Companies can do well (financially) and not do “good”, e.g., businesses that sell products that are bad for one’s health. Companies can do well and also do good, e.g., businesses that, when they are highly profitable, donate some of that profit to their communities. Or companies can do well by "doing good". These are organizations that make “doing good” a central part of their missions and business models. They do things that improve the well-being of their internal customers (employees, vendors, business partners) as well as external customers (buyers of products and services, shareholders).
There is much disagreement about the corporate value of “doing good”. Wally Bock, in his blog, describes the debate in this way:
In general, the debate about how corporations should act is composed of two groups shouting across the divide in their views. One group shouts "corporations must do good" only to be answered with "profit is good" and "corporations owe something to the community," answered by "corporations should serve their shareholders and no one else." Sigh.
However, the evidence is mounting that doing good is a competitive advantage. Companies are finding that this starts with employees. If a company treats its employees poorly, it’s not going to be able to be successful with customers, vendors, and the wider community. Treat your employees with deep caring and customers and profits will follow. The Container Store, is an example of this phenomenon. Interviews on CBS and CNBC tell the story. Kip Tindell, founder and CEO of the storage and home/office organizing store chain and featured leader on the Real Leadership Series blog, says this about his company’s attitude toward employees:
The average retailer embarrassingly enough only invests eight hours in each first-year employee and we invest 272 formal hours of training with each first-year employee.
In the following CBS News video he describes his company's key values such as “conscious capitalism”:
This kind of “doing good” inside and outside the organization, is what Michael E. Porter and Mark R. Kramer call “shared value”. They explain “shared value” in this way:
The concept of shared value can be defined as policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and economic progress.
Another organization that makes “shared value” part of its operating principles is SSM Healthcare, the St. Louis based health care system that has 22,000 employees, 5,800 physicians and nearly 3,900 volunteers. It was the first health-care recipient of the Malcolm Baldrige Award for continuous quality improvement. SSM’s mission is to deliver “exceptional patient care (clinical outcomes, safety, satisfaction), exceptional commitment (from employees and physicians), and exceptional financial performance/growth.” The organization has been recognized by Case Western Reserve University’s World Inquiry’s Innovation Bank for innovations that contribute to both societal and business benefit. In the case of SSM, the innovation is a “School at Work” program developed by Catalyst Learning Company to prepare entry-level workers for advancement and further learning. SSM attributes its success to how it treats its employees, physicians, and patients.
Maybe an organization can survive for a time (even a long time) without caring deeply for its internal and external customers, but it won’t be a satisfying environment in which to work, employee engagement will be minimal, and it will not be sustainable. Any organization, whether for-profit or nonprofit, needs to decide for itself whether its mission is doing well, doing well and doing good, or doing well by doing good.