Strategy

Strategy and the Triple Bottom Line

I’ve been working with my strategy students to understand the idea of organizational performance. The idea of performance is to generate above average returns.  Nothing new here. However, recently academics have developed the concept of the Triple Bottom Line.  That is performance that covers the social, environmental and financial performance of an organization.  The idea of the Triple Bottom Line is that if we measure performance using a variety of goals, we are less likely to try to maximize a single goal in inappropriate ways and with unanticipated consequences.

We used Starbucks as our live case to understand the Triple Bottom Line.  (Full disclosure: I spend enough time at my local Starbucks that I should pay them rent for office space, and the barristas know my favourite order).  Let’s just say that our class discussion about the Triple Bottom Line was a lively one. Some students felt that the social and environmental performance was just window dressing, a PR effort to reduce resistance to the organization.  Others felt that there Starbucks promoted their Corporate Social Responsibility actions for self-interested reasons. Others felt that Starbucks was pursuing CSR initiatives for idealistic reasons.

My question is, why does it matter what the underlying purpose or rationale?  Likely it is a mix of idealism and self-interest.  In the end, as long as we make progress toward some positive social and environmental goals, does it really matter?  Perhaps if companies like Starbucks continue to be successful and profitable, they will help to generate economic stability, which history has shown contribute to improved social and environmental conditions. The real question is why aren’t other organizations using the Triple Bottom Line to measure their own performance.?

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