Everyone seems to have a unique view of sustainability, which may be one of the reasons that so many people struggle with sustainability in a business environment. Articles are written that make the case for and against Corporate Social Responsibility. Books have been published that tout the benefits and dangers of Sustainability in a commercial corporate environment. Blogs and Magazines articles are produced with list of six, seven and ten of the top items that you have to do in order to create a sustainable program for your organization and lists of reasons why this notion of sustainability is just a fad.
So, instead of trying to write another blog that tries to prove the benefits of sustainability or show how sustainable practices can help your organization. I sat back and asked myself isn’t their someone that could speak on the topic of sustainability and reach across both the environmental and business groups?
It seemed like for every person I could think of, I could also think of a reason why they wouldn’t work. No, she would only be considered a tree hugger by the business community. No, he would come across as a “I’m only here for the profit” businessman. Then it hit me, what about the man who invented management? So then I wondered, “What would Peter Drucker have to say about CSR, Sustainability and Business?”
I didn’t have to look very far before I started finding insights into his beliefs on the relationship of business, management and CSR. I soon discovered that not only was he the “Father of Management”, Peter Drucker was also considered a “Pioneer of business social responsibility.”
William A. Cohen writes in Drucker on Leadership that “Drucker believed that the first “social responsibility ” of business is to make a profit sufficient to cover future operational costs.” An important distinction here, he didn’t say the business of business was to make a profit. He is saying that if this basic “social responsibility” was not met, then no other “social responsibility” could be met either.
Makes sense, if the company goes out of business then they won’t have any funds to put into CSR programs, the existing programs will end, employees lose their jobs, suppliers don’t get paid and their companies are put into jeopardy and we all go back to square one. The circle of life seems to also apply to the circle of business.
Drucker didn’t view this philosophy as a license to slash-and-burn. He warned leaders to be careful of unintended consequences and said that it was the responsibility of the company to assume the responsibility of the outcomes of their actions. Cohen writes that “Drucker taught that since impacts are inevitable, the first thing that an organization needs to do to be socially responsible is to minimize them and not to do foolish things in the name of “doing good.”
Drucker also felt that business leaders should take a “first, do no harm” approach in regards to social responsibility and general business ethics. Not a bad guideline for us all to adopt.
While other business leaders felt that social responsibility was the the responsibility of business, Drucker felt that social responsibility was not only a duty but could provide a competitive advantage beyond simple public relations. Sound familiar? Competitive advantage versus Greenwashing. Drucker saw that CSR could provide flexibility for an organization, allow companies to attract and retain talented employees, reduce employee turnover, provide a return on investment (ROI), and yes; Increase sales and profit.
I wish that I could have met this man. He seems to have had the ability to view business from multiple angles and not be held to one rigid view of what business is or should be. He saw that business had a “circle of life.” A process that should be nurtured and allowed to change, but at the same time required to hold certain points as guiding principles through out the ages. Which I suppose is what sustainability is about; changing, growing without doing harm to current and future generations.
2 thoughts on “Peter Drucker on Sustainability”
Senor Drucker knew of the deadly lightning rod within sustainability and avoided it very conspicously in his work. The third rail for this guru of business management around sustainability was externalized costs. He knew it was going to become an ever larger liability in social, economic and environmental events until global disasters would begin to resonate from this accumulated balance in ever shortening cycles.
David Korten’s The Post-Corporate World points out that all U.S. corporate profits are about $500 billion per year, yet a conservative estimate of the externalized costs of industry runs to about $2.5 trillion per year. When this amount is totaled for the last two hundred years is the balance $200 trillion? $300 trillion? Sadly these could be very low estimates.
I agree – Drucker felt that social responsibility was not only a duty but could provide a competitive advantage beyond simple public relations. Social responsibility and general business ethics should be a priority within any enterprise. Great insight!