On Sustainability

What does it mean to be a sustainable business?

I don’t mean environmentally friendly, though that’s also important.

I’m talking about sustainable growth. I’m talking about making products of value that make peoples’ lives better rather than engaging in fast fads. I’m taking about creating solid recession-proof companies and growing them organically rather than recklessly racing to some succeed-or-bust finish line on the horizon. I’m talking about companies that stakeholders, including employees, customers, and B2B relationships, can count on to be there year after year, solidly and competently filling their niche rather than over-reaching in a bid to expand into new markets and product lines.

Fundamentally, it’s a difference in perspective between creating value vs creating profit. Don’t get me wrong, profits are great and necessary, but they’re not the whole point. The shortest path to generate profit is generally to take an idea that already exists, but make it for cheaper and market it better than the competition. The shortest path to generating value is to innovate something that nobody’s doing yet, or to do an old thing in a new and improved way. If you are able to make new and useful things or provide services that fundamentally add value, then monetizing those assets should be trivial.

It’s also a difference between working for stakeholders vs shareholders. Obviously a company needs to generate profits for the owners, but maybe that shouldn’t be the end of our expectations for corporate responsibility. The focus on stakeholders includes employees, customers, suppliers, and even employees’ families and communities. A rationally self-interested sustainable company does not let its workforce sink into poverty. It doesn’t engage in behaviors that are anti-social within the community. It doesn’t drop the ball and leave suppliers holding the bag. In a nebulous, but real sense, the decisions that companies make can alter the course of the communities in which the stakeholders are involved. There’s a tragedy of the commons issue here to be sure, but in general pro-social corporate behavior should be though of as an investment in the future of the company’s relationships rather than a sunk cost on this quarter’s bottom line.

As Google used to say: Don’t be evil.