Analyzing performance

Published on March 30, 2022   6 min

Other Talks in the Series: Key Concepts: Introduction to Strategy

Hello and welcome to this series of introductory talks on business strategy. My name is Robert Grant, I'm a professor of strategic management at Bacconi University in Milan, Italy. I'm also the author of Contemporary Strategy Analysis, a leading strategic management textbook used in business programmes throughout the world.
Achieving compatibility between the pursuit of profit and the pursuit of social-environmental goals is not automatic. The relationship between profit and social and environmental responsibility needs to be understood and it needs to be managed. Realising this convergence can be assisted through two concepts. The first is the idea of evolutionary fitness. Firms need to nurture and sustain their ecosystems and co-evolve with them. Consider the case of climate change. For automobile producers and oil companies, the solution is neither to fight it nor abandon what they are doing. The challenge is to recognise the changes that are afoot and adapt to them so that they can become part of the solution rather than part of the problem. Second, firms need to focus on those issues and activities where there is the potential for convergence between commercial interests and social interests. Thus, through pursuing social and environmental responsibility, firms can gain reputational benefits. Conversely, if firms do not operate according to the expectations of society, they may well lose their license to operate. There are plenty of examples of both. In terms of building a reputation through social and environmental responsibility, Patagonia, Lego, Starbucks are examples of this. Conversely, environmental and ethical irresponsibility is punished by consumers and investors, consider the case of BP and the Deepwater Horizon crisis. Consider Harvey Weinstein's firm, Weinstein Studios, or News International and the phone-hacking scandal. These companies were brought to the brink. In the case of Weinstein, over the brink of failure as a result of management's actions. If we view long-run profit as the primary goal of the firm,