Making whole some half-truths on Washington’s Birthday

Making whole some half-truths on Washington’s Birthday

George Washington may or may not have said “Father, I cannot tell a lie” after felling a cherry tree, but he is on record as saying, "honesty is always the best policy." So in that spirit on his birthday, I’d like to round out some half-truths. As I discussed in a previous blog, becoming a purpose-led organization is no small undertaking, and it’s important that organizations don’t get misled by ideas that reveal only part of the picture.

Half-truth: Organizations deliver on their commitments to a higher purpose through corporate responsibility programs.

Whole truth: Gone are the days when businesses could compartmentalize their commitments to a higher purpose. Now it is all about integrating purpose into core business and people strategies to make a broader, more meaningful impact. A great example of this would be car manufacturers that introduce cars with innovative technology for reducing CO2 emissions. It’s a sound business strategy that also delivers huge social benefits.

 Half-truth: Making a positive impact on stakeholders demonstrates that an organization is always guided by its higher purpose.

Whole truth: True, but it is important to add that an organization guided by purpose also never knowingly does harm. These organizations understand that all the good work in the world will not compensate if one aspect of the business or one compromising decision strays from that purpose. So, their commitment to purpose is one that never waivers – regardless of circumstance. For example, I knew of a pharmaceutical company struggling to manage cost increases imposed by new regulatory requirements. Instead of diversifying to skirt the rules, this company chose to remain true to its purpose and invested in developing safer, more effective therapies.

Half-truth: When organizations embrace a higher purpose, their people feel more inspired.

Whole truth: Working for a purpose-led organization can be inspiring, but inspiration alone doesn’t cut it. Organizations that honor a higher purpose invest more in, and expect more of, their people – they have to because the stakes are higher. As an example, consider how important quality control is for a medical device manufacturer. The fact is, when an organization is driven by a purpose greater than profit, a commitment to higher standards comes with the territory.

I’ll close with one final half-truth: Higher purpose is all about putting the greater good ahead of profit. Not so. Thinking beyond profit doesn’t mean thinking less of profit. In fact, promoting the welfare of stakeholders is the best way to enhance profits. And that is the whole truth.

Sudhir Prabhu

Transformation Strategies | Leadership Thinker | Sustainable Solutions

8y

'Simple Truth' !

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Nicholas Vine

Customer-Centric I Relationship-Builder I Business Solutions Focused I Change Agent

8y

Good article Punit Renjen. Could'nt agree more.

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Joseph Toomey

Independent Management Consultant

8y

Half Truth: “Car manufacturers that introduce cars with innovative technology for reducing CO2 emissions. It’s a sound business strategy that also delivers huge social benefits.” Whole Truth: Economic choices are driven by opportunity cost: How much we need to spend today in exchange for how much benefit is subsequently received. If a consumer must fork over $10,000 in extra cost for some “innovative technology for reducing CO2 emissions” such as regenerative braking that saves $300 per year in gasoline outlays ― about what the typical consumer driving an average number of miles in a typical driving profile can expect to reap at prices today ― it is neither economically prudent nor environmentally warranted. From an economic standpoint, the “investment” in emission-reducing technology would never be recouped over any practical lifetime of the car, and the rate of return on the investment given a rational allocation of capital cost would be negative. From an environmental standpoint, the additional outlay would entail a social cost far in excess of the social cost of the emissions abated. If consumers wish to ignore the truth, fine. But that doesn't make it a "sound" decision. Because there is a social cost that is exacted in manufacturing and delivering emission abatement equipment ― mining ores and minerals that go into abatement equipment componentry, shipping raw materials to assembly plants, fabricating and machining emissions abatement equipment parts, delivering those parts to an assembly plant, building an abatement equipment manufacturing facility to assemble equipment, staffing and operating a production facility, delivering emissions abatement equipment, installing and delivering finished automobiles, etc. ― those social costs must be weighed against the social cost of emissions subsequently abated. The tragedy for humanity is that there appears to be a limitless supply of otherwise very well educated people who put aside all of their economic and environmental learning when CO2 emissions are discussed. They never consider that there are limits to how much should be spent today to reduce emissions that may or may not have some net negative impact far in the future. If the present value of abatement spending today far exceeds the present value of negative future emission impacts ― the social cost of carbon is how economists describe it ― then abatement spending is economically wasteful and environmentally damaging. So there may be no “huge social benefits” to capture. Another example where these lessons are lost concerns wind and solar energy. States in the U.S. have enacted emissions abatement requirements that force electric utilities to purchase wind power. In New York, the state will install 8,000 megawatts of nameplate wind generating capacity that will abate CO2 at a cost of over $300 per metric ton. But the “social cost of carbon” as measured by the Congressional Budget Office is only around $20 per ton, or as measured by a consensus of climate change economists to be around $5 per ton. Germans have enacted climate policies that abate CO2 using solar power whose abatement cost is estimated to range between €750 and €1,000 per metric ton to eliminate CO2 emissions whose social cost is between $5 and $20 per metric ton. All of these abatement schemes impose social costs today far in excess of the discounted future flow of social benefits from reduced emissions. So the statement about “huge social benefits” is demonstrably false, and no known emissions abatement scheme has ever shown otherwise. And THAT is the whole truth. Joseph Toomey Author: AN UNWORTHY FUTURE, 2014

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Aashish Gupta

Founder: StrategyPLUTO & Consulting CEO: FAITH (Federation of Associations in Indian Tourism & Hospitality)

8y

Hi Puneet... Some additional thought.....half truth - people & organisations pursue the maximation of their personal goals ..full truth - if their personal goals include benefiting from a , healthy ecosystem , then that is in the best interest of all

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