Milton Friedman famously said the corporate executive’s only responsibility was to make money for shareholders. That’s the model most corporations have followed ever since. But companies like Toms Shoes, Patagoniaand other socially-conscious “benefit corporations” are changing the game.
I mention this because a former boss of mine started just such a company, GoneReading, which supports literacy efforts in the developing world with the profits it realizes from reading-related products.
Yvon Chouinard, the founder of Patagonia said: “The modern corporation was ‘born to be bad.’ Benefit Corporations are ‘born to be good’ because their corporate purpose must include the pursuit of a material positive impact on society, not just shareholders.”
A recent New York Times editorial by Greg Smith, a former Goldman Sachs employee, caused a huge furor – and furious counterattacks – when it depicted a toxic, profit-at-all-costs culture where client service wasn’t even the point anymore. Clients were there to be milked for every dime they were worth.
So traditional capitalism is taking it on the chin in a lot of places…and more and more consumers, especially younger ones, arepassing judgment with their pocketbooks.
Most of these “conscientious capitalism” firms are niche-oriented, and consumer-directed, not B2B. But if a company is a supplierto one of these firms, it shouldn’t be surprised to find itself pressured by that customer to perform with a greater degree of social responsibility. Especially if there’s a taint of scandal or misdeed that reaches the news media. Witness what’s happened over the past few years with Apple and Foxconn.
What this means in the long run is that it may become very important to project that image of social responsibility in marketing and P.R. It may end up being an essential cost of doing business. The groundswell of public disfavor that rolled over “pink slime” producers is a striking example: their customers distanced themselves from these vendors in a heartbeat, and it’s led to plant closures.
Any B2B marketer with the remotest chance of exposure in this area needs to have a strategy that’ll reinforce their credibility about being aware of this meme, and shows they’re interested in performing good works. If you’re part of a trade group that emphasizes benefits to the community, emphasize that connection. If your employees volunteer, if you’re involved in any good cause at all, leverage the fact. A company doesn’t need to be an entirely “socially conscious corporation” to realize some of the same image and marketing benefits.