How Great Companies Think Differently

Corporate leaders have long subscribed to the belief that the sole purpose of business is to make money. That narrow view, deeply embedded in the American capitalist system, molds the actions of most corporations, constraining them to focus on maximizing short-term profits and returns to shareholders at the expense of worker safety and health, the environment, and society in general. In this article, HBS professor Kanter argues that a very different logic informs the practices of most high- performing and sustainable companies: An institutional logic. These companies believe that they are more than moneymaking machines; they are a vehicle for advancing societal goals. They deliver more than just financial returns; they also build enduring institutions. At great companies, institutional logic takes its place alongside economic logic in research, analysis, and managerial decision making. Six facets of institutional logic--a common purpose, a long-term focus, emotional engagement, partnering with the public, innovation, and self- organization--radically alter leadership and corporate behavior and form the building blocks of a more sustainable competitive advantage. INSET: What Counts As Good?.