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Business as a socially positive entity

14:42 / 01.06.06

Bit of disclosure before I get started:
I've recently been working on a(nother) startup. Mostly it's as a hobby to cope with the unpleasentness in day to day work, but I've got an idea that might go somewhere. It's to do with selling houses in a way that's not nearly as fraught as the current process, where no-one is taken advantage of, or loses out, through the web. I wasn't sure if this was more appropriate for the Headshop, really, but I'm not such a regular reader/poster there.

Is it naive to assume that it's possible to run a business in accordance with well, any principles at all? Does working for profit nessecitate a kind of cod-Darwinian, Gordon Gekko, macho business environment? I'd really like to think that if you set out to ensure that every transaction leaves everyone in the chain (person buying, person selling, employees, suppliers, the business itself) up on the deal, you can acheive something less grubby than the conventional corporate world. When you come into competition against other companies that don't have the same basis it seems to me that have a huge advantage. Is there a way to cope with competition that doesn't simply work by being willing to behave worse that anyone else?

Obviously funds generated from business can be used philanthropically but that can't make good damage done by an organisation that hurts people while it made that money. I went to a univeristy (for a bit, anyway) that was funded on tobacco money, a trade not famed for it's socially positive effects. I can't say I was entirely comfortable with that situation, as using facilities bought with that money seems to be tacitly condoning the methods it was obtained with.

Have any of you had experiences with socially positive companies? Have you worked for one, and was it all the fun it sounds?

17:42 / 01.06.06

it's possible, but I think you have to assume from the getgo that you're not really going to be able to compete against some of the bigger businesses because of the limitations you put on yourself. of course, you can always use your socially concious stance as a way to advertise to people who share your ideals.

I think housing might not be the easiest business to do this in, however, because it's a very cuthroat business and the stakes are very high

as for examples: take a look at Canadian record label Constellation Records (home of Godspeed You! Black Emperor)
this interview gives a pretty good idea of their business practices

18:04 / 01.06.06

I don't know much about business or economics, but I do own a small business. I think it's definitely possible to run an ethical and socially responsible business. My perception is that where most companies turn 'evil' is in going public. When you have shareholders it's no longer enough to break even or make a modest profit. You must always be making more and more and more every year, boosting your profits and cutting your costs, and invariably someone gets screwed over in that process.

18:08 / 01.06.06

The problem I have with business models is the notion that all business must be for profit. Now, of course, a business that continually operates at a loss wouldn't last long (unless it's Amazon), but I think that the Western notion of continuous growth is cancerous.

Now, admittedly, my notions of the finer points of macroeconomics are a bit hazy, but it seems to me that when a company goes public, money that could be spent investing in human capital (Workers) gets diverted in order to satisfy the whims of the Board of Directors and stockholders (Parasites). Suddenly maintaining growth and profit is the sum total of the company's focus. When profits are down, do the stockholders tighten their belts and soldier on? No, they let 5,000 workers go. When profits pick back up do those 5,000 get rehired? Sometimes yes, but seemingly more often the stockholders enjoy a windfall dividend.

A friend of mine operates a non-profit business with a staff of about 10 people and 20 more volunteers. He's primary objective is to pay rent on his facility and pay the paid staff. His organization is, on the face of it, a recycling center, but the real service it provides is giving jobs to the community. When he has more money he hires more staff. I have to wonder what the U.S. auto manufacturers* would look like right now if they operated under this principle.

*Tangental rant - the common complaint about GM from economists is that $5000 of the sticker price of a GM car goes to paying the comprehensive health coverage and pension benefits of GM employees. When I herad this I started seriously considering buying a(nother) GM auto. Imagine how much cheaper a GM would be if the stockholder's dividends and the Board of Directors' and CEO's salaries weren't included in the sticker price?

18:10 / 01.06.06

Also, sorry for the double post, but I should have mentioned the Domini Social Index. Domini's an investment firm that aims only to use socially responsible companies - of course how well they do at that is debatable but it's a great idea.

19:24 / 01.06.06

Douglas Rushkoff wrote some stuff on this a while back in this “Business is Good” article , which I found interesting.

Paraphrasing bits of it, he says that most businesses start with a primary objective being a passion for making or doing something – making shoes or whatever – which contributes something worthwhile to the community. Sooner or later they sell out though – and in the stock market-driven world, people feel compelled to focus on profit. This is often at the expense of what they do best, or of being socially conscious. Companies maybe compromise their success as well. A prime example is the way the US media has pretty much followed the right-wing line of Fox News, in a bid to recapture viewers. What’s ended up happening is that there is now no real choice of news sources in the US, so lots of people simply go to places like the BBC and the Guardian. So these media players have also lost out.

Companies should focus on a more inspiring goal than profit, he says – they might be more likely to succeed if they do. Sounds lovely – just can’t think of too many big companies that do (I can’t see any company names listed on your Domino site, ibis). And recent google shenanigans obviously confirm it’s a difficult mission to stick to once you go public.

19:59 / 01.06.06

Here's a page on the Domini site that discusses which companies they've had shareholder resolutions about (to? for? I'm a little tired). One of the things I like about Domini is that rather than just being a sort of superficial salve to the investor's conscience, they get involved by encouraging (pressuring in some cases?) companies to make real improvements in specified areas. ...If you go into their annual & semi-annual reports you can see lists of the companies they invest in (in PDF form). I wouldn't read them as a list of ethical or model companies, though, because to be honest it looks like almost everyone is on there, including Disney, Starbucks, McDonalds, blah de blah.

09:12 / 02.06.06

Thank you everyone who's replied, it's really heartening to hear that it can be done. That Douglas Rushkoff article seems particularly useful in a practical sense. It confirms to me that work has to be about what you love to do, and the moment it becomes more about money is where you begin to lose your grip. I think that's something to live by generally, in fact.

TeN - I wanted to go into housing precisely because it's such a cutthroat business. It seems a market where the majority of people get taken advantage of, and there are whole sections of society excluded for numerous reasons. I suppose what I've been trying to find out, in a round-about way, is if it's possible to maintain a socially positive outlook in such a situation.

Ibis - I suppose going public is really "selling out", in the most literal sense. It's rather hard to consider getting to that stage when I've not even registered the company yet, but it could happen. The Domini stuff is really interesting, too. It's a good demonstration that the situation isn't clear cut, and the voice of normal shareholders isn't always what business analysts assume it be.

It seems to me (and not being an economist I could be completely wrong) that being a company that's good for society yet is productive is good for the economy as a whole. I was interested to read about the broken window fallacy, and that got me thinking that some companies, even though they may make a profit, are essentially bad for society by doing more damage than the value of what the produce (even ignoring the personal costs to those involved with dealing with such a company).

13:21 / 02.06.06

Property Broker is pretty good no-nonsense no estate agents website for London. Is this the sort of thing you hadd in mind?

12:41 / 04.06.06

That's very similar to what I had in mind, except I was hoping I'd be able to do it for nothing more than a nominal fee to authenticate people against their credit card details (so you could make sure estate agents didn't try using it for cheap advertising) and making do with any commission on mortgages/surveys/removals that people decided (or not) to take.

It's good to see other people are thinking similar thoughts, too!