Published November 20, 2020
ARCS was formed to promote serious research on corporate sustainability. Over the last decade, we have built a strong community, but we have lost out in the broad market for ideas.
One popular notion, a story really, holds most of the market share, and it has done so for more than two decades. It includes an attractive plot twist and provides a happy ending; it has enemies to hiss and heroes to cheer; it leaves people feeling hopeful and energized, and its telling fits neatly into a 90 minute class.
It goes like this. Economists have deluded all of us into believing that the pursuit of profit may impede the cause of sustainability. As a result, our thinking has become so narrow that we overlook opportunities all around us and imagine tradeoffs where there are none. But all is not lost, because a genius has perceived a new way forward! He or she has proclaimed to business leaders that if they open their eyes and minds, they will become agents of the good: profits will grow from protecting the environment, fortunes will be made lifting people out of poverty, value will be shared broadly, and climate change will be solved for fun and profit.
If you think I exaggerate, consider these sentences from Michael Porter and Mark Kramer: “Business and society have been pitted against each other for too long. That is in part because economists have legitimized the idea that to provide societal benefits, companies must temper their economic success.” Porter and Kramer promise that if done properly, something called shared value will “drive the next wave of innovation and productivity growth.” If you still think I overstate the case, consider CK Prahalad’s promise that a fortune lies waiting for firms at the base of the pyramid, or contemplate VG Govindarajan’s proclamation that Reverse Innovation “will transform just about every industry, including energy, healthcare, transportation, housing, and consumer products.” And Amory Lovins really did write that climate change could be fixed for “fun and profit”.
Such predictions would be marvelous indeed, were they backed by evidence, but as Ken Pucker (a former COO of Timberland) and I argue in a piece published today in the Stanford Social Innovation Review, they depend instead on cherry-picked cases for support, and their proposed mechanisms seem to rely on magic. To explain why so many opportunities lie all around us, their advocates drag out that old chestnut of a story about the economist and his granddaughter. You know the one: she sees a $20 bill on the street and goes to fetch it, but the economist says: “don’t bother, if it were real someone would have picked it up already.” Something like that story lies at the base of all popular ideas of corporate voluntary action: opportunities lie all around us, we just need to open our eyes to see them; free-minds and free-hearts will allow us to overcome any obstacle, even well-established principles of economics or physics. If we truly believe, we will be able to fly.
Soaring over seemingly insurmountable barriers is an alluring notion, and precisely the kind of idea that ARCS was founded to scrutinize, and debunk if needed. ARCS founders wanted to ensure that solid well-tested ideas diffused, and sloppy untested ideas were held in check. In the last decade, we have made headway in the academic literature, but we have had little influence on the ideas flowing to the public. Worse still, we have sometimes endorsed popular feel-good notions.
Or at least I have, particularly in the MBA classroom. It is fun to teach a class on how Patagonia makes money while being good for the planet, and it’s a drag to teach students about Pigouvian taxes. It is entertaining and uplifting to talk about the successes of industry self-regulation, and it is a big downer to talk about how seldom they work. So my course syllabi have tended to include some empty calories, in the form of win-win ideas, to sweeten its otherwise vinegary servings. I suspect I am not alone.
But prevarications in the classroom don’t explain why we in the ARCS community haven’t tested popular ideas and pruned them back. Yet I know of no rigorous test of the idea of shared value, or fortunes at the base of the pyramid, or Reverse Innovation. Do we think the advocates of these ideas will test them for us? They won’t. Ken and I spoke to several and discovered that they don’t intend to do rigorous empirical testing. Some are so confident that they think it unnecessary. In fact, one told us his ideas were relatively risk free, because they follow deductively from the “physics” of how things work. Another big-name scholar told us he thought testing should be done, but not by him. His job was to come up with intriguing notions, and it was the job of others, like those in ARCS, to test them. If so, we missed the assignment.
Why? Do we consider these popular ideas so sloppy that they do not deserve our time? I am ashamed to say that I sometimes hold this belief. Many popular win-win proposals are so ill-structured that they are hard to test…and the data are hard to collect…and besides none of my close colleagues take them seriously anyway.
Or perhaps we don’t think that a little sugar does anyone harm. That is the argument I have heard most often. Popular win-win ideas may be overblown or even wrong, I’ve heard people admit, but they make students excited and motivated. As one ARCS member said in a recent seminar, they may be “rhetoric” rather than scholarship, but they might still be useful in persuading business leaders to take action. Maybe that’s right, but it sounds dangerous to me. As Ken and I argue in our article, some happy win-win ideas have caused real harm. And I think it dangerous for ARCS members to endorse unsupported ideas, even as rhetoric. In a world struggling with alternative facts and fake news, I would rather ARCS stand for careful science and objectivity.
I am well aware that the untenured faculty reading this post have another reason for not testing popular win-win ideas. There is great risk in popping a senior Professor’s gilded balloon, and not much upside. What counts are peer-reviewed publications, and no time can be wasted on glamor projects. I get that, and I feel for you. Being untenured sucks. Go in peace.
But what about the rest of us? ARCS, as an organization, is close to becoming a teenager, so perhaps it is time for us to engage in a little angst. After more than ten years, have we been part of the solution or part of the problem? And where shall we go from here? I’d love to hear your thoughts, even if they pop my favorite balloon.
 Porter, Michael E., and Mark R. Kramer. “The Big Idea: Creating Shared Value. How to reinvent capitalism—and unleash a wave of innovation and growth.” Harvard Business Review 89.1-2 (2011).
 Jason Kornwitz, “Why Reverse Innovation Will Change the World,” News@North-eastern, March 12, 2013.
 King, A. & Pucker, K, “The Dangerous Allure of Win-Win Strategies”, The Stanford Social Innovation Review, Winter 2020. https://ssir.org/articles/entry/the_dangerous_allure_of_win_win_strategies
Original article posted on The Stanford Social Innovation Review. We encourage readers to engage in conversation on the original article.