Is Your Business Useless?

A blogger from the Harvard Business Publishing Umair Haque wrote an article Is Your Business Useless? He talks about corporate social responsibility. Below is his post. I’m interested in your comments; or you can follow the comments on his post — Is Your Business Useless?

(The red font is highlighted for emphasis purposes.)

Is Your Business Useless?

2:45 PM Tuesday October 27, 2009

These days, lots of people ask me: “Phew! So, the crisis is over, right?” Wrong.

The real crisis is in the DNA of the industrial economy — and it’s just as lethal as ever. Most businesses are socially useless. They’re about as useful to society (to paraphrase Gloria Steinem) as bicycles are to fish.

Sound controversial? If it does, it only underscores just how out totally of touch with real value we’ve gotten. (Here, for example, are Paul Krugman, Simon Johnson, and Lord Turner all discussing social uselessness.)

What has socially useless business cost just over the last five years? $12 trillion at a minimum. Those are the costs of the various bailout packages for socially useless banks.

Socially useless business is what has created a global economy on life support. Socially useless business is what has created a jobless “recovery” and mass unemployment amongst the young. Socially useless business is why we don’t have a better education, healthcare, finance, energy, transportation, or media industry. Socially useless business is a culture in shock, reeling from assault after assault on the fabric of community and comity. Socially useless business is the status quo — and the status quo says: “You don’t matter. Our bottom line is the only thing that matters.”

Until now. Today, socially useless businesses are living on borrowed time — and the clock’s about to reach zero hour. Somewhere out there is a Constructive Capitalist who’s going to use the power of meaningful economics to relegate you to the dustbin of economic history — just like Google and Apple are doing to big media, Wal-Mart’s doing to big food, FMCG, and retail, and Nike’s doing to shoes.

Constructive Capitalists are better businesses. They’ve learned how to create thick value: value that’s socially useful. They are doing things that matter to people, communities, and society.
So there’s a single, simple, fundamental question every decision-maker should be asking today. How useless is your business?

To answer it, you’ve got to stop thinking in yesterday’s terms. Forget the decades-long obsession with business models for a second. It’s time to think anti-business models. Anti-business models are models companies use to profit without doing anything socially useful.

I’ve put them in terms that a certain generation of beancounters can understand — in the hopes that, before it’s too late, and awesomeness rains down on them like thunder, they change their ways.

Here are four different paths to becoming a socially useless supervillain:

Skeletor. Skeletor‘s goal was to learn Eternia‘s time-honored secrets, and use them against Eternia itself. Sound familiar? It should. It’s what telcos, pharma players, health insurers, and automakers do when they lobby against the common good — and for a license to be socially useless. The secrets of Eternia were the key to its prosperity, just like laws that protect the common good are the key to ours. Yet GM was lobbying against higher mileage standards until this year, right up until their bankruptcy. That’s about as brain-dead as Skeletor trying to take on He-Man, over and over again — and never winning.

Gargamel. Gargamel isn’t really a supervillain — just an evil old dude with the ability to create magic potions. He wants to destroy the Smurfs because he thinks he knows how to run a better Smurf society. Sound familiar? It’s the economic equivalent of financial engineering. Private equity funds are textbook examples: their magic potions never seem to work very well. Though the companies they run may benefit in the near-term, eventually, they run iconic companies into the ground. Think of the sad story of Simmons — the focus of seven deals in 18 years. Today its debt load is ten times what it was two decades ago. Yet from the merry-go-round of private equity owners, no authentic value has been created.

Cobra Commander.
Cobra Commander founded Cobra, the nemesis of the GI Joe Team, to be “a secret organization to acquire wealth and power and thereby wreak his revenge on the world.” What’s the economic equivalent of Cobra? Hedge funds, of course — but they’re just the tip of the iceberg. Cobra’s corporate alias was called Arbco, and too many businesses see value creation as arbitrage: buy low, sell high. Real value creation is about creating stuff with passion, honesty, and commitment — and exchanging it fairly.

Wile E Coyote.
Poor old Wile E. He was always cooking up incredibly complex schemes, creating Rube Goldberg machines — all to try and catch the ever-elusive Roadrunner. Investment banks were run by overly complicated models that were about as useful as Wile E’s Acme machines. They were like the living expression of the Wile E Coyote model: wily only if wily means “kamikaze.”

Business supervillains have something in common with the cartoon supervillains above: they rarely win. That’s because socially useless business is built on shoddy, poor economics — and like most things too good to be true, it rarely lasts for long.

Next time, I’ll discuss four socially useful superhero models — 21st century business models for the creation of value so thick and goopy, it’s like a double fudge triple caramel sundae.

For now, fire away in the comments with your answer. How socially useless is your business?


2 thoughts on “Is Your Business Useless?

  1. We hav built our company to add value to our customers and their customers.
    Frankly, we compete all to often with the “Skeletors” of the world who bring nothing new to the market but try to steal someone elses innovations.

    Great Article!
    Barry Russin

  2. Great Article. I have been arguing the same thing especially relating to the Hedge Funds and their uselessness to our overall culture.
    I love the old school TV references !!

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