Tuesday, July 24, 2007

Business's convening power

A NGO with x million approaches the government for a partnership and is rebuked, but if they partner with a company who foots the x million they will be accepted, due to the clout that the company has. Why? Well it is not just brand or connections, but because governments recognise how important companies are through their FDI investments, job creations, technology transfers and so on.

It is clear business has this important convening role and this should be utilised as much as possible.

The purpose of business...

(not an easy answer, but here is one answer:)
Make sustainable profits in sustainable ways.

How? Need to define 'sustainable ways', which is different for each company, and translate that for each individual's job role and evaluation criteria.

But is 'profits' necessary? In today's society with the current ownership structure, yes. Since pension funds, and the whole banking system is dependent on generating dividends to then give back to society, indirectly, or to re-invest. However, potentially profits are not necessary, when a company is privately owned, collaboratively owned and so on. There is a trend for this, but how important will it become?

Monday, July 23, 2007

Culture vs Human Rights

What do you do when cultural sensitivity is in contrast with human rights? do you abide by the local culture (i.e. not promote women) or do you support women's rights?

It seems that there are many examples of 'international human rights' being in contrast to local traditional norms and cultures. Similarly, since values are so crucial to people and to organisations, how do you deal with contrasting and conflicting values? Do you impose values on others (surely not!) or what?

Migration

Migration is often unplanned, but actually it is also, often planned, or at least encouraged. Since the importance of remittances has now been well recognised in contributing to a developing country's economic growth, international migration is often encouraged, despite the brain-drain consequences.

Internal migration is also often encouraged as a solution for those whose geographical location restricts their ability to escape poverty. But, of course, migrants are often mistreated and exploited. Furthermore, how is migration related to outsourcing and the whole freedom of work/movement issue? It seems that migration is actually the opposite of outsourcing. Instead of sending work to poor people to do it, the poor people come to the rich countries to do it (or replace 'countries' with 'cities' for internal migration). Is there a correlation of any kind? Which is better -migration or outsourcing? How are the drivers different and what is a more successful way of reducing poverty?

Urbanisation -good or bad for SD?

Urbanisation is traditionally seen as a disaster for SD. Unplanned urban expansion causes diverse environmental and social problems which previously did not exist -and the problems are exacerbated due to their ability to spread quickly or just become more significant due to the numbers of those affected.

But, maybe urbanisation can be an opportunity? It is easy to reach out, within a city, to those in need, quickly. It should be easier to plan and control development. It should be easier to solve problems in an urban environment. Evidently it is not, and there needs to be more work at a city and government level to see urbanisation as an SD solution and to plan it thus.

Who owns natural resources?

The discussion on ownership of natural resources is not one with an easy answer, but it is one that is becoming more important as energy (which comes from natural resources) becomes a greater issue; not just the supply of energy, but related issues of energy security, renewable energy etc. Water is also a big, big issue and one that will get even bigger. It is also related to energy, since hydro-power can be an effective method of generating electricity, often in developing regions which can benefit from the electricity and the income; since those areas might not have any other resources.

If you build a dam to generate electricity, you create unmeasurable impacts upstream (through needing to flood certain areas and destroy biodiversity or relocate residents) and even greater impacts downstream where the river's flow and composition is altered which affects those who rely on the river for food, to flood their fields, for transport, for drinking or even for their own electricity. These are just the problems affecting people directly, let alone the other biodiversity related impacts. So who owns the rights to use a river, especially if that denies others those same rights?

Public health -the public's responsibility?

I've mentioned before how it seems that individuals are losing their responsibility and nowadays it is up to companies and governments to help/tell people how to live their lives responsibly. In a health context this is more extreme: if a person wants to be fat and eat junk food and not do exercise it is surely up to them. They need to make informed choices, for sure; once a government (or a company) has made the relevant information available, why should they still be involved?

Well, moving past this kind of health topic to ones of public health, like SARS or avian flu or HIV/AIDs, one can see that increasingly companies are having to play a much greater role; in a supporting role to gvernments to help governments deal with these kinds of crisese. Why? Because they will be affected -as with any CSR issue- they will start to be impacted through a lack of employees, customers etc. But where is the impact? This involvement is purely a risk management investment. But how many investments must companeis make in risk management? What companies can afford these investments and should they be bearing these costs, probably disproportionately?

Climate Change affects those who did not cause it

So what does this mean? An acceptance of this fact might help for a start, but that won't happen. Money to help those who need it could be provided, through traditional aid or disaster relief public fundraising campaigns, but this will likely happen after a disaster which is, of course, too late. Some extra aid money is bein provided to help those countries deal with any extra possible disasters and prevent them. Otherwise a market-based system will be needed, like the CDM (Clean Development Mechanism), which allows polluters to pay others to reduce their pollution, since it is probably cheaper and easier for others to reduce their pollution (or not become polluting). Though CDM is not working effectively right now it is a great experiment and we have to hope it will have some impact and continually get better.

Problems with strategic CSR

One aspect of Strategic CSR is when a company uses its core competencies to help society; such as trained staff or (customised) products. But it is easier to just write a cheque and give some money. Not only is this quicker and require less time from the company (as well as being simpler, since companies are not development experts) but normally it just requires 1 or 2 people to sign off on the contribution.

If you want to, say, develop a new toilet that is suitable for people that lack suitable toilets, you do not need to just talk to PR or Finance, you need to talk to Sales and Marketing, R&D and HR... in fact you need an internal project team that is committed to this (and thus more than just the CSR person!) and able to do this. Part of the ability issue is whether the company allocates these people to the project. This project may be great in many ways, but it is most likely not going to be as profitable as targeting rich people and selling them toilets (though, in the long-term it might be). So, a) how to build this consensus and commitment to this idea throughout the organisation that you need to deliver this project successfully, and b) how to get them committed to the project, compared to the other priorities the company has?

Corporations helping community or vice versa?

I fully believe that business can be the solution to poverty. The process is simple:
1. Identify the problem
2. Identify the solution (technological, training etc)
3. Innovate to provide the solution to the problem.

Point 2 is actually quite easy, and there are already solutions to almost every development challenge, be it finding water, preventing HIV/AIDs etc. Point number 3 is where the challenge lies. So far government has failed to provide the solution in most developing countries for various reasons (money, ability etc). Can business do better? Well they also need to overcome problems, such as providing the solution cheap enough, ensuring there are qualified people to distribute and provide the solution, ensuring the solution is suitable to local needs and so on.

If a company can do that, great. Companies can profit from helping the community. If they do that, then there is a clear motive for business to invest money in helping raise awareness of the problem, the need for their solution and their proposed solution (possibly through NGO partners).

This is the issue: when does this become unethical? Health companies already understand this uneasy balance when they go to doctors to tell them about their solution to a health problem. This means the doctor will use that product to solve the problem, but is it actually the right or best product -or just the only product the doctor knows about? How to stop the doctor accepting bribes for distributing that product and not another one? Will the patient lose the trust of the doctor knowing how closely associated the doctor is to the company (and companies often havea lack of trust)?

For me, working in an NGO, where we have the trust of the community, we would gladly like to (and already do, to some extent) promote certain products (and sometimes subsidize them) -in fact we are keen to help companies understand the problems and help them develop a solution, but where is the line between promoting something that will help solve a problem and becoming (in effect) a distributor for the company? How does this affect the trust the community has in us, if they link us so closely to a company?

Upcoming posts

Over the next week I will be posting based on some thoughts from the conference I am attending; there will be many (but short!)!

Tuesday, July 03, 2007

Has Development failed?

This article questions whether the theory of 'development' as proposed by the UN, World Bank and IMF mostly, has failed. The article makes sense but has a ridiculous notion of development, only focusing on those 3 organisations who though shoot above their weight in some developing countries regarding their influence on policies, really have very little impact at all because they only worked at the governmental level until recently.

Development in its modern sense is about government -yes, in theory good governments lead to their citizens creating their own development by operating in a peaceful society which respects rights and gives the freedom to make the most of the market. Unfortunately most governments in impoverished countries are not like this, and trying to change those governments has (as history has shown) only made things worse. Stability and peace is the most important requirement for development. It would be nice to have functioning education, healthcare etc.. or even a functioning market, but without these, it is necessary to help create them.

If governments cannot create them, then other actors must and this is whether civil society comes in: NGOs, trade unions, co-operatives and of course, individuals. Of course there is a role for business/entrepreneurship too. Development is about all of these actors, and it is not failing; it is struggling to be efficient in overcoming the government deficiencies, the market deficiencies and the instability most developing countries are in.

Secondly development as seen by grass-roots organsiations, individuals themselves, and now even by the UN/IMF/WB is now seen as the opposite of what the article describes: it is about bottom-up, empowerment, skill provision, access to markets and so on. It is about partnership between different societal actors and it is about, eventually, reforming those limiting factors -especially government, through a gradual process. It takes time to educate citizens, train teachers or health workers, or create distribution channels for medicines, credit etc.

Once countries have skilled empowered citizens, they will inevitably be able to enter government or create new (capable) governments. If the WB/UN/IMF model has failed, that is really of little significance to development now, as those actors are now so minor. Much more important are civil society actors, entrepreneurs and 'foundations'. Development has barely even started yet... but in the last decade or more, it is sure that there are enough cases of it working in different ways in different countries to prove it can work. Just give all those actors the chance to do their bit and it will work, from the bottom-up.

Unfortunately development takes a long-time. That must be accepted. Unfortunately there are bad people doing bad things which is continually restricting development's potential. That must be accepted and worked around. There are many exciting examples of development taking off -explore the nextbillion.net, ashoka.org and hundreds more organisations that are connecting technology, people and organisations to create more success and scale-up successes to create greater impact.

Monday, July 02, 2007

‘Strategic’ CSR in China

Why should a company ‘do’* CSR? Because it is in its own benefit to do it.

What CSR should it ‘do’? That which benefits the company the most.

The word strategy always sound good, and in a CSR sense, it means doing something that is of maximum, long-term, benefit. Strategic CSR is not, necessarily a strategy in itself, but a commitment leading to a direction identifying certain areas a company will focus on which will improve itself and society (either at the same time, or at a later date). Thus an investment in staff makes it easier to attract new staff, reduces staff turnover (and hence recruitment costs), increases staff morale and productivity etc. An investment in the supply chain improves partnerships with suppliers, increases their efficiency, reduces risks from being associated with suppliers who break the law etc.

In the last few years, a new are has developed focusing on strategic CSR within a company; normally including a team crossing the functions of sales, marketing, research & development and corporate affairs. The objective: to develop products that fulfill a societal need, and to deliver that product to those who need it, profitably. Simple examples would be a company that makes soap that has tremendous hygiene benefits. Thus by improving the distribution a company can get soap to more people who need it and by reducing costs poorer people can afford it. It might not be easy to do either of these, but it can be possible and should be attempted because if it can be done, sales can be increased.

Many multinational companies are now focusing on this area; though not so much in China (as they are still obsessed with the higher margin middle and upper class customers), but i am sure it will be an area to watch for more. Interestingly though, China’s very open capitalist market economy has led to many companies employing these kinds of strategies anyway, without having a dual goal of helping society AND making a profit. They just want to make a profit; but the side-effect is to help society. It is easy to buy things like soap in even the most remote areas of China.

What is next, is the products and services that are harder to distribute en masse and harder to profitably sell to the poor; such as water purification systems, education, sanitary toilets, advanced farming tools, good quality roads and so on. The list of possible products and services the poor do not have in China, but need to improve their lives is a long one. The challenge is to develop a needs-based product, get it to customers and sell it to them profitably (yet at a price they can afford -or possible along with micro-loans).

China, with a huge market offers significant opportunities to do this by achieving economies of scale and scope. It is, of course, also a country with 20 million people in absolute poverty and around 200 million in poverty -second only to India. However China also offers numerous challenges, such as Intellectual Property Rights and logistics. The challenge to entrepreneurs (and of course, current businesses) out there is look for the needs that poor people have and try to serve that need profitably.

*I dislike the use of the word ‘do’ but ‘do’ is the simplest word that everyone will understand. To explain how to ‘do’ CSR is not possible in a simple blog post; though use of the word ‘do’ does imply something very simple, it is indeed definitely not.

Not Zimbabwe again

A topic I have not touched for a year or more; orginally writing about how the West should be ashamed for not doing something about a country that is constantly getting worse. Well, finally, as the problem has got worse, some other African countries have been forced to do something. Not because they really want to help of course, but because the problem is so bad that at least a third of Zimbabweans have fled their own country, many to South Africa. The migration is having such an impact on South Africa it has been forced to at least acknowledge the problem and started to apply some pressure.

The pressure makes no difference; Western countries ignore the problem; Zimbabwe gets worse. Inflation at 3,000% was bad, now it is above 15,000%. Prices triple every month. Salaries double every 3 months... an imbalance that means poverty is just getting worse and worse -a vicious cycle has taken hold leading to worse health problems and worse educational facilities. How can this cycle be broken? Even if Mugabe falls, even if the transition to a stable leadership could be relatively smooth (which would be a first through out the World), how long will it take to recover? to rebuild, to retraing, to re-attract talent...

But first we need to convince our governments to do something. To get rid of Mugabe and his cronies and try to help Zimbabwe find itself a decent leadership. Then we can think of trying to help. The future is not good. If anything it is, unfortunately, a case of how bad can a dictator mess up a country, before it actually self-implodes? It seems, regrettably, like we might be finding out in the next year. At least something might change soon -but only because the situation is so bad. And what do we do about it?

Macro Micro-finance

The greatest problem for countries to trade their way out of poverty is lack of infrastructure, especially roads. Even if the government funded the big main roads throughout the country, and the government maintained them, what about the small roads connecting through to the villages? Well if we presume that these small roads are only used by the villagers themselves to transport goods out of the village, or into it, then the villagers could pay for and maintain the road. They have free labour to some extent (in the off-season) and only need the materials/expertise (though we are talking simple roads here).

If we believe that improved roads really will help the village trade and increase their income, why not lend them money to build the road and get them to pay it back over time; once their incomes go up. The loan would be guaranteed by the whole village as they all have a stake in it. This idea of collaborative, group-ownership, lending model might work. The returns might not be great; and the loan would have to be paid back over quite a long time, as the initial cost is quite high -but it could still be profitable, and the primary purpose is to utilise funding more effectively in ways to support development.

Now, once the road is built, villagers' incomes increase and so they can become traditional microfinance clients, and this can be much more profitable.

Thursday, June 14, 2007

Mission Creep

Corporations face a choice of whether to diversify or to specialise. There are numerous advantages and disadvantages to both. However the decision on what to do is normally driven by the need to make the company as successful (i.e profitable) as it can be, in the long-term. Thus if the objective is already decided it can be easy to list the pros and cons and see whether to diversify or specialise.

For NGOs, it is not as simple: NGOs are driven by a vision: to make the World better, and each NGO has it own mission: how it will make the World better. Though it is rare, once an NGO achieves 1 mission (i.e. campaigning for better environmental protection), it can then move onto another mission towards this overall vision. Most large NGOs do this within the context of restricting themselves to what kind of missions they will undertake: normally based on their expertise and their beliefs -so they may concentrate on the environment, or poverty, or education etc.

Larger NGOs are quite well funded, however they still face potential mission creep, though for smaller NGOs it is a much greater concern, for NGOs all require funding (from just a few dollars a week to millions) and that funding must come from something and be directed towards something else. Often the 2 are connected, sometimes they are not. Faced with the opportunity to get money, most NGOs will try to get it, changing their programs or approach accordingly (which may no longer best address the needs of who/what they want to help). Is this good or bad? Every NGO must make decisions on a case-by-case basis, but it is very tough to reject funding.

Additionally many NGOs have their own little 'cash cow' which they use to raise money, and they spend resources on generating income -how much should they spend? Well, the international standard is no more than 20% of expenditure should be for admin or for fundraising. A 'cash cow' could be money from the government, from a business, from the public, from selling a product or service etc. But what 'cash cows' to pursue that support the mission; and which to reject? Again a case-by-case decision must be made considering various factors. One thing is for sure, Mission Creep in an NGO is a tricky issue and an issue most companies don't face. They have to worry more about strategies and less about objectives. NGOs often worry about objectives because theirs are more fluid and less defined.

Sunday, June 10, 2007

Women

If the World was equal women would, on average, be in half of all positions. In reality most, globally, dominate the 'working in the field' and 'looking after the home/family' positions and are under represented in many others. The devil's advocate (or the economist) could argue that the division of labour means people do the job they are best at. True women are probably best at bringing up kids; but maybe they are also the best at running countries, institutions and businesses too?

After listening to a special podcast from one of my favourite websites, I had a new epiphany. Previous I was all for women's rights, and women being at least equal to men. I had also read some of the (slightly scary) articles about Women soon not needing Men (biologically) -well, whatever. I had, also, realised that when Women are allowed to do things, they often do them better than Men -maybe because they need to prove themselves (having not been allowed to to it before) or maybe they just work harder than Men. I am well aware that Men and Women are better at different things.

Being involved in the Development World I am well aware of the crucial role that women play in rural communities (particularly). They care for the elderly, care for the young, look after the land if the men work elsewhere (migration) for cash, look after the home and more. They are the life of a community. They are very busy, but very competent. But they are 'stuck' in this role, without being able to use their wonderful abilities to achieve more. They are also discriminated against (physically and mentally) at home and in communities, often lack any voice individually or collectively in communities (as Men are seen as more important, culturally, especially in China) etc. So, the idea of empowering women came about a while ago. We are a year into our own Rural Women Empowerment Program -and it is such a simple concept but so exciting.

Allow me to elaborate. You have these women, who are normally quite busy, but sometimes have some free time; they are mostly uneducated but have huge responsibilities (including managing household finances as well as everything else previously mentioned). They rarely read (some cannot read). So you give them something to read, something relevant about childcare, farming, finances, womens health etc. Then you get them to get together with some other women to discuss what they are reading, share ideas and work on common challenges. Then they have a greater collective voice in the community, are more effective at their 'work' saving them time etc etc. Many of them can then work together to start micro-businesses (needlework, selling food, for example) from micro-finance. The result: just from giving them something useful to read and facilitating/encouraging the formation of collective groups is incredible.

Micro-finance is now becoming well-known, and is making a greater impact across the world. over 90% of all micro-finance clients are... Women. They are ones who have the time and ability to implement small business ideas; they just need the seed capital and training to do it. And it is making a difference, a huge difference. Our Micro-finance program has lent to over 5,000 people and not had a single payment default on interest of 10+% (which is low for micro-finance, due to local situations).

Anyway, back to the epiphany (of sorts) was that for the jobs that Women are most under-represented in; i.e. politics, Women might actually be the best ones at those jobs: better at understanding different people's opinions, better at negotiating, better at 'reading people', more inclined to help people and be less ruthless and so on. Apparently there is a UN Security Council resolution about Women being involved in more political processes, though i wonder how this is enforced...

So we shouldn't be helping women get certain jobs because they have equal right to them, we should be helping them get them because they can do them better and though that might mean Men like me lose out, it means Women can help make this World a better place cause all the Men can't manage to do it! hmmm

Thursday, June 07, 2007

Values for Sustainable Development

So, though the World is more and more acutely aware of how unsustainable it is, the World continues to get more unsustainable. Weird that isn't it? I have wondered for a while how this bizarre effect takes place. The more extreme example I can think of is HIV/AIDs.

I know there is obviously a lack of education and awareness about the disease; but if 25% of a population, or in some villages 60% have HIV/AIDs and are actually, visibly dying from it, why doesn't the rest of the village realise and address the issue? Is it just because everyone catches it before it is too late to realise? In which case, why is it, when these people then tell a nearby unaffected village about HIV/AIDs, that that village seems to ignore them, catch HIV/AIDs themselves etc.

I might be oversimplifying things somewhat, especially for such a complex issue. But People are pretty stupid. I've commented before on the problems of the disconnect that is the main cause of today's problems -we do not see the (unsustainable) impact of our actions, but even when we do see the negative impact of our actions, we still don't care. We absolve ourselves of responsibility, find some solution (to the detriment of someone else) and move on. It is a dog eat dog world. But when you've eaten all the dogs, then what will be left for you to eat?

So if you were given the chance to try to spread a few values that you thought might be the ones, that if everyone agreed with, and acted based upon, would lead to a sustainable World? Well, I led a short discussion and though the list could be endless and so many of the values are overlapping we came up with:
-Respect
-Interdependence
-Equality
-Responsibility

I believe that if everyone lived those values and understood those values the World would be a much better place. As it happens the project we've been running to teach the top high school students in China about these values through discussion on key SD issues is just finishing it's first phase. So far about 2,000 students reached and, for a pilot, it has been fantastic. Let's see what more we can do next time.

Community

Everyone and everything is part of a community, though how large the community is and who/what is in it varies. Human beings seem to change communities more than most species, moving between communities and changing communities more and more often. At what cost?

Communities developed as people realised they needed to trust others to survive and work with others for the common good of their community. Nowadays we leave communities searching for spouses, education, jobs, fun, adventure or just something new and different. Ironically the people that are forced to leave communities are often the ones that do not -they are forced to leave because occasionally they did something to offend the community, but most likely because the community is unable to provide for those within it any more.

A sense of community is essentially similar to a sense of social responsibility, though a sense of community is easier to define and provides more tangible benefits to those within it. It is, I believe, not a bad thing to move communities, but the bad thing is that once we move out of a community we often do not move into another one, or we do not recognise the one we have moved into -how big is it? who is in it? what are the commonalities holding the community together?

We don't recognise our community because we are not trying to; we are not trying to because we do not recognise the value of a community -to us or to others. We do often end up in some kind of community, whether we want to or not, but then we are not entirely aware of it, and are not sure if it is the right community for us. Sometimes it is, sometimes it is not. These new communities that we join are often short-lived or only based on a social nature; thus there is no long-term commitment to the community, especially it's physical environmental nature.

We need to identify our community and it's impacts. We need to recognise it for what it is worth and strive to improve the value we get from it, and the collective value within it, as well as how it interacts with other communities. I worry that as we lose our sense of community, we venture into the unknown -with unknown consequences, both short and long-term. What community are you a part of?

Saturday, March 03, 2007

Participation

Levels of Participation is what possibly used to be 1 aspect separating businesses from NGOs from governments -but the recent trend has been for everyone to take-up participation in different ways which is now another example of the blurring of the line between the 3.

Governments all try different models of participation as democracies or even as autocracies too various degrees; with citizens able to vote on certain people or decisions as well as have access to information and the ability to input into ideas, processes etc through consultations.

NGOs have long had to use participation to find volunteers and raise funds and utilise some sort of research to start an idea and then to affect real change engage people in their activities as much as possible.

Businesses used to only use participation for market research and employee unions, but now involve employees much more, customers and their ideas much more and stakeholder engagement is the buzz word around to identify new opportunities and understand potential risks.

Though all kinds of participation are different within sectors and within organisations there still is a trend for all 3 sectors to increase their participation: for government it is a way to increase their legitimacy (which is getting lower), for businesses it is a way to increase trust and hopefully increase profits and for NGOs it helps increase their impact.

Participation for me is a great thing as it helps create mutual accountability between groups, increases communication, gains greater agreement, inspires confidence and generates ideas amongst other things. Of course there are limits to how much participation is useful -however I believe these limits should be decided by the 'participants' rather than those deciding. If it requires too much time for too little benefit, let the 'participants' say! If 'participants' are not qualified for certain discussions, let them realise so!

Power to the people, greater participation and greater involvement can unite this world slowly and surely to achieving better things for more people in better ways. After all, who will complain if an idea they contribute to fails? Though they might not take responsibility, they will still be happy about the process of decision making -and this is the key point for participation. The process is more important than the result and if 'successful' will often achieve better results in the wider sense.