DOING
WELL BY DOING GOOD
by
Samuel Sewell
The American business community has, at best, a
tenuous grasp on the indisputable principle that honorable conduct is a
prerequisite for ongoing abundant profit. Benjamin Franklin understood the
benefits of enlightened and ethical business practices when he advised, “Do
well by doing good.” Throughout the history of
capitalism, many entrepreneurs have prospered through application of this
principle.
A short video featuring Harvard Business School
historian Nancy Koehn makes
the point that earlier entrepreneurs were driven by their own personal
philosophy that doing “good” for their customers, employees and the community
as a whole means that their business will do very well. Koehn gives several examples of enlightened business practices. Many thinkers from the first two hundred
years of American history have commented on the principle of high minded
businesses. For example, “Doing well is the result of doing good. That's what
capitalism is all about." - Ralph Waldo Emerson.
However, it wasn’t until the 1960s that modern
management science curriculum began to teach students that they can create
stable wealth by doing “good”. At last a
fundamental truth that guides the creation of sustainable wealth was available
to business students.
Today there is excellent data, both qualitative
and quantitative, showing that a company’s successful relationships with
people, as well as ethical business practices, are positively related to its
financial performance.
Four scholars, from divergent fields, deserve
the credit for developing the established modern principles that produce
optimal wealth.
Abraham
Maslow studied what motivated people and is particularly
remembered for his hierarchy of needs theory. (Remember the pyramid with food,
water and shelter on the bottom and self-actualization on top?) Knowing what
made people tick helped Maslow become a business management guru throughout the
’50s and ’60s trusted by the largest of corporations and considered today the
father of modern management.
In his 1965 book Maslow on Management
(originally Eupsychian Management) he writes, “The good society is one
in which virtue pays.” In other words, prosperity is the natural consequence of
“doing good.”
Douglas
McGregor, a
contemporary of Maslow’s, also known for his insights on the intersection of
human motivation and management, was a professor at the MIT Sloan School of
Management. He developed the contrasting X and Y theories of human motivation. Theory X stresses the importance of
strict supervision, external rewards and penalties; it’s all about control by
management. In contrast, Theory Y
has a profoundly more profitable influence in the motivating role of job
satisfaction by encouraging workers to approach tasks motivated by personal
satisfaction and pride in performing
competently without direct supervision.
McGregor’s book The Human Side of Enterprise
(1960) had a significant influence on the relationship between management and
employees. He pointed out, “The
ingenuity of the average worker is sufficient to outwit any system of controls
devised by management.” Like all natural systems, human behavior cannot
be controlled; however it can be managed. “Any attempt by management to enforce behavior that is contrary to
human nature is preordained to fail.” Conversely, management methods that
complement human nature are sure to provide wealth and wellbeing for all
concerned.
Peter Drucker,
also considered one of the foremost pioneers in developing management
education, training and techniques, published 39 books on the subjects that
were translated into 30 languages. For years he offered Wall Street Journal
readers insights on management. On his passing, one of the many look-back
pieces the paper published about him was headlined, “Peter Drucker’s Legacy
Includes Simple Advice: It’s all About the People.” He was “among the first to
see the limits of large industrial organizations and their authoritarian
hierarchies” and understood the importance of workers “motivated by personal
pride as much as by fear and a paycheck.”
John
Nash, as
recounted in the hit movie A Beautiful Mind, brainstormed the
beginnings of his Nobel Prize-winning Nash equilibrium theory while at a bar. He and his buddies were evaluating
their romantic prospects with ladies at the establishment when the four friends
began to compete for the beautiful blonde in a group of five women. “If we all go for the blonde,” Nash
says, “we block each other; not a
single one of us is going to get her […] and we insult the other girls. But,
what if no one goes for the blonde? We don’t get in each other’s way, and we
don’t insult the other girls. It’s the only way to win. […] The best result
comes from everyone in the room doing what’s best for himself and for
the group.”
The two most important conclusions gleaned from
John Nash’s equations are (1) More
profit is created through cooperation than through competition. And (2) nice
guys finish first.
One can hardly complete a college-level
business course without exploring the differences between the X Theory and Y
Theory of management or climbing Maslow’s ladder of human needs from staying
alive to becoming fulfilled. These classes, however, do not provide adequate
familiarization with modern management science, nor do they really explain
Maslow in relationship to management.
Most courses fail to adequately convey the idea
that profits are maximized when respect for the human side of enterprise is emphasized. Or if those notions are
imparted, students approach them the same way I did with algebra: I did
whatever math was necessary to graduate and have never worked another algebra
problem for the rest of my life. Likewise, these principles of “doing good” in
business rarely make it beyond the classroom.
Because of intellectual competition and academic hubris, the
contributions of the leaders of modern marketing and management science
are rarely available in a single source, no matter what college
you attend.
Nevertheless, a small group of today’s
upper-echelon management professionals are applying eupsychian management
principles. For instance General Motors
and Ford recently announced they are cooperating in the manufacture of high
performance sport cars that will have the same transmissions installed rather
than separately designed and manufactured parts. Maslow and crew would be pleased!
I hope this helps remind business people of
their college days, and encourages them to use proven profit enhancement
principles based on “good guys finish first.”
BIO - In the 1970s Sam
Sewell served on the faculty of Sterling College where he researched and
created the Marketing and Management Science Curriculum. Sam guided the core
curriculum through the federal accreditation process based on scientific
management principles. He now provides
management training for business and religious organizations.
For interviews or guest appearance requests, contact
Sam at at 239-591-4565
or http://bestselfusa.com/
