The Hellstrom Enterprise Chronicle

Talking about business ethics is like drinking bourbon. It starts out as a conversational lubricant and can lead to interesting exchanges of ideas. But if you keep going, mostly you’ll end up just shooting your mouth off, without saying anything at all interesting and possibly getting into a pointless fight.

So I’m returning to the subject with some trepidation. Nonetheless, a point raised by a number of correspondents in response to “Development team ethics, Part I — The Abyss,” deserves attention. So pour another shot and settle back.

The article pointed out that publicly held corporations aren’t just human beings only bigger. In particular, corporations, unlike human beings, aren’t presumptively moral … they are, instead, presumptively amoral. It’s a point required by the shareholder-value theory of the corporation, which insists that maximizing the return on shareholder investments is the measure of “good” for the enterprise.

“So how,” my correspondents asked, “do you explain corporate philanthropy?”

Great question, which as every KJR subscriber knows is ManagementSpeak for “I don’t have a great answer,” (you can decide in a few minutes if you think I have an acceptable one). It is, in any event, a point that deserves exploration because understanding how this can happen illuminates important dimensions of corporate decision-making.

Let’s start with an unexpected box office hit from back in 1971 — The Hellstrom Chronicle. It introduced audiences to the notion that a colony of social insects is best understood as single organism that comes in the form of thousands of individual bodies.

This perspective is neither more right nor more wrong than the lots-of-critters perspective. It’s complementary — lots of important research has been conducted on the behavior and neurophysiology of individual bees, ants, and termites, as well as on the behavior of colonies as single entities.

Publicly held corporations have important parallels to social insect colonies (You! The one making a snide comment about corporations turning everyone into faceless drones! Take a time-out, if for no other reason than that you don’t understand that drones don’t do any of the colony’s work and are the ones who are different from each other.)

Sorry … where was I. Oh, yes. Parallels. Like social insect colonies, corporations have emergent properties … behaviors best explained by treating them as whole organisms. They have other properties that are better explained by describing them as collections of individual human beings acting as an independent agents.

Understanding when each model is applicable can be quite useful in your role as business leader, wanting to set direction instead of being helplessly dragged along by the corporation as creature.

And so, as a dreadfully oversimplified generality, here’s how it works:

Business leaders have two different kinds of conversation about what the business should do. One starts with shareholder value and how to maximize it, or some other formulation built around what’s good for the company. Examples: “What can we do to: Sell more product, increase marketshare, increase mindshare, increase walletshare, increase revenue, cut costs, increase profits?” and so on. When these are the questions being asked, the corporation is behaving as a single entity and its employees at all levels are best viewed as components of that entity.

The other kind of conversation starts with someone … usually, someone in a position of influence (part of the central nervous system if we want to push the metaphor) … deciding something (perhaps a cause or philanthropic effort, but also possibly a dicey but intriguing pet project) is important to them personally. Then they ask how they can direct some of the company’s resources to support it.

The dynamics of what follows is fascinating in that in one way or another it involves changing decision-makers’ perspective as to their relationship with the company, from being its agents (and therefore responsible for its well-being) to its influencers (where the corporation is something to manipulate for their purposes). Planning has to do with who will have to say yes, what their philanthropic impulses are, and … and this is crucial … how the good works will help the company’s brand, image, and promotional efforts.

In other words, how to help the company’s decision-makers rationalize the decision in the context of the corporation-as-organism perspective.

It’s a sad fact that while human beings invented the corporation, most of us, most of the time, act as its servants.

Understanding how corporate philanthropy happens can help us shift the balance just a bit, so that occasionally we can be in charge of our creations instead.

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For this week’s great quotation, click here.