The Foundation for Doing Good
The Long View
Vigorous dedication to social change is not limited to liberal-thinking CEOs
I'm disturbed by the trendy, fad-like hype around the idea of using a company as a tool for social change. Not that I'm averse to the basic concept. Personally, I'm inspired by executives who openly aim to use a business as a vehicle to do more than just make money--and who do so without cynicism and with purity of spirit. But the hype has created two unfortunate and dangerous assumptions: that social-change companies must have a socially liberal agenda (moderates and conservatives need not apply) and that they avoid a disciplined focus on profit. To grasp the folly of those premises, consider Marriott and Patagonia.
On one level you'd be hard-pressed to find two companies more at odds with each other. Patagonia has its roots in 1960s California counterculture, composed of dirtbag climbers and surfers with an ethic of radical environmentalism. Maryland-based Marriott, in contrast, has Mormon roots--a blend of Utah conservatism and East Coast establishment. Comparing Patagonia's culture with Marriott's is a bit like comparing juvenile delinquents who blow off school to go surfing with a troop of clean-cut Eagle Scouts who always do their homework, make their beds, and clean their rooms.
And you'd certainly have a hard time finding two executives with less in common than J. Willard Marriott Jr. and Yvon Chouinard. Marriott dedicated himself to a workaholic life and has kept at it long after he could have retired to a life of leisure; Chouinard dedicated himself (long before he had much money) to a "fun hog" life dominated by surfing and climbing. Marriott, the consummate hands-on manager, travels 150,000 miles a year visiting hotels; Chouinard employs a unique "MBA" style of management: "Management by Absence." Marriott wears austere navy blue business suits; Chouinard wears shorts and sandals. Marriott believes that corporate growth is intrinsically good; Chouinard shares environmentalist Edward Abbey's sentiment that growth for growth's sake is the ideology of the cancer cell.
Yet, with all these differences, these two companies share two surprising and, taken together, paradoxical traits: both see the corporation as a powerful tool for social change, and both have a ferocious dedication to profit.
Patagonia's activities as an environmental activist date back to the early 1970s, when the company's equipment designers encouraged climbers to shift away from rock-scarring pitons (spikes that are driven into the stone for support). Today the company makes jackets out of recycled plastic bottles, produces clothing made exclusively from organic cotton, and donates 1% of its sales to environmental causes. It offers courses to its employees on nonviolent activism and may even spot bail for employees who get arrested as the result of their involvement with an environmental cause. Patagonia's strategy isn't just to give away money to environmental causes but to pioneer leading-edge practices of sustainable business, prove their economic viability, and persuade others to follow. Patagonia will make only a small dent by using 100% organic cotton, but it can make a big impact if it can then persuade companies like Levi Strauss and Nike to follow suit.
Marriott International Inc., more conservative by nature, doesn't see itself as a social crusader to the same degree that Patagonia does. Yet Marriott consciously uses its power as a corporation to stimulate social change. On the basis of core values that emphasize good old-fashioned hard work and individual character forged by adversity, Marriott launched its "Pathways to Independence" program, which targets welfare recipients, puts them through dozens of hours of rigorous training in preparation for the responsibilities of employment, and "graduates" them to jobs in the company. Marriott has spoken with the same level of passion about the Pathways program that Chouinard demonstrates when he talks about the environment, describing the satisfaction of seeing chronic welfare recipients rise above their plight to become productive and self-sufficient members of society.
Since 1991, Marriott has employed more than 750 people through its Pathways program, 300 of whom are still working for the company. That's a small number, to be sure, but Marriott's contribution, like Patagonia's, is being a role model and a source of inspiration. By proving that it can be done--and done profitably--both Marriott and Patagonia can influence other companies.
And that brings me to the second similarity: both companies fanatically pay attention to the basics of profit. I expected this from Marriott but not from Patagonia. Yet during a short tour of Patagonia's new surfboard start-up, Chouinard spent as much time talking about the importance and mechanics of profit as the need for social change. And as a previous CEO of Patagonia said, "The one thing I'm clear about is that Chouinard demands 10% pretax profit." Patagonia might be a social vehicle, but it runs on an economic engine. It's not a question of social good OR business profit, but social good AND business profit.
Both Patagonia and Marriott faced serious economic difficulties in the early 1990s, which temporarily tarnished their business reputation and financial strength. Marriott found itself crushed by massive debt acquired as part of a growth binge; Patagonia found itself with a multimillion-dollar cash shortfall and the need for painful layoffs when sales fell short of projections. Had the two companies continued to decline, their social agendas would have become meaningless. Would anyone pay attention to a bankrupt Patagonia? Would Marriott's Pathways program mean as much to other business leaders if the company failed to deliver consistent economic results? To be credible and viable, both companies had to return to what I call the "Genius of AND"--the idea of business strength AND social contribution.
I'm not trying to argue that you should use your company as a tool for social change; I'm pointing out that you can, regardless of your social leanings--left, right, or center. Basic social responsibility is a minimum requirement of business, in both the moral and the practical sense; social activism, in contrast, is an option, a choice. It's a choice open to all, not just to the radicals. Unfortunately, the moralistic, self-righteous, and at times hypocritical ranting of some activist companies turns off more measured and moderate executives. That's unfortunate, for the modern business organization stands as one of the most powerful tools ever invented by man. Business leaders of all persuasions and temperaments can legitimately use their companies to stimulate social change.
I don't wholly share the values of either Marriott or Patagonia (I'm a bit more liberal than Marriott and a bit too workaholic for Patagonia), but I'm inspired nonetheless by both companies. Perhaps you will elect to join them in stimulating social change; I hope you will at least consider it. But if you do, keep in mind that social consciousness should not--indeed must not--obscure the importance of disciplined management and sound business practices; indeed, it should heighten their importance. To do social good you must first and foremost perform well.
Jim Collins is the coauthor of Built to Last: Successful Habits of Visionary Companies and operates a management laboratory in Boulder, Colo.