I firmly believe companies should do good. I believe it’s the right thing to do. I also think it’s commercially beneficial in the long run. However, these are merely beliefs. I have no evidence.
I’ve read about (and occasionally leafed through) studies that show companies who score better on ESG metrics outperform their peers. I’ve done the same for studies that show more diverse companies outperform the market. This correlation is heart-warming, but it’s not evidence in the strictest sense.
To gather evidence about companies that do good being better than companies that don’t is no easy task. There are too many variables to control for and too many subjective opinions about “good” and “better”. It would require making a lot of assumptions.
It is too broad a subject for a single article. However, we can begin our journey by asking some fundamental questions.
What’s the half-life of a good deed?
Does a company doing something nice for you leave you more loyal to them? For how long does that loyalty last?
What’s the half-life of a bad deed?
Does a company screwing you over make you less likely to use them in the future? For how long does this animosity last?
Which half-life is longer? Good or bad?
What’s the half-life of a generally good deed?
If you haven’t personally benefitted from a company’s good actions, but have heard about them, are you better disposed towards that company? For how long?
What’s the half-life of a generally bad deed?
If you haven’t personally lost out from a company’s poor actions, but have heard about them, are you less disposed towards using that company’s goods or services? For how long?
Does availability affect the half-life?
If it is everywhere and convenient, do you get over the bad deed more quickly? Does the good deed last longer?
Does frequency affect the half-life?
If you use a good or service all the time, does a deed have a more or less material impact? If you rarely need the good or service, what’s the effect?
Does repetition affect the half-life?
If a deed is repeated, does it lead to any deeper level of meaning and lengthen the half-life? If a deed isn’t repeated but tales of it are, what’s the impact?
Does price affect the half-life?
If something’s cheap, do you ignore the misdemeanour? If it’s dear, are you willing to pay a premium for good deeds?
These questions obviously probe around ideas of trust, reputation, brand and purpose. They also come from an unapologetically commercial angle. I share them because I’ve been thinking about them a fair bit and I don’t know the answers.
My belief is that bad deeds have greater impact than good ones. That personal experience is more meaningful than broad gestures. That the half-life of a good deed is very short indeed. And, regardless of all that, companies should do good because it is the right thing to do. There need be no greater justification.