Spectrum Of Organizing Value Creation
--Nipun Mehta
3 minute read
May 28, 2011


Recently, Rushabh recently pondered if companies should just distribute their "social responsibility" donation through their employees.  When he asked for my inputs, I wrote ...

If you're looking at value creation, it probably helps to consider the whole spectrum. 

On one end of the spectrum, ambition and greed of a businessman creates a successful business; this will inevitably externalize costs and create ill-will; subsequently, you make donations to offset that.  Starbucks destroyed mom-and-pop stores and then gave $100K awards to community heroes to win back their support.  Mark Zuckerburg gave $100M the week before 'Social Network' came out to offset some of the negative PR.  This is very common.

Somewhere in the middle of the spectrum, a successful businessman feels content and genuinely wants to give back.  Yet, this giving back comes with a certain arrogance of how to give back.  Bill Gates is a good example; he became the world's richest man within a context of capitalism, so when he wanted to give back, he insisted on using this approach in his development work in Africa; at the World Economic Forum, though, he publicly admitted that his kind of capitalism doesn't work in the real world. :)  His success in the business world apparently justified his arrogance.
Farther along the spectrum is someone who leverages business mechanisms to generate value for the world, and wants the excess value to ripple out from there itself.  Companies who spend a lot of money in building a company culture, keeping employees happy, or have high standards of ethics, operate from this space.  When Malden Mills burned down in 1995, company owner continued to pay his thousands of idled workers for six months and keep them insured.  He wasn't legally obliged to do it, but he did.  And he consciously went bankrupt because of it.
One more hop along the spectrum is the new branch of social entrepreneurship.  These folks, mostly youngsters now-a-days, want to apply business best practices to deliver solutions for social problems, like providing light to rural populations of India.  Their work is their philanthropy.  If you consider the work of Aravind Eye Hospital, they have given eye-sight to over a million people over the last several decades in this way.  Dr. V., the founder, never even took a salary opting to live very simply from his pension.
Towards the other end of the spectrum, there are folks who don't think many problems cannot be solved by market methodologies; issues where costs are concentrated but benefits are diffused (think Smile Cards); or issues like shifting culture (think Japan, where there was no looting post Tsunami) which have a very long-term horizon.  These folks mostly go on to start nonprofit organizations.
On the tail end of the spectrum, there are one or two people :) who are able to engage in effortless action.  They are extremely process driven, to the point that every part of the process is the outcome for them.  Ripple effect is the only way to organize here.  Their time horizon is hundreds of generations, so short-term thinking makes zero sense to them.  Think Raman Maharshi, who practically just sat there for his whole life. Masonobu Fukuoka applied this to a "do nothing" farming approach.  Gandhi experimented with this approach in social change; he once interrupted a meeting with top diplomats to take care of a bleeding goat; most of the time, when people thought he was strategizing, he was just in "prayer" awaiting for solution to arise effortlessly.
Along this whole spectrum, of course, you'll have all kinds of confused approaches where the head is in one place and the heart is in another; or the mouth is advocating one approach but your head and heart are elsewhere.  One can also make an argument that you can use different approaches to solve different problems.  CharityFocus, however, is biased towards the tail end for all solutions. :)

Posted by Nipun Mehta on May 28, 2011