I am passionate about responsible business practices.  Not only have I been actively studying, practicing, teaching, and coaching on it my own businesses for the past 20 years, but these experiences were built on top of  a foundation of being raised by a family of responsible business owners for the first 20 years of my life.  Responsible business is smart business.

These days I have come to say that “green business is smart business™” because green business is about responsible business and conscious capitalism.  It recognizes the interconnected and complex self-adapting nature of the systems in which business operates.

Having said this, whenever I get into a discussion about responsible business, green business, or conscious capitalism inevitably Milton Friedman and Adam Smith are brought up as counter arguments.   These men were brilliant and spoke in a language of their respective era.  And that language issue is critical to understanding and communicating about green business, responsible business, and conscious capitalism.

To borrow the subtitle of Dr. Frank Luntz’ book, Words That Work, “It’s not what you say, it’s what people hear” and a quote from a great movie “What we have here is a failure to communicate.” The debates get stuck in one of three ways: rhetoric, ignorance, or school yard labeling/bullying.   This was beautifully illustrated in a written 2005 debate I read this morning between Whole Foods’ John Mackey, Milton Friedman, and Cypress Semiconductor’s T.J. Rodgers.  “Rethinking the Social Responsibility of Business”

Make sure you read it all the way to the end with John Mackey’s rebuttal and closing comments.  I found two notions quite telling.

The first about the similarity between Friedman and his views

Toward the end of his critique Friedman says his statement that “the social responsibility of business [is] to increase its profits” and my statement that “the enlightened corporation should try to create value for all of its constituencies” are “equivalent.” He argues that maximizing profits is a private end achieved through social means because it supports a society based on private property and free markets. If our two statements are equivalent, if we really mean the same thing, then I know which statement has the superior “marketing power.” Mine does.

Both capitalism and corporations are misunderstood, mistrusted, and disliked around the world because of statements like Friedman’s on social responsibility. His comment is used by the enemies of capitalism to argue that capitalism is greedy, selfish, and uncaring. It is right up there with William Vanderbilt’s “the public be damned” and former G.M. Chairman Charlie Wilson’s declaration that “what’s good for the country is good for General Motors, and vice versa.” If we are truly interested in spreading capitalism throughout the world (I certainly am), we need to do a better job marketing it. I believe if economists and business people consistently communicated and acted on my message that “the enlightened corporation should try to create value for all of its constituencies,” we would see most of the resistance to capitalism disappear.

In response to T.J.Rodgers school yard tactics, Mackey responded diplomatically by deftly exposing the inaccuracies of Rodgers attacks on Whole foods and then turning the mirror on Rodgers business to prove his point.

Rodgers says with passion, “I am proud of what the semiconductor industry does–relentlessly cutting the cost of a transistor from $3 in 1960 to three-millionths of a dollar today.” Rodgers is entitled to be proud. What a wonderful accomplishment this is, and the semiconductor industry has indeed made all our lives better. Then why not consistently communicate this message as the purpose of his business, instead of talking all the time about maximizing profits and shareholder value?

This written debate is a brilliant example of how the language used can shape the conversation and what people hear.   One of the key points that so many miss in debates of this kind is the fundamental notion of what is the purpose of business.   All too often the focus is on responsibility to the investors, but was is the purpose of the business in the first place.    In the late 90s whenever I ran across an article or story of a company or a product gone bad I was continually ask the fundamental question “Did anyone ask whether they should do it in the first place?”   I fully agree and have practiced John Mackey’s business’ noble purpose:

Like medicine, law, and education, business has noble purposes: to provide goods and services that improve its customers’ lives, to provide jobs and meaningful work for employees, to create wealth and prosperity for its investors, and to be a responsible and caring citizen.