The raison d’être of a business/ Google and political reform

What is the raison d’être of a business*? To serve a societal or consumer need? To make profits for the shareholders? To keep the stakeholders happy? To create jobs? To realise the vision of the entrepreneur? Any combination of these?

What about social and political reform? Can that be the raison d’être of a commercial business? Would that not be called “profiteering” since any profits will necessarily be about taking advantage of some people’s miseries.

Google, whose original justification for entering China and agreeing to censorship did not convince me, and whose recent strategic moves leave me less than impressed, is now publishing a report on Google service accessibility from within mainland China.

I don’t imagine it uses up much resource for Google to generate that report. But the question must be asked:

What is the point of this exercise and what, if any, strategic aims of Google are likely to be furthered by it?

I frankly find the exercise pointless. Those in the world, who passionately care about the issues of freedom of speech (yours truly included) and political freedom, have a fair idea about what information China blocks. Many of us have friends and business contacts, who straddle China and HK, and do not hesitate to share how their web experience changes in the mainland and the hoops they jump through to circumvent the Great Firewall of China. So Google’s report is quite likely to be preaching to the choir.

If the report is about naming-and-shaming China into something, I think Google is once again over-reaching its raison d’être as a business. Moreover, having lain once with the dogs and now woken with fleas, it can now hardly be a credible turncoat.

Further the timing of such a shaming exercise couldn’t be worse. One could say that Google is just trying to add its voice to the growing discontent in USA with China’s direct impact on the SME and the manufacturing sector, whether through trade and through protectionism. But in reality, China is holding the USA by the short & curlies. Any posturing at this time could only serve to damage diplomatic relations further, especially as the balance is no longer unquestionably favourable to the USA.

My money – and I daresay the smart money of those, who understand nuance and the complex dance of cross-cultural business – is on that Google should do its duty as a business and not try to bring about political or social reform in China. At the very least, any such action reeks of hubris; at the kindest, of naïveté. And when one hopes to do business across cultures, neither is very helpful.

What about the Chinese people and their freedom of speech then?

With a rich, if somewhat inscrutable to us, heritage, the Chinese are hardly a stupid or insentient people. When they are fed up enough, they will redeem themselves.

* n.b. The word “business” here is used to indicate a commercial, profit-making enterprise, funded by private individuals and/ or other commercial institutions. A body such as UNHCR or Amnesty International would not be a “business” by this definition.

Late edits (March the 25th): Links on the issue: My agreement is not a necessary condition for links to be included.

Google’s slow boat from China or slow death? (Telegraph);

Google’s Quixotic China challenge (Business Week);

Google, China and the Art of War (Guardian); via Salil who has commented below;

While you read an explanation of why Google’s move saves face for China, remember the flanking manoeuvre as applicable to diversified businesses.

China Unicom won’t allow Google on mobiles using Android

China reminds Sergey Brin of Russia and WSJ in a hilarious moment says he is using that experience to shape Google’s China strategy. Hilarious because Brin left Russia when he was 6!  His parents remained and tolerated Russia till they were good and ready. They redeemed themselves, when they were ready. Just as the Chinese will.

Google also censors elsewhere: Bahrain, Bangladesh, Belarus, Brazil, Burma, Cuba, Ethiopia, Fiji, Indonesia, India, Iran, Morocco, North Korea, Pakistan, Saudi Arabia, Spain, Syria, Thailand, Tunisia, Turkey, Turkmenistan, the UAE, Uzbekistan and Vietnam.

More on India’s “reasonable restrictions” on free speech here.

Rape, pillage and philanthropy: via Hemant, who has also commented below.

2 thoughts on “The raison d’être of a business/ Google and political reform

  1. Consider this as a thought-experiment, Shefaly. Google’s purpose is to earn the best rate of return in a legal way. In so doing, it wants to operate by principles and values by which it believes it will enhance its reputation.

    If shareholders don’t agree, they will divest, and move to other companies. It believes it can enhance its reputation by being transparent and open about the way it operates. It believes in disclosing to its staff, shareholders, customers, and stakeholders, of the services which it offers which are not available in certain places. (e.g. BA letting its customers know that it would like to fly you next weekend to Ibiza, but they have had to cancel short-haul flights because of the strike action – an externality it cannot control.)

    By the same logic, Google tells its customers/others, that do use our service, but don’t expect groups, Picasa, YouTube, etc, in a particular domain at a particular time. … See more

    Does it shame China? Yes.

    Is it Google’s problem? No.

    Will it lead to retaliation? Maybe.

    Can that retaliation make a material impact on Google’s earnings? No.

    Will it enhance its reputation among some users? Yes.

    Is that a large number? Potentially.

    If so, is it a good move? Quite likely.

    I agree, a few things I’ve said here are assumptions – but you *can* make a business case for this act – as well as moving to Hong Kong – as well as stopping to censor. While censoring a website is not the same as building railtracks to Auschwitz, but I for one would not stop companies from operating in ways that make them less likely to be complicit in bad behavior by states.

    Here’s what I said about it elaborating the “rights” angle, on the blog of IHRB, in the past: http://www.institutehrb.org/blogs/staff/google_china_decision_remarkable_courageous_and_far-reaching.html

    @Salil: Thanks for your informed comment on the matter. I approach the post from the angle of ‘what is the company’s business?’ but the topic is broader. Not being complicit is not quite the same as trying to attempt political reform. When Google went in, much commentary focused on that a taste of the free world, rather than whole banquet, may change things in China. The recent posturing including Google’s pleading to the US government to take note of the matter and dobbing Microsoft in as an evil player etc all reek of a tonnage of hubris. It is hard to believe they did not go in believing their own PR, and now faced with the might of a proud and stubborn sovereign nation, are unsure of how all this was justifiable. Sorry to say this but you and I have to agree to disagree on this, thought experiments or none.

  2. Your point that Google’s China strategy is not aligned with its overall business strategy and therefore Google should stick to its knitting is both valid and correct. No argument there.

    However, you open the post with a bunch of questions that are more generic and at a more transcendental / philosophical level. You haven’t answered those explicitly in your post, but your post does suggest that a business’s business is just business … to put it succinctly.

    I have a different view. A business’s business is whatever it chooses to make its business, and whatever its shareholders have invested in. If the investor mandate includes social reform, then it becomes a core objective. IMO the view that the raison d’être of a business is simply to make profits for its shareholders is … not incorrect .. but incomplete, and very 20th century / post-Industrial era, if I may add. I don’t mean to disparage that view – it has brought us to where we are now. But where we are now has some serious downsides too (ref. the 3 global crises the world is facing today: environmental, economic and socio-political). And that has made us re-think the raison d’être of a business.

    The emerging view is that societal and environmental issues and concerns form an integral part of the way a business looks at why it exists and what it is doing here (on planet earth). Businesses of the future will no longer afford be able to afford the luxury of focusing purely on the financial return to the investor (or equivalent KPIs). More on this at my site.

    @Hemant: Thanks for your note. I agree that a business should operate in a socially and environmentally responsible manner while seeking economic gain (the three planks of sustainability). But political reform invariably raises the game to a different level of challenge. Why, Google censors results in many countries including India, to not fall foul of the laws of the land. But there is hardly any discussion about any of those because few of them are as lucrative markets as China could be, although many of them are oppressive regimes just like China, such as Burma. Makes it hard to believe it is a matter of principle, more a case of being red-faced at not being able to influence the game and now going back for diplomatic support. Hence my core message: do the business and if political reform is not in the articles of incorporation, er, avoid aiming for it…

What do YOU think?