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What Makes a Business “Social”?

| Friday September 25th, 2009 | 0 Comments

social-businessBy: Scott Shuffield

“Service to society, guided by well-articulated values, is not just ‘nice to do’ but an integral part of the business models for companies.” – from SuperCorp: How Vanguard Companies Create Innovation, Profits, Growth, and Social Good by Rosabeth Moss Kanter

Years ago, Sam Palmisano, CEO of IBM, told the board of directors that he wanted to invite all 400,000 IBM employees to a WebChat allowing them to discuss IBM’s values and take account of the employees’ opinions. A prominent member of the board stood up and asked, “Isn’t this socialism?” Some people might expect that reaction and even argue that such a venture isn’t acceptable, not Rosabeth Moss Kanter.

As Kanter argued during a forum held by Center for Social Value Creation (a part of the Smith School of Business at the University of Maryland), a sense of purpose beyond monetary compensation motivates people and will even increase a company’s profit. When IBM’s Palmisano asked employees to contribute to the direction of the company, it allowed them to put a stake in the business and allowed their emotions to get involved. Kanter suggested that the culture Palmisano created at IBM helped it fare better than most during the recent global financial meltdown.

But just asking employees for their input won’t suffice to inspire innovation. After asking for their input, IBM made sure to actually do the good things their employees recommended. For example, when a new plan for using idle computer power to create a supercomputer came from IBM’s research and development, the first thing IBM did was make it public (a.k.a. free!). Creating WorldCommunityGrid.org, IBM invested in a program that allows people like researchers to access a supercomputer to do advanced calculations that would take years on a single computer. It’s a really cool concept and I encourage you to check out the site.

Now to refocus a bit, I absolutely believe that doing social good not only makes sense from a community and worker satisfaction standpoint, it improves the company. When workers believe that their work is contributing to a larger goal, they are more productive and more innovative. Higher productivity plus innovation equals higher profits. Kanter’s talk emphasized the importance of a “social good” bottom line on the profit bottom line.

She referenced other companies as well. She cited Banco Real of Brazil and their values. Helping people really improve their businesses and investing in things like microfinance, Banco Real has made a difference in the community and a big impact in the banking industry.

She also spoke on Honest Tea and Seth Goldman (who spoke before her) and the integrity Goldman used to create a product that is good for people while good for profit. Though slow getting started, Honest Tea is now being distributed by Coca Cola…another example of how honesty and a mission focused on “doing good” really do make good business!

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Scott Shuffield is an undergraduate international business student at the Robert H. Smith Business School at the University of Maryland. He has worked with Prisma Microfinance Honduras and Kiva.org and is Co-President of the Global Business Society at the University of Maryland.


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