Sunday, May 18, 2008

Social Responsibilities Objectives

What's the impact of your business on society and the economy?  Businesses don't exist in a vacuum.  They exist within a society and an economy.  If your business is valued by society and the economy, you have a chance for survival.  If it's not valued, society can put you out of business overnight.  In The Essential Drucker: The Best of Sixty Years of Peter Drucker's Essential Writings on Management, Peter Drucker writes about baking social objectives into your business strategy. 

Business Needs to Think Through Its Impacts
Your business has an impact on society.  Drucker writes that you need to think through your impact and responsibilities:

Only a few years ago managers as well as economists considered the social dimension so intangible that performance objectives could not be set.  We have now learned that the intangible can become very tangible indeed.  Lessons we have learned from the rise of consumerism, or from the attacks on industry for the destruction of the environment, are expensive ways for us to realize that business needs to think through its impacts and its responsibilities and to test objectives for both.

Business is a Creature of Society and Economy
According to Drucker, your business needs to serve a necessary, useful and productive job:

The social dimension is a survival dimension.  The enterprise exists in a society and an economy.  Within an institution one always tends to assume that the institution exists in a vacuum.  And managers inevitably look at their business from the inside.  But the business enterprise is a creature of a society and an economy, and society or economy can put any business out of existence overnight.  The enterprise exists on sufferance and exists only as long as the society and the economy believe that it does a necessary, useful, and productive job.

Social Objectives Need to Be Built Into the Strategy
Drucker writes that a manager has to include social objectives in their strategy:

That such objectives need to be built into the strategy of a business, rather than merely be statements of good intentions, needs to be stressed here.  These are objectives that are needed not because the manager has a responsibility to society.  They are needed because the manager has a responsibility to the enterprise.

Key Take Aways
Here's my key take aways:

  • Think through your social and economic impact and responsibilities.
  • Society and the economy need to believe that your business serves a necessary, useful and productive job.
  • Bake social objectives into your strategy.

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