Kinder, Gentler, Richer Companies
How Vanguard Companies Create Innovation, Profits, Growth, and Social Good
By Rosabeth Moss Kanter
Crown; 320 pp.; $27.50 Smack in the middle of a worldwide recession is an odd time to publish a book called SuperCorp. Especially since some of the largest corporations on the planet, names like AIG (AIG) and Lehman Brothers, helped put us in the soup. But Harvard academic Rosabeth Moss Kanter seems a glass-half-full kind of person. And her book, subtitled How Vanguard Companies Create Innovation, Profits, Growth, and Social Good, paints an appealing picture of the future.
Her optimism is clear from the opening pages. It isn't until late in the book that Kanter preemptively takes on critics who would call her examples of corporate benevolence isolated exceptions to the greed-is-good rule of thumb. To Kanter, these companies are far more important than that. They are models of what businesses can and should become—in her words, "instances of 'positive deviance' that are a harbinger of trends to follow."
Kanter is a well-regarded professor at Harvard Business School, and the depth of her fieldwork lifts this book beyond cheerleading into something much more useful. She and a team of researchers spent more than three years doing 350-plus interviews at 15 different companies in more than 20 countries. Along the way they compiled anecdotes and searched for common practices. In classic B-school style, Kanter distills those best practices into lessons ending each chapter. She also lists the characteristics of leaders at trailblazing companies and the "Ten Things Anyone Can Do To Be in the Vanguard." (Among them: Stress innovation, create networks, and treat employees as if they were volunteers.)
The book's most persuasive sections are those that clearly tie corporate acts of social good to financial growth and success. A complex series of steps IBM (IBM) staffers took to help victims of the 2004 Indian Ocean tsunami and other natural disasters provided both a crash course in management for young Indian workers and technical innovations IBM went on to sell through its "Smarter Planet" initiative.
But it doesn't take an act of God, or even a new mission statement, to get the ball rolling. An emphasis on social good at Brazil's Banco Real began with cleaning up dirty alleys near its offices. That eventually morphed into, among other things, a line of profitable loans for environmental upgrades to cars and homes, as well as microloans to small businesses. Those loans have a default rate of just 4%, compared with 7% for banks in general. Handheld devices with fingerprint readers developed by India's ICICI Bank (IBN)to help illiterate customers in remote locations have proved both cost-effective and fraudproof—and are becoming the gold standard in the industry for all sorts of transactions and customers.
At the root of these innovations is a corporate philosophy that strives for some kind of good beyond mere profits. At the same time, goodness can be good for the bottom line, too. David Kenny, former CEO of Digitas, an advertising agency now owned by Publicis Groupe—and one of the companies Kanter lauds—sees a shift in the landscape. "You cannot sell things anymore, because digital empowers people to make their own choices," Kanter quotes Kenny as saying. "So we should be generous [or] they will not choose you. ... Generosity breeds returns."
At a time of financial crisis, climate change, vast economic disparities, and pandemics, the existence of companies trying to right wrongs and fix things is certainly soothing. And from Kanter's descriptions, SuperCorps—Mexico's Cemex (CX), Japan's Omron, and Procter & Gamble (PG) are also on her list—tend to be well-run and fun places to work. Missing from the book, however, is a clear discussion of the difficult trade-offs that being high-minded requires. Doing the right thing can be expensive, after all. Another hitch is Kanter's choice of exemplars. No particular metric had to be met for a company to be named a SuperCorp.
Still, her chosen companies together make a compelling argument that social imperatives, as much as an open corporate culture and a focus on problem-solving products, will characterize leading businesses in the decades to come. They won't replace nongovernmental organizations and proactive political leadership. But they are sure to be increasingly involved in making the world a better place.