deepening professional competencies, such as dealing with ambiguity, building trust, resilience with feedback.
Working in cross-disciplinary conversations that expand the depth and reach of our concepts and deliverables.
Create deep mentoring relationships that extend beyond the time and space of our semester-long classes.
We would enhance our positive interactions with business partners by:
Providing developmental experiences for the student team, while their capacity is built and expectations are exceeded.
Developing a more highly engaged relationship with the Marriot School, exposing possibilities for mentoring, hiring students as interns or employees, and financial contributions.
Maintaining a professional interface, including use of vetted contracts, quality checks, and professional quality outreach materials.
We would more deeply engage a broader set of faculty by:
Using their academic work as a basis for interaction with local businesses, mining it for practical application and expert insight.
Creating opportunities to teach and lead workshops with students and business professionals.
Developing a panel of businesses that can be used to gather qualitative and quantitative data in real time.
We would benefit BYU Marriott by:
Drawing businesses to campus that may potentially recruit from BYU Marriott with a Virtuous Organizations lens in mind.
Enhancing the reputation of BYU Marriott as a champion of socially responsible business practice, particularly to potential students.
Positioning BYU Marriott as highly involved in training students with not just the skills of modern business, but able to apply values uniquely expected from a school affiliated with the Church of Jesus Christ, to the benefit of a complex modern world.
Building a network of high trust relationships with deeply engaged Virtuous Organizations alumni, including those from our early cohorts who are now located in businesses such as Amazon, Boeing, Intel, and McKinsey, who want to stay involved as mentors and contributors.
Conclusion
The Virtuous Organizations Initiative works best with engaging regularly and rigorously with outside organizations. We realize that care must be taken to avoid oversaturating the same organizations with requests or conflicting work. Learn-Do-Become would help us ensure awareness within the college at the least, and ideally coordination and cooperation. Working more closely with the other Learn-Do-Become experiences to coordinate outside stakeholder engagement could help in building relationships with key mentors and organizations.
We would be excited to contribute to the development of quality metrics for partners and for students and contribute to the BYU Marriott database of external partners. We would benefit greatly from awareness of existing partners and mentors who may be particularly well-suited for our niche interest. In all cases, it would be helpful to be supported in outreach efforts, using approved college and university terms of engagement, making the best matches with stakeholders, and reporting stakeholder satisfaction to a common body.
Our commitment is to create high-quality experiences for students, impactful deliverables for outside organizations, and strong relationships at BYU Marriott. We would hope by receiving the Learn-Do-Become designation, we could elevate the work being done by the current Virtuous Organizations Initiative by both utilizing and contributing to the processes used within BYU Marriott for project-based learning.
This is an in-progress outline and draft by Jill Piacitelli for a book concept.
Introduction
In 578 AD, a Korean immigrant made his way to Japan at the invitation of the royal family. Buddhism had begun to grown quickly in Japan, with the encouragement of the Monarch, Empress Suiko – a descendant of the Buddhist Soga clan. She brought in scholars and craftsmen from Korea and China as experts to support the growth. Shigemitsu Kongo was a renowned temple builder, and the royal family commissioned him to build the Shitenno-ji temple, which still stands today in Osaka.
Kongo saw an incredible opportunity. He knew he could be kept busy for decades building temples and formed his construction company Kongo Gumi. He underestimated by a few centuries – closing in 2009 over financing decisions rather than a lack of work. This business lasted 1,428 years.
Business has staying power. As long as there are organizations in the world (which there will always be – right? I mean, is even a tribe an organization that benefits from the following?), there will be a need for the basic core components of business. As long as organizations have to interact with each other and/or the public, there will be a need for marketing. As long as there are resources to account for, there will be finances and accounting. As long as there is something to be done, there will be a need for the skills of strategy and for the implementation of human capital to accomplish the organizational aims.
Getting a much later start than Kongo Gumi was the British East India Company, a company focused on trading basic commodities between England and the East Indies (the area encompassing present day Malaysia, Philippines, Singapore, and Indonesia). EIC’s official royal charter in 1600 marks the formal origin of the very construct of corporation in business. New and different to prevailing business traditional was the opportunity for certificates of ownership, or shares, to be purchased and held by members of the public. These shareholders could now buy or sell their shares to others without any effect on the existence of the company. This type of legal incorporation created a “publicly traded joint-stock corporation, an entity with rights similar to those of states and individuals, with limited liability and significant autonomy”. So, a corporation had a “legal personality” separate from the shareholders, who become only liable for the company’s debts according to what they had invested.
In the centuries to follow, the idea of corporation has been “matured, over extended, reined-in, refined, patched, updated, over-extended again, propped-up”. It’s widely acknowledged that the next fifty years will contain some seismic shifts to this business construct, with some even predicting the end to the corporation.
This turbulence in governing ideas and principles of organizations is pointed out by many scholars over the last 50 years. in dominant values have occurred in organizations over the last 50 years or so; at least four major shifts can be identified (Cameron and Quinn, 2006). The early organizational literature emphasized traditional business values such as efficiency, control, specialization, and rationality (Weber, 1947). These values were highly effective in helping organizations achieve efficient, reliable, smooth-flowing, and predictable output, especially in relatively stable environments. A turn in dominant organizational values also occurred toward market mechanisms, mainly monetary exchange. That is, the major values focused on transactions (exchanges, sales, contracts) designed to create competitive advantage. Profitability, competitiveness, bottom line results, strength in market niches, stretch targets, and secure customer bases supplemented the more traditional values (Williamson, 1975; Ouchi, 1981) and became dominant in organizations. Still later, shared values and goals, cohesion, participativeness, individuality, and a sense of we-ness began to achieve prominence. Instead of traditional rules and procedures or the competitiveness of profit centers, typical values focused on teamwork, employee involvement, and corporate commitment (Ouchi, 1981; Pascale and Athos, 1981; Lincoln et al ., 1980). Finally, the hyper-turbulent, complex, accelerating environments of the 21st century led to still another shift in values toward innovative and pioneering initiatives. Organizations and leaders emphasized developing new products and services and preparing for the future, and the major task of management became to foster entrepreneurship, creativity, adaptation, innovativeness and activity on the cutting edge (DeGraff and Lawrence, 2002; Tushman and O’Reilly, 1997).
Culture is the most mysterious, illegible and powerful force. It includes such tricky things as race, language and religion. Business, like gravity in physics, is the weakest and most legible: it can be reduced to a few basic rules and principles (comprehensible to high-school students) that govern the structure of the corporate form, and descriptive artifacts like macroeconomic indicators, microeconomic balance sheets, annual reports and stock market numbers.
But one quality makes gravity dominate at large space-time scales: gravity affects all masses and is always attractive, never repulsive. So despite its weakness, it dominates things at sufficiently large scales. I don’t want to stretch the metaphor too far, but something similar holds true of business.
On the scale of days or weeks, culture, politics and war matter a lot more in shaping our daily lives. But those forces fundamentally cancel out over longer periods. They are mostly noise, historically speaking. They don’t cause creative-destructive, unidirectional change (whether or not you think of that change as “progress” is a different matter).
Business though, as an expression of the force of unidirectional technological evolution, has a destabilizing unidirectional effect. It is technology, acting through business and Schumpeterian creative-destruction, that drives monotonic, historicist change, for good or bad. Business is the locus where the non-human force of technological change sneaks into the human sphere.
In 2008, Harvard business school professor Rosabeth Kanter proposed “The Corporate Conduct Continuum”. She laid out a sequence of values and ethics arranged to assess organizational integrity and engagement. Such models are helpful reminders of what businesses can aspire to, beyond simply profit generators for shareholders. In fact, even as s business values shift, their capabilities typically do not. It is always possible to create a company worthy of admiration. Companies have a vast range of such capabilities: to build leaders, to design easy-to-use products, to create a transformative experience, to innovate and shape industry, to generate wealth and alleviate poverty.
A virtuous organization achieves the greatest possible good through all available avenues. We want to build virtuous organizations, but balance sheets (even those with two or three bottom lines) do not automatically identify organizational virtue. Social responsibility initiatives do not erase harms and waste. Volunteer programs cannot overcome demoralizing or degrading HR practices. Philanthropy does not make up for environmental depletion and damage. Business needs to move beyond the rubric of “responsibility” into one of “virtue.”
This book will explore and debate how companies can raise their total value by maximizing 14 specific virtuous value propositions – and prepare students to critically evaluate the attributes of the organizations they observe, work for, and patronize. Student participation in this course will also contribute to ongoing research about the value of for-profit enterprises in forwarding social good. What businesses really are has never been more transparent or consequential. Emerging leaders can bring this highly relevant, but rare depth of insight and quantitative backing, to the vision and skills they bring to companies and organizations.
Chapter 1 |Introduction to Virtuous Organization and Refreshing Key Concepts
Virtuous Organization and need for the class
Overview of the 14 concepts
Quick and review of organization types, in general?
Overview of the history (and future) of the corporation?
Organizational structure of corporate giving: marketing dept, philanthropy, other biz org (pluralsight)
Basic Economic Theory (market failure, public value failure, bureaucratic failure, the effect of price and quantity on surplus and loss. IRS 501c tax code)
Ground rules for analysis (and articulation of grounding of comparison)
Teams created
Adam Smith put this keystone philosophy of capitalism into the world, the same year the United States of America was born, the keystone of democracy.
Adam Smith: Every individual… neither intends to promote the public interest, nor knows how much he is promoting it… he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. (The Wealth Of Nations, Book IV, Chapter II, p. 456, para. 9.)
Frequently the self-interested action could lead to the greater good: more innovation, better investment, more productivity, more wealth, a larger pie for everyone. (Sal Khan) Can we ensure that it just does?
Identifying our implicit mental models for why we believe/categorize organizations into good, bad, neutral.
[If this discussion is to make any sense, we need a quick primer/reminder on basic economic theory. We know that a perfect market, where supply and demand meet, is mostly theory. Here, the buyers and sellers are so numerous and well informed that monopoly is absent and market prices cannot be manipulated.]
Market failure is a situation where, in any given market, the quantity of a product demanded by consumers does not equate to the quantity supplied by suppliers. Let’s stretch to think about these for a moment. The four types of market failures typically addressed are public goods, market control, externalities, and imperfect information.
Reasons for market failure include: positive and negative externalities, environmental concerns, lack of public goods, underprovision of merit goods, overprovision of demerit goods, and abuse of monopoly power.
Market failure occurs when a market is unable to manage its resources efficiently due to the breakdown of price mechanism caused by externality or market power. A market failure results when prices cannot achieve equilibrium because of market distortions (for example, minimum wage requirements or price limits on specific goods and services) that restrict economic output.
Getting up to speed on basic economic theory (market failure, public value failure, bureaucratic failure, the effect of price and quantity on surplus and loss. IRS 501c tax code) and set some ground rules for the analysis to follow. We create teams. We identify organizations we believe to be “good,” “bad,” and “neutral,” and start thinking about our implicit mental models for why. We get a general sense for the state of social impact accounting and CR. We identify and refine the list of 14+ topics we will cover the rest of the semester.
Chapter 2 | Warm Glow
In the late 1980’s, economists began to challenge the notion of pure altruism – the belief or practice of disinterested and selfless concern for the well-being of others, with no internal or external reward for helping people. This approach to do-gooding also avoids the egoistic motivation for donation, as a boost to self-esteem as people think of themselves as self-less, socially responsible, or when others recognize their philanthropy.
James Andreoni forwarded the theory of “warm glow giving” that attempts to explain why people give to charity – less for others, and more for the positive emotional feeling they get from helping others. There is physiological evidence for the warm-glow phenomenon, as it lights up certain parts of the brain. Pete Singer, (The Most Good You Can Do) talks of effective vs emotional altruists.
[JP – So what really is the benefit for a corporation? What is the “warm glow” for corporations?]
Frame with public and new media reaction to what they did. (This is where green washing/pink washing comes in.)
[JP: See cases and find current examples.]
Chapter 3 | Value of shareholder wealth and how profit maximization creates wealth and brings countries out of poverty
Michael Fairbanks SEVEN Fund (look him up!): morality of profit, ability of bsuiness to, role of failure in innovative enterprise, relationship between private and govt and constitutents.
William Easterly (NYU)
Sir John Templeton, wealth creation was no accident of history, whether for the nations of the West or for the billions of people struggling for basic necessities in the developing world. Human societies could experience general prosperity, he believed, only when they recognized and established broad principles of freedom, competition, and personal responsibility. For him, individual freedom was the indispensable foundation of economic, social, and spiritual progress. Check out this foundation.
“We’ll be the economic leaders. The question is will we be the moral leaders?”
Role of incentives (Wells Fargo)
“If anything is sufficiently anti-social, we should do something about it.”
“I am doing the things I love with people I love.” – “I stay healthy by being happy.”
Chapter 4 | How business can benefit employees
Probably something in sociology about the stabilizing force of organizations?
Also worker satisfaction and life satisfaction links, positive organizational culture, employee development, etc. make sure this is generationally sensitive since corps don’t work like they used to.
Chapter 5 | The social value of organizations
(sense of belonging, value alignment and augmentation, work on choirs by matt baggetta, etc.)
(I would start with the fair trade movement here. and labor unions. consider things like the high cost of low prices (walmart documentary). Obviously look at things like sweat shops and international labor and these effects.
Chapter 7 | Collective Influence
(I would start with the fair trade movement here. and labor unions. consider things like the high cost of low prices (walmart documentary). Obviously look at things like sweat shops and international labor and these effects.
Chapter 8 | Markets and innovation
Maybe also some on market failures in innovation (think clean energy) and government intervention. How to incentivize innovation in all areas?
Chapter 9 | Collective Value
(the idea that teams can do things that people can’t. But not talking about collective bargaining. Just the pure value of being in a social group. Why go from an individual to an organization? those olde tyme readings are what we need here. Coase? theory of the firm? Maybe. Sociology?
Chapter 10 | How to Get Ideas or Products to More People More Quickly and efficiently
Something about the dispersion of new innovations. Clean air act. immunizations. Darron Billeter stuff. pricing strategy (economics of getting wide distribution of good things)
Chapter 11 | Sustainability and renewability of natural resources
Explore renewables and nonrenewables. cloth diapers as a case? sustainable logging?
Chapter 12 | Beneficial Waste
Look for the orgs that use biowaste and turn it to fertilizer. Look at the impact of recycling programs. sustainable fashion. impact of pollutants. plastic. carbon offsets.
Chapter 13 | Institutional Knowledge
educational institutions. libraries. patent office. the internet. watchdog groups.
Chapter 14 | Customer interaction, customer interface, and customer service
treating people with dignity and respect in social services. USAA customer service. Nordstrom. the impact of automated phone systems.
Skill (by JP) – reporting and transparency
Chapter 15 | Price setting
(living wage, low price as a differentiator, low price as a distribution mechanism, the ethics of profit margins, contract failure theory, approaches to reinvestment)
Chapter 15 | Corporate Citizenship
(tax evasion, citizens united, charitable donations, hiring local, manufacturing local, social capital, employee volunteer and giving programs, participation in the “community”)