Shared Value vs. Don’t Be Evil

• David Weinberger
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• Michael Porter and Mark Kramer’s article in January’s HBR tries to advance our world’s shared values by arguing that doing right is the best long-term business strategy. But their argument is weakened by the very optimism that also gives it its appeal. If our interest is in building a better world, then “Don’t be evil” is a better guide than “Incorporate shared value as a key part of your business strategy.”

  But first, let’s praise Porter and Kramer. Their article puts Porter’s reputational weight behind an idea that in itself has, well, shared value. It has stirred up useful debate, and provides cover for executives making the case for doing what’s right. These are no small things and I share Porter and Kramer’s values. But…

  In 399 BCE, shortly before Socrates was executed for the crime of corrupting the youth with his heretically human views, he argued that no one knowingly does evil. For example, if you knew you were corrupting the youth of your community, you’d know that you were making your community a worse place to live. But, no one wants to live in a place that is worse than it needs to be. Thus, Socrates’ crime must have been one of ignorance, not evil — or so he pleaded.

  Porter and Kramer’s Shared Value argument subscribes to the same general principle: if businesses looked beyond quarterly profits, they’d see that dumping PCBs into the local streams (GE, I’m talking to you) will kill their workforce and a small portion of their market, as well as make them susceptible to a PR hit. They would also see that generous and effective employee health programs result in healthier profits long-term. They would see that exploiting children in far-off lands creates an unstable supply chain and hurts their future markets. The picture in each of these cases is more complex (as the article makes clear), but the essence of the Shared Value approach is there: Bad actions ultimately hurt the businesses perpetrating them. As the article says, “A business needs a successful community, not only to create demand for its products but also to provide critical public assets and a supportive environment.” If businesses understood that, they would no more corrupt their community than Socrates would have. No business knowingly does evil. Therefore, the solution is for businesses to know better.

  This is great when it works. The Shared Value article is chock-a-block with examples where it does. For example, GE’s turn toward manufacturing energy-efficient locomotives was a perfect alignment of values: The market was turning toward ecological solutions, and GE was smart enough to jump on the train early.

  But how about where it’s not so clearly win-win? What happens when sharing values requires sacrifice on the part of a business? Suppose doing the right Shared Value thing requires closing plants, raising prices, becoming less competitive, reducing profits? Should an automobile manufacturer abruptly exit a lucrative market for high-performance gas guzzlers, luxury gas guzzlers, and cheap gas guzzlers on the grounds that expensive fuel-efficient cars are better for us all? Should the cigarette companies commit corporate suicide? (Actually, I think I know the answer to that one.) If you are a gun manufacturer, what are the shared values to which you should respond, Sarah Palin’s orJames Brady’s? And what do we do about Shared Value when one of the leading makers of expensive sugar waterclaims “‘Performance with Purpose’ means delivering sustainable growth by investing in a healthier future for people and our planet. We bring that purpose to every aspect of our business”? Has anyone ever been made healthier by carbonated sugar water? What happens when an important value is not held by the community? Plenty of people still want gas-guzzlers and cheap cigarettes. What happens when pursuing a Shared Value impedes the development of long term business value? What happens when the disagreement over values is existential, not incremental?

  The optimistic, rationalist metaphysics says that when interests are understood clearly and fully, they always ultimately align. But life isn’t always win-win. I offer two pieces of evidence for this more pessimistic metaphysics:

  First is the existence of ethics and morality. We have the concept of morality because interests sometimes misalign: the right action is not always the action that most benefits you. If doing the right thing never required sacrifice, we wouldn’t need morality. Porter and Kramer’s Shared Value strategy gets you the low-hanging fruit: You now see that a generous health policy is actually good for your business, so of course you’ll go that way. But when a generous health policy actually does not also advance corporate goals but is simply the right thing to do, then businesses need a commitment to ethical behavior. “Do not be evil” is not a bad place to start, although, as Google has learned, situations are usually not quite that easy to morally parse or to follow through on.

  The second piece of evidence is that most companies haven’t adopted the Shared Values strategy that Porter and Kramer argue for. Maybe that’s not because businesses are too dumb to see the longer-term benefits Shared Value offers them. Maybe it’s because doing the right thing often requires a business to make real sacrifices.

  The Porter-Kramer article goes down smooth because it holds out the promise that corporations can support Shared Values without pain. An appeal to Shared Values skirts the hard cases, which are, alas, most of the cases. It can thus delay the moment when a business, like an individual, faces the cold realization that our own interests are not always the most important interests. For those moments we need not the comforting thought that all important values are shared, but the discipline brought by the fundamental teaching of morality: When your interests are not shared with everyone else’s, value the interests of others at least as much as your own.

  David Weinberger (self@evident.com) is a senior researcher at the Harvard Berkman Center for Internet & Society. Visit his blog at www.hyperorg.com.