10 Things I've Learned About Building a Revolutionary Responsible Company

10 Things I've Learned About Building a Revolutionary Responsible Company

[Editor's Note: When it comes to pioneering green businesses, few companies hold the standing that Seventh Generation has earned. For 20 years, the company has made green cleaning products a household item, and has done much for building a market -- and a supply chain -- for green goods. To help us kick off "The Power of 10," our celebration of 10 years of GreenBiz.com, we asked Seventh Generation's founder and Chief Inspired Protagonist, Jeffrey Hollender, to share some of the lessons he's learned after two decades in the trenches.]

1) The only real brand of responsibility is holistic and systemic -- not compartmentalized. Corporate responsibility only works when it is strategic, not programmatic and driven from both the top down and the bottom up. It balances concerns about justice and equity with efforts to enhance growth and profits; pulls these values into every corner of a company to impact every process and decision; and offers original sources of innovation and opportunities for new products and services that deliver a return on purpose as well as a return on investment.

2) Authentic companies must build a collective corporate consciousness and embed it into every molecule of their DNA. As our own experience at Seventh Generation has shown, this is a long-term process. It starts by achieving collective clarity about what matters and constructing a communal view of what the company should be. Once this self-awareness is established, it can be brought to bear on decision-making to ensure that a company walks its talk in every way.

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3) Our mission is our primary product. At Seventh Generation, we've come to understand that our purpose and values are far more important than our products. In our view, strategy is synonymous with advocacy. In standing for something that truly matters, we're sharply distinguishing ourselves in the marketplace and instigating changes that couldn't be made if we played the same game as everyone else.

Jeffrey Hollender4) Businesses must create meaning at work and unleash people's potential. We're dedicated to offering opportunities for our employees to realize their deeper aspirations and providing work that fulfills higher goals in addition to traditional financial aims. We view our company as a community in which our employees are animated by a larger sense of purpose and as a result act more like the individual entrepreneurs our company needs them to be.

5) Radical transparency is required. Information technologies now let the public keep an eye on everything we do, and we invite this scrutiny. Publicly sharing all our activities preempts our critics, and more eyes on our behavior means more advocates and friends. Radical transparency also creates new partnerships and in this way becomes the first step towards overcoming the deficiencies that ultimately harm our profitability.

6) Culture is critical. It's almost impossible for most customers, investors, and other stakeholders to see, but it may matter more than anything else. A few traits of a responsible culture include a company's level of honesty, how well people are treated when no one's looking, acceptance of criticism and disagreement when directed toward senior management, and the humility to know that no one has all the answers. When bad behavior occurs at BP, Goldman Sachs or Toyota, it almost always starts with a culture that allows or encourages irresponsible behavior.

7) Ownership is essential. America is a nation of employees, not a nation of owners. Business is one of the most effective ways in which wealth is transferred from employees to investors. Businesses that don't ensure that every one of their people are owners and not just employees will never be truly responsible.

8) Business, money & politics is a dangerous combination. We must get business money out of politics now. Seventh Generation will not make any donations to individual candidates, no business should. 'Want to understand why the financial industry is driving the meltdown in our economy? Look at the almost half a billion dollars a year that they have been spending to influence policy in Washington. It's a game big business spends far too much money trying to rig.

According to the Center for Public Integrity, for example, companies and groups that lobbied against financial reform spent a total of $1.3 billion in 2009 and the first quarter of 2010 on all lobbying efforts. Just one trade group, the U.S Chamber of Commerce, spent nearly $31 million on lobbying in the first quarter of 2010 alone. Individuals, small businesses and NGOs can't compete with that kind of overwhelming influence. When regulations are strong, they don't have to.

9) Full cost accounting is the only way to level the playing field. We urgently need new regulations requiring that companies account for and pay for the costs of their externalities, those environmental and societal costs their operations and products create. Currently these very real, very private expenses are passed on to the public in the form of additional health care burdens, ecological remediation, other public problems, and the higher taxes needed to pay for them. The result is an economic system that does little to encourage good behavior and even punishes those trying to do better.

If cleaning product companies, for example, had to pay the real costs for using up nonrenewable petroleum-based raw materials, the impacts created when these materials are extracted from the earth (think BP), the pollution the resulting products produce, and the illness their formulas cause, retail prices would climb and healthier alternatives would emerge as the most affordable option. As it stands now, safer and more sustainable products are forced to compete without assistance against those produced by companies receiving hidden de facto government subsidies covering the more significant costs of their operations.

10) Standards and metrics are missing in action. Ask the CEOs of the Fortune 500 to raise their hand if they are running a responsible business. How many hands will go up? Well 500 of course. Corporate responsibility is like playing a game with no rules, on a field with no boundaries, with referees who can never agree on who actually won the game. We need standards and metrics now. B-Corp is a great start, but social and environmental disclosure should be required for every license that is granted for a new business.

Jeffrey Hollender is the co-author of the recently published book, The Responsibility Revolution. The Co-Founder and Executive Chairman of Seventh Generation, Hollender also shares his insights at The Inspired Protagonist, a leading blog on corporate responsibility.