While lots of corporations pursue profits with a Gordon Gekko-like focus, many thriving Northwest companies also include social and environmental responsibility when calculating their bottom line. Such mission-driven companies face special challenges and ethical questions when trying to do both the right thing and the profitable thing. Some of the issues facing growing green enterprises are examined in this excerpt from Companies on a Mission: Entrepreneurial Strategies for Growing Sustainably, Responsibly, and Profitably (Stanford University Press, 2010) by Michael Russo, the Charles H. Lundquist Professor of Sustainable Management and management department head in the UO's Lundquist College of Business.
Although it can be traced to the popular press, the idea of groupthink was more fully developed by psychologist Irving L. Janis. He defined it as “a mode of thinking that people engage in when they are deeply involved in a cohesive in-group, when the members’ strivings for unanimity override their motivation to realistically appraise alternative courses of action.” Groupthink has often been identified with public policy decisions, particularly poor ones. Among its characteristics are a tendency to discredit and stereotype dissenters, an illusion of moral superiority, and pressure for conformity within the group. Disloyalty is met with disdain.
On occasion, mission-driven companies and even groups of those companies have fallen into these tendencies. This is sometimes manifested in difficulty with criticism. For example, groupthink may have retarded efforts within the community of mission-driven companies to be self-critical when confronted with evidence that some companies were saying one thing and doing another. But groupthink is also manifested in how the movement chooses to identify, celebrate, and reward some of its heroes.
The Moskowitz Prize for Socially Responsible Investing was established in 1996 to recognize quantitative academic research on socially responsible investing. During its first several years, the studies that won the award demonstrated positive associations between responsible practices and financial performance. But in 1999, the award went to three finance scholars who demonstrated that legislative and shareholder pressure for voluntary disinvestments in South Africa during the apartheid years had little effect on banks and corporations doing business there. Although the winners heard no criticism when they received the award, behind the scenes a number of practitioners were angered by the choice. For them, the study challenged “beliefs that were central to their identities,” according to Lloyd Kurtz, one of the leading figures in the social investment movement and the longtime administrator of the award. Apparently, there are still some lingering misgivings about some of the award winners for this research. The website of investment advisors, Invested Interests, lists all the Moskowitz Prize winners along with links to each paper. All the winners appear—except for the 1999 winner, which is conspicuously missing...
Groupthink blocks therapeutic dialogue that pushes mission-driven companies to question their assumptions in ways that are necessary and healthy. Short of mass layoffs, to confront the pernicious effects of groupthink, managers can institute a number of policies, some of them counterintuitive and risky.
Managers can hire people with whom they agree about values but sometimes disagree when it comes to social and environmental decision-making. According to Stanford’s Robert I. Sutton, these hiring practices actually enhance creativity. Having people who genuinely feel differently about prevalent notions can dislodge the status quo in ways that promote new thinking. For example, in today’s food marketplace some companies are adamant about organic ingredients. Yet, if the only source for those ingredients is distant, it could be helpful to have an internal voice arguing for the value of local sourcing. This type of voice can at least generate some creative tension that will permit self-examination, which is essential to preventing groupthink. Naturally, it’s hard to guarantee that these interactions will happen in a context as free of anger and recrimination as possible. But, if done skillfully, these dialogues can provide a platform for introducing positive modes of disagreement and stimulating active listening.
The problem for mission-driven companies, however, is not just that their values are so deeply tied into their culture but that these values are a key part of the selling proposition in the marketplace. Asking difficult questions that unsettle these values can be seen as an attack on the basis of their own authenticity. Therefore, mission-driven companies are uniquely challenged in trying to confront groupthink and encourage—even honor—dissent. As the movement continues to develop, an open question is how they will do so.
Confusion over means and ends (or Deng Xiaoping, meet T. J. Rodgers)
In 1962, during a congress of the Communist Youth League, Deng Xiaoping delivered a line that has become a mantra: “Whether white or black, a cat is a good cat so long as it catches the rat.” The idea behind repeating this Sichuan proverb was to urge delegates to focus on the goal of economic development for China as a route to jobs and wealth creation rather than on the choice of political pathways to that end. Reviewing Deng’s oft-repeated statement suggests a second provocative issue for mission-driven firms: If the movement’s true north is to reduce social and environmental impacts of business, why not be enthusiastic about a business that contributes to social and environmental advancement, even if that isn’t mission driven?
Cypress Semiconductor CEO T. J. Rodgers certainly would qualify as a black hat to many in the mission-driven movement. No friend of environmentalists and others who confine his libertarian reflexes, Rodgers is as outspoken as he is blunt. For example, Rodgers was seated between representatives from Environmental Defense and the Competitive Enterprise Institute at a 2008 panel discussion on climate change. Likening their remarks to “two loudspeakers screaming political slogans,” he said in his typical manner that he “almost would rather have been waterboarded.”
In 1996, Rodgers first gained a degree of notoriety with the socially and environmentally oriented community when he replied to a letter from Sister Doris Gormley of the Sisters of St. Francis of Philadelphia. Sister Doris expressed disappointment in the makeup of Cypress’s board of directors, which included no women or minority members. “Get down from your high horse,” Rodgers urged in his blistering 2,800-word letter of refutation, labeling Sister Doris’s requirements “immoral.” He argued that he’d be happy to add a woman or minority to his board—so long as they brought the requisite talent for the job. Lost in the biting tone of the letter were the great many positives at Cypress identified by Rodgers, from premium salaries to excellent benefits to an award-winning charity program. The letter was quickly publicized, leading to charges that Rodgers had stooped to “nun-bashing.”
Given the ill will that this episode left behind, it is ironic that Rodgers’s SunPower, a company largely owned by Cypress Semiconductor until its spinoff in 2008, is now busy manufacturing solar cells that reduce carbon emissions and support energy independence. In the days of cheap oil, SunPower was down to its last watt when Rodgers met with its founder, Dick Swanson, a former classmate at Stanford. Rodgers’s initial personal investment, combined with later support from Cypress, sustained the company through thin years to the point where SunPower’s improving solar cell performance met rapidly growing demand for its product. SunPower’s 2008 revenues of $1.4 billion make it one of the largest solar energy players in a market bustling with high flyers. Although it depends on what electricity sources the company’s cells displace, it’s safe to say that the reduction in carbon emissions from SunPower’s cells has been considerable.
So, should we celebrate T. J. Rodgers’s solar energy success story or second-guess his business methods?