The good corporate citizen

By John Abele

In 1995, Malden Mills, a fabric manufacturer in Lowell, Mass., burned down. CEO Aaron Feuerstein decided not only to rebuild, but pay the workers during the rebuilding. There was a lot of publicity from that compassionate act.

Unfortunately, after the recession of 2000-01, Malden Mills declared bankruptcy. Its creditors were very generous, and the company survived, although Feuerstein was relieved of control. The continuing debt burden, however, turned out to be too difficult to overcome and in 2007, it declared bankruptcy again. The assets were sold. Creditors lost money. Employees lost pensions. That well-intended effort in good citizenship ended up hurting a lot of people.

A successful organization over time is one with a great reputation - not just with customers and shareholders, but with employees, community, vendors, government, and even competitors. A good reputation requires respect. And respect has to be earned, not bought. Relationships with each of these constituencies are built on a combination of trust, openness, respect, judgment, and accountability.

The reason for developing these relationships is not social responsibility, it's enlightened self-interest.

Customers prefer to buy from organizations they respect. Employees are more productive when they have pride in their organization and it's easier to recruit talent as well. Long-term shareholders want a good return, but prefer businesses that are predictable, communicate clearly, and have good reputations. Companies with good community relationships have more flexibility to get things done. Great vendor relationships save money and time and lead to more innovation. And being respected in the field may enable subsequent acquisitions, partnerships, or recruitment.

In other words, the successful organization is a good citizen because it helps it to be successful. To be a good citizen, you have to survive.

This year, as a result of many storm-related crises, we have seen extraordinary examples of organizations and individuals providing help to others at great cost and risk. However, this support is not sustainable in the long term and is only possible if the organizations, both private and public, have been managed well enough to avoid becoming a Malden Mills.

With companies that focus on solving social needs or problems, there's a worry that philanthropic activities may reduce their capability to carry out their socially valuable primary mission. At Boston Scientific, our mission has been to develop medical technologies that reduce risk, trauma, cost, and time. That vision, enabled by great employees, customer partners, and many other constituencies, has brought great value to many people. Balancing the social and primary missions is like being the mother on an airplane who recognizes that, to save her child, she needs to put the oxygen mask on herself first.

We're hoping USFIRST can become a model for the future. The mission is to organize a range of robotics competitions around the country and the world for kids from kindergarten through high school. Hundreds of thousands of kids participate, and more than 100 colleges provide scholarships for participants. Thousands of corporations provide mentors, volunteers, and money. And some of the biggest companies, which sponsor hundreds of teams, tell us this doesn't come from their philanthropic budget, but from their operating budget because of the value it contributes to their learning and culture.

That's great citizenship.