Thursday, June 6, 2013

“Green” Business as a Long-Term Strategy



In the McKinsey Quarterly report, “Clouds, big data, and smart assets: Ten tech-enabled business trends to watch”, written by Jacues Bughin, Michael, Chui and James Manyika, trend number six was “Wiring for a sustainable world”. This trend covered the movement of businesses into a “green” realm and hinted at it being a business’ social responsibility to sustain the environment. The report provides examples of companies that try to reduce their environmental impact through their IT services and specifically their electricity usage. The writers suggest the usage of smart meters and other devices in order to reduce the carbon emissions of the IT sector of a business. While these are good points, I think the writers left out a key element in the article. I believe the companies are not changing their habits out of a sense of social responsibility; rather, they are doing it because it is profitable for the business and either generates or saves the company money.

Milton Friedman tackled the social responsibility of business in his article “The Social Responsibility of Business Is to Increase Its Profits”. His title sums it up pretty well. A business does not function to better society; it operates to make a profit. Yes, there are social actions that companies take on a daily basis, such as building parks in their local communities. However, these actions are not undertaken for purely philanthropic motives; they are done to increase sales. The social activities are business practices which are designed to increase the positive reputation of the corporation or get the company’s name out in general use so that its brand is recognized and becomes a household name. The social activities are done in a calculated manner in order to increase revenue. If the activities are not seen to increase revenues, they are not undertaken. Friedman went further with this argument and said that a corporation can contribute to charities of their choice, “since  they [the corporation] can in that way contribute an amount that would otherwise have been paid as corporate taxes.” (Friedman 4). This is a calculated business practice that saves the company money and provides a positive image for the company.

The point that the authors of “Clouds, big data, and smart assets: Ten tech-enabled business trends to watch” bring up about sustainability is very valid, yet not portrayed completely. The social responsibility the writers highlight in this topic misses the mark. The companies are not conducting these activities out of an altruistic goal of saving the planet. Rather, the companies are doing it out of saving or promoting their business. They are trying to sustain the business through using and sustaining their environment. Companies are trying to remain in business and the green efforts the companies are taking are towards the long term strategy of keeping the business running. The c-level officers realize that if they don’t attempt to reduce their consumption of natural resources or their impact on their environment, it won’t be around forever for the continuation of their business. They won’t have the resources they need in order to sustain their current business practices. They are taking steps now in an effort to meet the most general of all long term strategies: stay in business and continue to make money. The big take-away question is, if the green efforts were not in the best interest of a company, would the company still complete them? My answer is no.

References:
Friedman, Milton. “The Social Responsibility of Business Is to Increase Its Profits.” The New York Times Magazine. The New York Times Company. 13 Sept. 1970. Web. 6 June 2013.

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