How to Answer the ‘Trap Question’

Source: The Wall Street Jornal (behind paywall).

The writer shares a brief anecdote that reveals the social responsibility of business:

This year’s Stanford Institute for Economic Policy Research Summit included a fireside chat with Microsoft CEO Satya Nadella. Unlike his clipped predecessor, Mr. Nadella turned the company around into a cloud colossus. Former Microsoftie Jeff Raikes, like George Stephanopoulos interviewing Nancy Pelosi, asked the softball questions.

But these are Seattle-soaked folks, so Mr. Raikes had to ask the unanswerable trap question: “Let’s talk a little bit more about equity. Before the pandemic, the world was facing big challenges: climate change, structural racism, economic insecurity, wealth inequality and more.” Oh boy, here we go. “What is the responsibility of the corporations,” he asked, “particularly the underlying connection to racial justice in the U.S. and elsewhere?”

Mr. Nadella isn’t CEO of a trillion-dollar company for nothing. Coolly and calmly, he explained that “the social purpose of a company is to find profitable solutions to the challenges of people and planet,” crediting Oxford economist Colin Mayer for the definition. “Driving broad economic growth is perhaps the biggest thing that a company can do,” Mr. Nadella added. “In order to have the pie distributed evenly, the pie should first grow.” Left unsaid is the pie should never stop growing.

Neither Ayn Rand nor Milton Friedman could have said it better, and it is encouraging to hear an important business leader make the point.

The principle of social responsibility — whether applied to businesses or to individuals — is among the most pernicious of ideas ever devised. It is the very essence of such things as witch trials and public stonings.

5 thoughts on “How to Answer the ‘Trap Question’

  1. “…the social purpose of a company is to find profitable solutions to the challenges of people and planet…”

    Actually, the main purpose of any business entity is to make a profit for the owners and investors. If those profits lead to “profitable solutions” fine.

    That does not absolve companies from social responsibility any more that it would for the average citizen. The only question is what constitutes social responsibility.

    (The last president tried to extort some corporations because they did not kiss the ring. Harley Davidson and Firestone were two examples. Yet, all they were trying to do was find profitable solutions without the threats of boycotts called by the president. The social responsibility the president said was lacking? Making motorcycles overseas and not allowing political campaigning for him in the factory during work hours.)

    Liked by 2 people

    1. No, Mr Nadella had it right the first time. Companies make profitable solutions for challenges and investors only benefit from those profitable solutions successes or they share loss if they are not successful. You can’t have a company without a profitable product or a service, investors or not.

      Like

  2. ““In order to have the pie distributed evenly, the pie should first grow.” Left unsaid is the pie should never stop growing.”

    The issue isn’t the growth of the pie. The issue is who gets the pieces of it. When it is only the C-suite folks and the shareholders, it is NOT fairly distributed.

    Also left unsaid is that the pie should never stop growing for the company, screw the rest of ’em.

    Like

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