Corporation 2.0
I tend to shudder at catchy phrases such as “internet bubble,” “web 2.0,” or “Ajaxified,” but I was unable to come up with a better term for how I have begun to visualize the next level of corporate structure than “Corporation 2.0.” This may not be a new concept, just perhaps a bit more concise and repackaged. After chewing on the moniker for a few days, and cycling through dozens of mental and sketched-out diagrams, I’ve simplified the concept down to the rather elementary doughnut diagram that follows:
Out With the Old…
The old corporate model, more or less, revolved around profit maximization. Profits at any cost, it often seemed. More mature corporations would tend to have a fairly solid corporate governance system in place, but typically lacked any kind of corporate social responsibility initiative or a formalized Code of Ethics.
In With the New…
Times are changing and there is a building consensus that corporations and their profits should be held to a higher standard. Corporation 2.0 is at the intersection of business and social responsibility. In short, as I see things, instead of simply pushing to achieve profit maximization, Corporation 2.0 combines a strong showing from each of the following disciplines to instead generate “ethical profits”:
- Business Ethics;
- Corporate Governance; and,
- Corporate Social Responsibility.
This is most likely not a startling concept to anyone that follows the noted issues, but perhaps the visual links between the three and ethical profits is helpful to view in such a manner. What the diagram strongly conveys to me is that without one of the three key pieces, the corporation will not be able to generate ethical profits–it is only through a strong showing from each of the three that ethical profits can be realized.
For instance, imagine a company with strong and consistent corporate governance, but that lacks a formal Code of Ethics. Without the code, how do employees and stakeholders evaluate ethical dilemmas? For that matter, do they have any idea what the company believes is ethical or not? Without such formal ethical guidelines, can the company truly generate ethical profits?
On the other hand, a strong showing from all three guarantees that the company is generating ethical profits. With strong corporate governance, stakeholders and employees are ensured that the proper checks and balances are in place and functioning correctly. A solid foundation of business ethics described by a formal Code of Ethics makes clear what is acceptable or not, and provides a guide for dealing with any ethical breaches. Strong corporate social responsibility initiatives ensure that the company is taking into consideration such issues as the environment, human rights, and community involvement.
I am hopeful that we will see more and more corporations moving toward the pursuit of ethical profits and I look forward to the day that I start pondering what Corporation 3.0 will look like.
TAGS: Corporation 2.0 | Business Ethics | Corporate Social Responsibility | CSR | Corporate Governance | Ethical Profits | Triple Bottom LineThis entry was posted on Saturday, September 9th, 2006 at 1:58 am and is filed under Business Ethics, Business Strategy, Corporate Governance, Corporate Social Responsibility, Social Enterprise. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.
September 22nd, 2006 at 2:51 pm
Hey Peter, I haven’t been to your blog in a while since I’ve been working more toward the end of summer and school’s starting next week. I actually enjoyed this post on how to balance the three areas of the corporation to ensure profits are being made properly and not at the expense of employees or investors. I seriously think the company I work for should take a look at your model and see that since all they care about is profits by cutting employee hours and benefits, their business is now rapidly sinking. I could go on for hours about how they treat people and then wonder why no one wants to work at 100% effort for them. I mean in OB we learned that managers need to be motivators and that’s how you will increase productivity within the workforce. In our case, all we do is destroy motivation by telling people their hours will be reduced and layoffs might be coming around every month. I don’t think that’s the right environment to have people working in because they just give up and say “why should I work hard, they’re just going to let me go anyways?”
Like I told you a while back, these things were going on a couple of years ago and now it’s gotten worse. I seriously don’t see this company existing in a few years if they keep running things the way they do and refuse to adapt to the ever changing post Wal-Mart retail business environment. Well, I’ve said my piece to my managers but they don’t seem to care and the way I see it, they will be the first ones out of jobs when all comes crumbling down. As for upper management, I just see them sitting around thinking of ways they can milk the company for as much money as possible before it goes under. I mean after the takeover (of 2006 by a real estate investment group), all of the old management team was kept in place, and keep in mind these are the same people who ran the company in the ground after Albertsons first took over in 1999. The funny part about this is that the company produces a monthly or quarterly newsletter and the recent one “showcased” the talent of 8 of our “key” management personnel in Northern California. Of the 8, 3 are currently “working” on their bachelors from the great institution named University of Phoenix. One has a bachelors from JFK University, another has a BA in Theology from Christian Life College. The final two have respectable BS degrees: on from UC Davis in Nutrition for our “nutrition specialist” and the other from CSU Dominguez Hill in Mass Communication. I guess those two are okay but the rest are unqualified for the job. Oh, and the last one has a high school diploma from a high school in Minnesota or some state in that area of the country. Like I said Peter, they won’t take my advice and my educational objective is far more superior to theirs since I’m the only one who can say I’ll have an MBA in 9 months.
I really think your model would be beneficial here but these people are only in it for themselves and don’t care about who gets hurt in the end. Sorry if my rant was a bit long but I’m sure you know remember how I felt about this situation when we were in school.
October 1st, 2006 at 12:59 pm
Paul: It’s always great to hear from you! There seem to be a fewer number of wineries around here but the next time you are out this way, let’s get together over a Guinness (and a Hefeweizen) and fix the world’s problems. And when California beckons me, I say we get Jess and JingWei together and come up with a new marketing curriculum…
I don’t think you are alone regarding your work situation, though you have a considerable amount of first-hand experience and insight about everything “nutty” that is going on there. I’ve been paying much closer attention to various business structures, specific corporations, how they are managed, and how business is being conducted, and unfortunately most seem to need a lot of help.
I know we have talked about this before, but I definitely think a huge part of the problem is the way corporations are structured and the goals our society aspires to achieve. The above structure is a great model for an individual corporation, but for a healthy majority to shift over to ethical profits, shareholders must prioritize and demand as much. Without a strong push from shareholders, there is little incentive for corporations to bother (unless they have fantastic leadership that can see the true value of making the shift…).