Starbucks is trying to please everyone, and it’s not going to work

Should Starbucks care more about the homeless, or its employees? Should it care about them equally? Should it even be in the business of balancing such interests? More generally, how should a company prioritize its stakeholders? Should a company try to do the most good, or try to do the most good for those most intimately involved in the company?

These questions came to mind recently following a random interaction on Twitter. Someone tweeted the story about Starbucks trying to figure out just how welcome the homeless are in its stores, and in particular in its bathrooms.

One respondent said, roughly, that maybe the least Starbucks could do is to put a donation jar on the counter (a common enough thing!) and donate the proceeds to the homeless.

Nice idea. But consider this. Should the donation jar replace the tip jar that’s often on the counter at Starbucks? After all, there’s only so much space on the counter. And if the donation jar replaces the tip jar, then the company is implicitly prioritizing the homeless over its own not-terribly-well-paid employees. Even if they were to find room for two jars, having two is still going to means less tip money for employees. I only get so much change back when I pay for my latté, and it’s either going in one jar or the other, or is (less likely) getting split in half. Who should the company side with—poor-but-employed employees, or the homeless?

The fact that the answer isn’t obvious (and if you think it’s obvious, you’re not thinking hard enough) suggests two broader lessons.

One is that it’s a mistake to think that business ethics is easy, and that companies should simply “clean up their act” and “do better.” Critics too often assume that greed is the simple reason that companies aren’t doing what they want them to do. But sometimes it’s because doing what Critic A wants you to do is going to make you an evil-doer in the eyes of Critic B.

The second lesson has to do with the popular but ultimately impotent notion of “creating shared value.” That notion, made popular by Michael Porter and Mark Kramer, suggests that the key to socially responsible business is to focus on the “shared value” that is created whenever business is done. As others have pointed out, the notion that business is about value creation is hardly new. That’s Capitalism 101. How to create value is the key question for all would-be business people. But the question of how that value gets shared—within whatever discretionary limits market forces permit— is the really hard question for ethics.

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