This academic year, Fuqua changed up some of its core curriculum by adding a class called, Business and Common Purpose. For months, Professors Scott Dyreng (Accounting), Rick Larrick (Management and Organization), Pino Lopomo (Economics), and Ashish Arora (Strategy) brainstormed insights from their specific academic areas and created the course content. Fuqua’s goal was to bring faculty from different areas of expertise together, so students could learn from varying perspectives.
On the first day of class, the professors stated that their goal was simply to provide frameworks about how to balance the need to make a profit with the desire for social good. This is a conversation that is coming up in most businesses these days. With these frameworks, we can determine how we want to balance the two, based on our values or the values of the company we work for.
There have been several things that I’ve taken away, but I’ll try to highlight three that have really stuck.
The Balance is Difficult
First, and probably most obviously, trying to make a profit while bettering society is challenging. Simply starting a business does so much good for society, such as create jobs, allow investment into the economy, etc. But trying to add another social goal on top of that, while also making a profit, is incredibly difficult. Although there are times when trying to solve a social problem leads to more profits, most of the time, they are at odds.
Because of this, companies need to understand and think critically about the trade-offs of making an impact on these social goals. There is no easy, one-size-fits-all answer for how much a company should balance profits and social goals. It depends on the company’s values and the people that run it.
Purpose Comes in Many Forms
Second, purpose clarity provides a boost on performance. The class compared “purpose clarity” and “purpose camaraderie.” Purpose clarity is when a company’s purpose guides the direction of the company and it is clear to its employees. Purpose camaraderie on the other hand is when a company’s purpose creates a family-like culture.
Although both can be good for different reasons, purpose clarity is correlated with higher performing companies. Even more than that, how clear the company’s purpose was to middle managers, specifically, had the biggest impact on performance. I thought it was fascinating to see the breakdown of purpose and how it can have a quantifiable effect on financial performance. I thought this was both insightful and actionable.
You Won’t Please Everyone
Third, you can’t be all things to all people. That has been something that the professors have repeatedly hit on. So many companies have good intentions to please all stakeholders. Unfortunately, this can spread the business out too thin, making it even more difficult to both make a profit and make an impact.
The professors have given us frameworks to think about whether a company should involve themselves in a specific societal goal, whether the stakeholder is material to the company, the company has the capabilities to make a positive impact, and the company can do it better than others.
We have studied companies that have integrated a societal goal into their business model so much that it affected their day-to-day operations and core capabilities. It’s vital for a company to think critically about which stakeholder or what social goal it will focus on, knowing it can’t do it all.
As mentioned, there have been several takeaways for me. These are just a few. What I’ve appreciated most about the class has been how discussion-based it is. I’ve gotten to hear diverse perspectives from my classmates. It’s been incredibly challenging to think through what I would do in different scenarios and contemplate my values. But I guess I chose Fuqua because I knew my professors and classmates would invite me to grow and think through these difficult, yet incredibly important, topics.