After last week’s session about stakeholder and shareholder managing and reading Jensen’s writings, I really started to think about business ethics and social responsibility in both types of managing. It dawned on me that maybe Jensen had a point when he was mentioning value maximization. It started to make me think that maybe profit maximization isn’t the only type of maximization that can occur and that maximizing something else may lead to make a company or firm so successful.
For my blog this week I read another blog post about social responsibility and sustainability within Patagonia. Patagonia is a company that pries themselves on being socially responsible. Whether it’s using an environmentally friendly material to manufacture their clothing, or ensuring that employees have safe and good working conditions, Patagonia makes sure they do all those things. They base their whole survival on ensuring that the world is safe and clean in the future, not just now for us. They want the world to be sustainable in the future, and that is what they try to maximize. Yes of course they want to increase their profits, but the way they achieve their goal is by maximizing their social responsibility and ensuring that they don’t threaten the environment or treat workers poorly.
In the blog that I read, there was a mention of Patagonia having a problem with workers getting headaches. Instead of trying to fix the circulation problem, Choirnard the founder decided to find out the cause of the problem, which was formaldehyde. Instead of taking the easy way around the solution, he decided not to take any shortcuts and instead to fix the problem in a different way to ensure it didn’t happen again and to eliminate the threat to the environment and workers. Not taking shortcuts around these types of problems is what customers who wear Patagonia value. They appreciate their mission, and stand by it, and that is what helps Patagonia maximize profits. Yes they want to increase profits, but not if it means skimping out on their mission and goals.
In the blog I read, there was a quote that really intrigued me. It is from the founder, Choinard, and he says, “We [Americans] are addicted to consuming. If we can change ourselves, corporations will change and the government will follow.” I guess I always thought it was the job of the CEO or manager of a company or firm to be the one who is socially responsible, but maybe it is really up to us consumers. I immediately thought of shareholder vs. stakeholder managing and how we consumers can change the values of firms and company’s if we take the first step. Sure, shareholder managing can still exist that way, just their maximizing value may be viewed differently.