Let’s Make a Sustainably Better Future

Why “Do the Right Thing” is a Ridiculous Motto

Sounds nice. Unworkable in practice.

Can we trust companies to treat their stakeholders well? Or does their focus on shareholder profit make them untrustworthy?

In this series, I explore the current best hope of the ESG movement, stakeholder capitalism. Its advocates want stakeholder capitalism to replace shareholder capitalism as the driving factor behind corporate actions.

But are we pinning our hopes on a doomed strategy? Doomed why? Read on to find out. This is the Stakeholder Capitalism series, Part 5.

What good is a good-sounding corporate motto?

Today I’ll discuss why good-sounding mottos only sound good. And I’ll suggest how better to guide company behavior instead.

Google’s old motto gives us some interesting food for thought. Do you remember it? Their motto was “Don’t be evil.”

Oh, where to start with this? It surely ranks right up there with how President Obama once described his approach to foreign policy:

Don’t do stupid stuff

Stupid stuff according to whom? Evil according to whom? One person’s good is another person’s evil.

Well, how about Google’s new motto? “Do the right thing?” (To be fair, also used by lots of companies in many settings.)

This sounds nice but is terrible guidance in practice. The right thing for whom? For the individual manager him or herself? For the employees of the company? For shareholders of the company? For customers?

What if doing the “right thing” creates conflicts, where helping one of necessity hurts another? See Why Stakeholder Capitalism Creates Chaos.

Vague statements lead to conflicting demands … and conflict

What all these formulations have in common is they completely blur the line of to whom the organization is responsible. As a result, stakeholders fight for attention amongst themselves.

This leads to manifestly unjust results where the loudest and most oppressive voices win. Tyranny in other words.

And this is why stakeholder capitalism will fail. The only question is how much damage the righteous will inflict upon society before it burns out.

Right now, you are probably thinking that I am exaggerating to make a point. Let me ask you then, in the French Revolution, how long did it take until Robespierre’s Committee of Public Safety unleashed the Reign of Terror?

How many millions died in the Russian civil war that followed the October Revolution? And how many millions of Chinese were persecuted, tortured, and killed in the so-called “struggle sessions” of the Cultural Revolution?

All of these movements were led by people who started passionately committed to “doing the right thing.” They ended with individuals concluding that it was just to eliminate anyone who disagreed with them.

Ultimately, each of these uprisings consumed themselves with their righteous fire, but only after drowning their societies in blood.

There’s a better way

And the worst of it is, absolutely none of this is necessary. At least if we’re trying to answer the question of how corporations should deliver the greatest good to the greatest number of citizens in society.

For everyone who works in corporations today, we don’t need these fuzzy feel-good sayings and idealistic obligations to “all society”.

We have an absolutely robust framework that was laid out more than 50 years ago and legally enshrined into western capitalism ever since:

Corporations are responsible to shareholders

You may not like this thought but it has served us well for a long time. I explain why in the next piece in this series, What is the Social Responsibility of Business?

Be well.

James Bellerjeau, JD, MBA, ran the global sustainability program of an S&P 500 company. He also served as General Counsel for twenty years.

About James Bellerjeau. More of my articles. Let’s connect on LinkedIn!

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