Kellogg School Corner / Improving financial and social health

Kellogg School Corner / Improving financial and social health
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First Published: Tue, Jun 05 2007. 11 12 AM IST
Updated: Tue, Jun 05 2007. 11 12 AM IST
More than 30 years ago, Milton Friedman, the doyen of free market economics, wrote that an executive’s duty was to increase the firm’s profits while obeying laws and abiding by society’s ethical?rules. (Many modern corporate leaders?seem to have misconstrued this obligation to mean that the?duty of an executive is to enrich himself.)
Implicit in this duty is the obligation to do “good”?for either of two reasons: to conform to the basic rules of society, or enhance the company’s profitability. In the first case, duty has nothing to do with profit maximization, but rather?the societal constraints on that maximization. Here, Friedman’s dictum tells executives what they must?not do—lie to people,?harm them or damage their property.
In the second case, Friedman requires executives to do “good” when doing so will increase the health of the firm. Here is how executives at one firm discharged this fiduciary duty while also improving public health.
Asthma is a serious problem for children in many inner cities, particularly in southern US. Among Hispanics in Dade County, Florida, the rate of infection can be as high as 25%, but good data on the prevalence is difficult to obtain because?asthma is considered a possible sign of poor housekeeping.?Children with acute asthmatic reactions are, therefore, sometimes diagnosed as having “bronchitis” when they are admitted to emergency rooms.
How can a brand manager for a product such as the insecticide Raid® have an impact on this public health problem? Some data suggests a rather simple causal dynamic.
In warmer climates, cockroaches are endemic. Their droppings can create?asthmatic reactions in kids, so parents— especially mothers—tend to be aggressive towards cockroaches. If a mother sees a roach, she may empty a can of insecticide?in the vicinity. Children can have respiratory reactions to insecticides, so this kind of?preventive “overkill” is also problematic. If a firm?established a programme to help mothers understand how to use insecticides appropriately, the roach waste/allergens would be reduced, reducing the incidence of asthma.
A programme of the global manufacturer of household cleaning supplies, SC Johnson, “Ninos Saludables, Hogares Saludables” (Healthy Children, Healthy?Homes), trains Spanish-speaking volunteers to educate neighbours in techniques?for maintaining?roach-free homes. SC Johnson cleaning products, rather than Raid®, were used to demonstrate the techniques. The company?launched the programme on 6 May, World Asthma Day, and made bilingual presentations, distributing product coupons, samples?and informational brochures.
SC Johnson’s partners in this pilot were Research Triangle Institute, an independent, non-profit research organization, Florida International University School of Nursing and Zubi Advertising. While all agreed to SC Johnson’s corporate sponsorship of this effort, they excluded specific brand names in the materials to safeguard scientific credibility. A Miami retailer, Winn Dixie, joined the effort by featuring SC Johnson displays and maintaining information tables in its stores.
SC Johnson hired a research firm to measure the programme’s impact on the behaviour of parents who had received the training, and track sales results for the firm’s household products. The initial data indicated that many parents changed their cleaning habits and said they would repurchase the products that they had previously been using. There were also significant increases in the knowledge of triggers that worsen asthma.
The challenge now for executives who designed this programme is to improve and sustain it. If they succeed, public health will improve and SC Johnson will expand its consumer base while building an innovative peer-to-peer model that measurably affects understanding and behaviour change among a target population.
This case, written by Kathryn Aiken for a Kellogg class, is an excellent illustration of managing according to the Triple P bottom line— improving profits, aiding the planet and helping people.
Friedman would be pleased.
David Messick is the Morris and Alice Kaplan professor of ethics and decision in management, and Kathryn Aiken (Kellogg class of 2004) is director of human resources, general affairs and corporate communications, at SC Johnson, Japan.
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First Published: Tue, Jun 05 2007. 11 12 AM IST
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