while I slowly make my way through this paper tonight…
Michael Porter is the real deal. I’ll admit I haven’t done much of the theoretical reading for Strategy class, but his “What is Strategy?” and “Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility” (with Mark Kramer) are such beautifully structured, engagingly written pieces. Really helpful ways of looking at what running a company is all about, how to know when you’re getting it right, and what you have to decide not to do to get it right.
Interestingly, tonight’s assignment—on Patagonia’s competitive strategy and environmental commitments—keeps triggering thoughts of Ayn Rand. More than anything, she seemed to abhor the idea of sacrifice: giving something up just because someone says you’re supposed to. There’s nothing noble about selflessness, she argued; what’s noble is the fair exchange. Swap out noble for sustainable (or maybe scalable) and you have Porter’s analysis in a nutshell. Corporate philanthropy is all well and good, but that can dry up at any time; what’s really powerful is when a company’s getting something of strategic importance out of what it’s doing. Unilever cares about farmers hit by climate change because that’s the first step in its supply chain. Microsoft invests in community college engineering programs because it can’t hire good programmers fast enough. FedEx lives or dies on fuel costs and emissions regulation, so it’s keen on building a hybrid truck fleet. When the bottom line is part of what’s at stake, the company can devote serious resources to making good things happen. Porter gets a bit fuzzier with this at times: American Express is smart to sponsor dance companies, he says, because a big part of its business is tourism and entertainment, so it needs a vibrant creative community. A tenuous link, in my opinion (does that mean AMEX should invest in the arts anywhere and everywhere its customers are?), but it still beats the image/PR motivation.
It reminds me of the touchiness I sense in Detroiters when the topic of revitalization comes up. We don’t need “saving,” they say sharply; we don’t need pity or charity. If you’re going to get involved, do it for yourself, because you see an opportunity here.
Of course, Rand’s fair exchange depends a lot on having an economic system that captures true costs (and benefits). And that, inevitably, requires regulation.
I read somewhere that Michael Porter advises countries as well as companies. Wonder how that’s worked out. I like the idea of governments understanding their strategic positions vis-a-vis other countries, whether their policies make sense for the overall strategy, what tradeoffs they’re consciously choosing.