Are businesses as selfish as they seem?

President Clinton was the keynote speaker at the NAA conference last week. He posed 4 questions to the audience:

1. What is the nature of the world in the 21st century?
2. What should it be?
3. What can be done to make it so?
4. What can each of us do?

The speech was basically a call to think of what we do in light of it’s larger impact on the world.

Being that the NAA is an association of landlords, the concept of using our clout to make buildings more environmentally friendly came up. It made me realize that in 15 years as a member I’ve never heard the NAA address any environmental concerns nor, in fact, any topic that related to our impact on the world at large.

This is typical of business, and it got me wondering why? I think there are two parts to the answer.

1. Living in the Now (aka short sightedness). Business people are very focused on the immediate so they often see investment as expense. That is they look at the immediate consequenses which may be negative, and ignore the future effects which may be so positive they outweight the negatives.

2. Competition. When you have competition, doing something “because it’s right” can put you at a disadvantage cost wise. This can even put you out of business. This is true even when doing “what’s right” would pay off big time in the future. Ironically, the solution to this often involves government regulation to “level the playing field”. Yet business people often see only the short term negatives of any intervention and ignore the long term positives (see reason #1).

I think it’s time for this to change, and companies run by smart people will be able to use this to their advantage. Here are some examples:

Being Green
Is it just a coincidence that the color of the environment is the color of money (at least in the US)? The June 2006 issue of the Harvard Business Review has an article about the profits companies are realizing by building green buildings. It’s available for a limited time here.

Minimum Wage
Henry Ford made history by paying his workers $5 a day (twice the going rate). The reason? Among other things it allowed his workers to afford his cars. No business in history has survived very long without a market. As I write this, the minimum wage in America hasn’t been raised in 10 years. Real wages for most workers have remained flat during that time. Yet expenses haven’t. How much better would your bottom line be if your market had more spendable income?

A few companies are known for providing actual real living wages for even the lowest employees on their totem poles. Costco is one that’s usually cited and it’s kicking Sam’s club’s butt. Starbucks provides health care for all workers – even part timers. The Container Store pays twice the average wage for it’s retail workers and gives them 10 times as much training as the norm.

What do companies like this know that others don’t? That in this environment, providing better pay and benefits allows you to attract (and keep) the best workers. How much is that worth?

Of course to make this work, you have to manage better – not just pay better.

Don’t even get me started on Health Care
It’s ridiculous that America spends more on health care (as a percent of GDP) than any other industrial country and ranks 32nd in the health of it’s citizens. How much more profitable would you be if your employees were healthier? What if your customers were healthier? Does it really make sense that people stay in jobs they hate because they can’t get health insurance if they move? Does it make a level playing field that GM has $1500 of health care costs in every car and Toyota has $110?

Why has business been so reluctant to demand an overhaul of the system?

Oil
We knew back in the 1970’s that our dependance on oil was a problem. Jimmy Carter proposed funding research into alternative fuels. But we didn’t follow through. 30 years later we’re paying for it. And not just at the pump, we’re paying with the environment and with the power that oil money has given to countries and even terrorists who aren’t exactly friendly.

Doesn’t it make sense that American inginuity that put people on the moon, could be harnessed to solve a problem like this? And in the process we would be creating high paying jobs, and new technologies we could export to the world.

Takeaways:

• Often what I’m talking about means making a bigger pie rather than fighting for a bigger piece.
• Some changes require governmental action – that should not be anathama to serious business people – only to the short sighted ones.
• Don’t be so short sighted you eat your seed corn.

[tags]Bill Clinton, President Clinton, NAA, Oil, Environment, Minimum Wage, Business, selfish [/tags]