One of the most pernicious fallacies into which our business thinking is prone to fall--and this is especially true in disciplines like finance and engineering, where numbers are particularly preeminent--is the conflation of measured value and real value. It's an old truism that you cannot manage what you cannot (or do not) measure. But managers, driven by objective results, take it one step further: If we cannot (or do not) measure it, the thinking goes, then for all practical purposes we can act as if it were not real. Oh, the endless debaucheries which descend from this one, simple stupidity.
Who says you can't measure love?
If we reject this fallacy, however, we ipso facto assume the value of CSR ("Corporate Social Responsibility"), which is really just another way of saying that the bottom line isn't really the bottom line. (Although, then again, maybe it is.) There are plenty of us who believe that environmental concerns, labor issues, management practices, and other corporate habits of thought and action impact the bottom line. Many of us also see quite clearly that making lots of money in our stock portfolio isn't worth it if the costs show up elsewhere.
Where else? Well, we might, I don't know, run out of water or something. (Even soft drink company execs, who seem to view potable water as competition, must realize that water is the main ingredient in their product.) Or perhaps canned air will become the only kind of air worth breathing. (Los Angelians must love the smell of cancer in the morning.) Or we pave our "path to financial freedom" using the backs of children. Or maybe we'll get to that point where corporate boneheadocracy seems normal.
After all, who cares? We customers and shareholders don't have to pay to clean up everything up when corporate America poops in the nest. But then who does? We taxpayers do, that's who. But wait. Aren't "customers," shareholders," and "taxpayers" just different roles played by the same flesh and blood human beings? Not only that, but at the end of the fiscal year, there's really only one balance sheet. Costs that corporate America manages to externalize just end up on a different line item on our annual budget, that's all. If we don't pay them as customers or shareholders, we pay them as taxpayers or family members or landholders or what have you. Only the dense, the foolish, and the psychopathic truly believe that the corporate bottom line is their own bottom line.
Burning Beds, Inc. has posted outstanding earnings for the past three quarters, and... hey! That's my bed!
Once you assume that clean water, clean air, happy children, and sane work environments have value (anyone other than these guys want to argue that this stuff is without value?), there are two possible ways forward:
- Get creative when it comes to measurement. Instead of whining about how some things are "unmeasurable," innovate new mensuration and valuation techniques. Two interesting actors in the field of valuation innovation are Innovest and Communications Consulting Worldwide (CCW). What's this all about? Consider the following example: Say Wal-Mart's got labor troubles (no, really, imagine it); how much does that dent in their reputation cost shareholders? According to CCW, "if Wal-Mart had a reputation like that of rival Target Corp., its stock would be worth 8.4% more, adding $16 billion in market capitalization." That's a game changing assertion, shifting the debate from "Can the effects of reputation be measured (i.e., is it possible)?" to "Can we improve the methodology used in this study (i.e., how well are we doing it)?"
- Stop managing and start leading. Insanity, as AA has it, is doing the same thing over and over and expecting different results. While the methods of bureaucratic management can optimize a banal system defined by quantified data, they are poorly suited to effecting metamorphic leaps in consciousness and/or character. As a rule, our businesses don't need to "do better," they need to "do differently." Better data and better management practices cannot provide a fresh, holistic vision for the future of business--only inspired leadership can do that. Bill McDonough and the Regenesis Group are two interesting players in the field of consciousness shifting.
We did not manage our way to the moon.
While I believe that creative mensuration and valuation techniques are effective tools for advancing a CSR agenda, they are useless without the proper outlook. Only competent, inspired leadership--a coherent vision supported by capable entrepreneurship--can truly change things. The incremental approach is appropriate as a rhetorical approach (that is, as part of a strategy of persuasion), but only a true leap in consciousness and character can ever save us from ourselves.
