Classic free market theory holds that a company’s only job is to make a profit for its shareholders, and that market forces ensure that this end results in added value for society.
On the one hand, this view can easily be criticized as crude and reductionist – the greedy CEO who strives for profit at all costs is a cliché for good reason.
On the other hand, it is difficult to argue against it because the free market is clearly one of the main engines of the age of material prosperity in which we live.
A recent wave of business and economic considerations argues that companies are responsible for the effects of their actions on all of their stakeholders, giving birth to the notion of corporate social responsibility. Combined with the fact that technology is rapidly changing our everyday lives, it is not surprising that many young entrepreneurs are motivated not just by making money, but by the goal of changing the world for the better with the companies that they are.
“Don’t be angry. We firmly believe that a company that does good for the world has served us better in the long run – as shareholders and in every other way – even if we forego short-term profits.” – A user guide for Google shareholders
However, on either side of the argument, you will usually get a black or white answer that may not reflect reality.
1. Corporate morale is inevitable
Even if you wholeheartedly believe that the only job any business is up to is to make money, it is not that easy to put into practice.
Organizations are nothing more than a group of people working towards a common goal. Since the actions of each individual are motivated by their values, the actions of the entire company result from the values of the people involved in the company.
The fact that values and morals are an inevitable part of any business doesn’t mean they don’t need to be managed. It’s easy to see why putting more emphasis on social activism than running the actual business can lead to poor results in the long run.
Because of this, building a productive startup culture is one of the most important steps in building a successful startup.
2. Failure to deal with cultural conflicts in companies can be fatal
The inevitability of morality in an organization suggests that an internal conflict of values is also inevitable.
For example, a period of sharp political divide in a society (e.g. highly competitive elections) would have a direct impact on the organizations operating in that society. When the people who work in the company have an irreconcilably different vision of the future, it becomes very difficult to follow a clear path and to continue internal cooperation.
The attempts by companies like Coinbase and Basecamp to remove political discussion from the workspace are an attempt to combat the destructive effects of such conflicts. And while the two companies have lost many employees due to their stance against political activism in the workplace, perhaps this would have been the right move in the long run if internal cultural friction got out of hand.
Therefore, when running a startup, it makes a lot of sense to be as transparent as possible about the values that motivate you and the vision of the future that you are fighting for. In this way, people with fundamentally different values simply do not interfere in your business, which can help you in the long run to avoid major internal cultural conflicts.
In conclusion, values and morals will be an inevitable part of your business. For this reason:
- Communicate your values and visions for the future transparently in order to attract like-minded people.
- Actively try to build a productive culture, and if necessary – to manage internal cultural conflicts.