Stability and change. Most people, especially in the corporate World will argue that you need to continue to innovate to succeed. In literary terms you can find 'sayings' both for and against change; in political terms everyone is always talking about change; in our personal lives we are always against change and upheavals.
I find this topic interesting just because in different situations, leadership might require stability, and others might require change -and it is impossible to create any kind of generalisation or advice on this. There are, of course, issues related to responsible leadership: a duty to understand what impacts changes might have on people (many are unforeseen) or a duty to be brave enough to change ahead of the times rather than after the times, in order to remain competitive.
I want to focus on the Political World though: Looking at Iraq, life was not great before Saddam Hussein, and it will hopefully be much better 'after him' -though when the 'happy' 'after him' period arrives is anyone's guess. Change is never easy (personally, politically or professionally) and Iraq is a simple way of asking, is the change process worth it? Even if the end result is better than before the change, the change process might be so bad (or so long) that is outweighs the benefits of the change altogether.
People like stability; people do not like to take risks and there needs to be a big enough motivation to take risks; or else those risks won't be taken. You could argue that in Iraq things were not bad enough (yet) that people were willing to risk doing whatever was needed to change the status quo. Now its clear that it is not so simple as to say that the US acted like an external consultant, assessing that 2002 was the time that the change should happen: that the risks were good enough (because there were many reasons for their intervention); but looking at a political situation through a corporate viewpoint draws interesting parallels.
Who should instigate change? The internal staff (or citizens) or the external consultant/new CEO (revolutionary leader or attack/'invasion' by another country)? How can the change process be best managed -and what is the goal of that change? Interestingly I think looking at Iraq from a business point of view it's clear that the US (apologies for simplifying such a controversial and complex issue) had a vision for the 'post-change period', but had only though of the first few strategies for getting there, underestimated the time to complete the change, forgotten to think about what the impacts of the change might be on different stakeholders, ignored what the 'competition' might do, misjudged the time frame and so on. Anyone reading this could draw their own parallels to various situations.
The end of the day is that business knows how hard change is, there are thousands of models and theories and good and bad examples.. there are though some simple rules that most MBA schools will teach. But what about political change? Even looking at more modest changes, like a domestic election leading to a change in political party leadership, there seems to be no real understanding of how to create the change, what the vision is, what the strategies are and so on. At least, that is a very initial statement.
With deeper reflection, I believe that there are many successful cases of political change, and what seems to be common with all of them is that change was so desperately needed that it was simple and obvious to work out the details, the strategies, to get stakeholder support etc. Nowadays most western countries don't have serious need to change, therefore whatever supposed changes they initiate (and most mainstream parties in most developed democracies seem to be very alike) they are not very successful. Now if change was really needed then an extreme party (communist, fascist or whatever) would take over... therein lies the issue: these parties will take over once the need is great enough and they get enough support. However it is in the current mainstream parties interests to stop that from happening.
The competition in the corporate world is much greater; the need for change is often more pressing and more is at stake. Politically countries can afford somewhat to just be stable, making minor changes, and sometimes companies can do the same -other times companies cannot afford that whatsoever. So maybe politics needs to look at itself from a corporate viewpoint; to look at issues about stakeholders, visions and strategies, goals and accountability, 'change or die' perspectives, scenario planning, competitive analysis and so on. This is an interesting topic to explore more of in the future.
Meanwhile I'm more interested in the 'tipping point' that leads to successful changes.. when are what pressures so great that change happens? who instigates the change? was the change worthwhile? For me, time is the most important issue with change. Try to make the change quickly. Get it over with, then tweak it. Everyone will argue with change, no-one likes change, everyone is suspicious of new things and demands will change, pressures will change... so much will change as time drags on that the whole change process becomes based on a cause that has changed and a vision that is no longer relevant. So, responsible leaders need to understand this (no matter what they are leading), they need to prepare, research, strategise. But most of all they need to get their timing right. Make the change at the right time -get it finished when that time is still right.
Then start thinking about other issues in change mangement: expectation setting, vision setting, leadership, buy-in, progress communication, stakeholder participation and agreement etc etc. How much of this has ever been done politically? Only when the situation was so bad that enough people could easily identify the problem and the problem was so serious that it had to be changed NOW and quickly has political change been successful (of course other factors are useful too, like outside support or copying other successful models) -overall change is about time, and about need. Right now some of the world is slowly starting to realise that change is needed, and quickly, to stop climate change or HIV/AIDs. But the world is not there yet. The pressures for change are not direct enough, not important enough, not relevant enough to create the tipping point needed. Lets hope though that this change will come, it will come quickly, be done quick enough, and be successful. Isn't is scary to compare the battle in Iraq with the battle against HIV/AIDs?
When will the end come? Who really wants the end? Are those who have the means to end it willing to end it or do they know how to end it? Is it just getting worse? The longer it goes on, the worse it gets -that is for certain.
Monday, September 25, 2006
Saturday, August 12, 2006
Sustainability takes off
So Sustainability might have finally taken off. The general public seem to know about climate change, have heard something about hydrogen replacing oil and have had to suffer either an electricity shortage or water restrictions recently. Many have read about the pollution in and from China, about the destruction of ecosystems globally and problems of slums, droughts, war and all things 'Africa-related'.
What is exciting is that all of these above things, including normally 'Africa-related' problems are becoming problems for the very people creating them -us, developed world's consumers. There are campaigns and 'days' or 'years' of all kinds. Companies are launching awareness campaings, politicians are fighting to be greener than their rivals and consumers are sometimes choosing 'fair-trade' or 'organic' products -or at least have probably heard about them.
The problem with all this, is that the World is a very big place, with many people, and many problems. Most of the causes for the problems we have are large-scale, and though its good to be aware of the cause and to have a solution. Actually implenting the solution on a scale that makes a difference (and hopefully reduces the problem) is another thing altogether.
So we are short of oil or water? It's not easy or quick to find more of either. So there is too much carbon in the atmosphere? Right now we are still pumping more into the air each year, let alone reducing our emissions, or finding a way of taking out what already is in the air! Our buildings and infrastructure waste water and heat. Newer (eg. LEED certified) ones are 10 times more efficienct, but look how long it has taken (and how little success their has been) to but energy efficient lightbulbs, let alone replace our water pipes, homes and offices.
I am excited by the trend that has started and is growing exponentially. But at the same time worried, because by the time the trend and the 'noise' gets big enough it might be too late. Recently a Nobel Prize-winning scientist has drawn up an emergency plan to save the world from global warming, by altering the chemical makeup of Earth's upper atmosphere. Uh-oh
What is exciting is that all of these above things, including normally 'Africa-related' problems are becoming problems for the very people creating them -us, developed world's consumers. There are campaigns and 'days' or 'years' of all kinds. Companies are launching awareness campaings, politicians are fighting to be greener than their rivals and consumers are sometimes choosing 'fair-trade' or 'organic' products -or at least have probably heard about them.
The problem with all this, is that the World is a very big place, with many people, and many problems. Most of the causes for the problems we have are large-scale, and though its good to be aware of the cause and to have a solution. Actually implenting the solution on a scale that makes a difference (and hopefully reduces the problem) is another thing altogether.
So we are short of oil or water? It's not easy or quick to find more of either. So there is too much carbon in the atmosphere? Right now we are still pumping more into the air each year, let alone reducing our emissions, or finding a way of taking out what already is in the air! Our buildings and infrastructure waste water and heat. Newer (eg. LEED certified) ones are 10 times more efficienct, but look how long it has taken (and how little success their has been) to but energy efficient lightbulbs, let alone replace our water pipes, homes and offices.
I am excited by the trend that has started and is growing exponentially. But at the same time worried, because by the time the trend and the 'noise' gets big enough it might be too late. Recently a Nobel Prize-winning scientist has drawn up an emergency plan to save the world from global warming, by altering the chemical makeup of Earth's upper atmosphere. Uh-oh
Thursday, June 08, 2006
Losing our responsibility
I'm often talking about PSR -Personal Social Responsibility- in the context of each of us should try to save water, recycle, help others and so on. But, actually in the last 20 years especially, we are all losing our sense of personal responsibility.
A recent article in the Telegraph newspaper puts a humerous twist on it:
-Did the credit card company force us to sign up to 6 credit cards and spend the money available on them?
-Do McDonalds force you into their restaurants to eat unhealthy food?
-Does your employer force you to not wear a safety mask?
Of course an employer should make sure their workplace is safe. Of course they can provide healthy products as well as unhealthy products. Of course they should not use advertising irresponsibly to attract you (or especially children) to smoke.
But it is almost sad when companies are providing training to their employees about sexually transmitted diseases or about traffic safety; because their employees do not know this information already (and the company does not want employees missing work from illness or injuries). Yes -there is a business case for companies to protect their employees from themselves, but why do employers have to do this?
A recent article in the Telegraph newspaper puts a humerous twist on it:
-Did the credit card company force us to sign up to 6 credit cards and spend the money available on them?
-Do McDonalds force you into their restaurants to eat unhealthy food?
-Does your employer force you to not wear a safety mask?
Of course an employer should make sure their workplace is safe. Of course they can provide healthy products as well as unhealthy products. Of course they should not use advertising irresponsibly to attract you (or especially children) to smoke.
But it is almost sad when companies are providing training to their employees about sexually transmitted diseases or about traffic safety; because their employees do not know this information already (and the company does not want employees missing work from illness or injuries). Yes -there is a business case for companies to protect their employees from themselves, but why do employers have to do this?
Monday, June 05, 2006
innovation, CSO and BoP
I was having a discussion with a friend about Nike and it developed into a new realisation for me. I suddenly realised the obvious linkage between innovation, CSR as CSO (Corporate Social Opportunity -not as just a responsibility) and BoP. BoP is the Bottom of the Pyramid theory that is popular nowadays, as a reason to motivate companies to create more products to sell to the poor in society, since they have some money, and if companies can create accessible products for them, they will be able to improve their quality of life.
In Nike's case there is not such an obvious proposition. They need to keep their products at a certain price to maintain the brand's status as well as make a profit to pay for their manufacturing and marketing costs. The proposition would be that Nike could create another brand (not called Nike at all, or called Nike Base or something) that would be at prices to rival local products (or the fake brand's products!) but would be based on Nike's quality standards. The products might be made from cheaper materials and would be proftable because there would be no need for R&D costs, promotional costs etc. It would not have maybe the same design benefits -since many people at the BoP require products for their use, not for their image. Thus this would differentiate it from the main nike products.
The conundrum though would be how to not lower nike's brand globally whilst still being able to sell these new products at a profit.
The next line of thinking is how to not just sell products to the poor -the idea is that the poor will benefit from these products, by the way, not just be exploited. How can Nike help the poor make more money (either to buy their products, or just to become less poor)? This would require looking at new manufacturing or distribution models. For distribution, you could look at a simple coca-cola model, where local distributors would sell their products and make money by doing it. One may ask why would poor people need nike clothes.. quality is not that big an issue for clothes. The locally made ones might be very similar to Nike's.
What makes this interesting is to tie this in with one of the key aspects of Nike's brand: of an active life. Sports and physical activies DO have huge benefits for people -anod not just in keeping them healthy, but in bringing people together for team activities as well as developing individual skills (team-work, motivation etc) or inspiring young people. This is the problem fo r Nike. What they can bring to the poorer people is a brand that will inspire people to be active..but they would need to keep their brand on these lower costs products to do this. What's the answer? Comments please, but there might be one somewhere out there.. Alternatively a low cost retailer might want to create a new brand: the ethos of Nike, but at lower costs!
How else could Nike help poor people? Apart from paying them to be distributors, they could also pay them to do marketing, to be sports coaches (if there was a business case to this then leading to greater sales), or to be involved in manufacturing.
There has been renewed debate against global supply chains and for local supply chains. Global Supply chains are the best way to maintain quality and be cost efficient, but the goods have to travel with climate change impacts and affecting the time to market from production. Groceries is a key player in this discussion at the moment: sourcing locally rather than centrally. But what if Nike's products could be made locally in small workshops, in local houses -much like 200 years ago in pre-industrialisation times.. and what if this was more beneficial than centralising everything, someway?
The point of this post is to show that for any company there are various options of innovating that might provide new market opportunities. Of course none of these might be feasible.. why should nike bother about producing locally, let a local entrepreneur or a mother stitch her own clothes! But, what if companies started to investigate and ask themselves these kinds of questions, to explore all kinds of new opportunties? Then, with some radical thinking, some determination and some innovation, we could get something, maybe. Maybe it won't benefit Nike, but if it can benefit society, someone else can take it up!
In Nike's case there is not such an obvious proposition. They need to keep their products at a certain price to maintain the brand's status as well as make a profit to pay for their manufacturing and marketing costs. The proposition would be that Nike could create another brand (not called Nike at all, or called Nike Base or something) that would be at prices to rival local products (or the fake brand's products!) but would be based on Nike's quality standards. The products might be made from cheaper materials and would be proftable because there would be no need for R&D costs, promotional costs etc. It would not have maybe the same design benefits -since many people at the BoP require products for their use, not for their image. Thus this would differentiate it from the main nike products.
The conundrum though would be how to not lower nike's brand globally whilst still being able to sell these new products at a profit.
The next line of thinking is how to not just sell products to the poor -the idea is that the poor will benefit from these products, by the way, not just be exploited. How can Nike help the poor make more money (either to buy their products, or just to become less poor)? This would require looking at new manufacturing or distribution models. For distribution, you could look at a simple coca-cola model, where local distributors would sell their products and make money by doing it. One may ask why would poor people need nike clothes.. quality is not that big an issue for clothes. The locally made ones might be very similar to Nike's.
What makes this interesting is to tie this in with one of the key aspects of Nike's brand: of an active life. Sports and physical activies DO have huge benefits for people -anod not just in keeping them healthy, but in bringing people together for team activities as well as developing individual skills (team-work, motivation etc) or inspiring young people. This is the problem fo r Nike. What they can bring to the poorer people is a brand that will inspire people to be active..but they would need to keep their brand on these lower costs products to do this. What's the answer? Comments please, but there might be one somewhere out there.. Alternatively a low cost retailer might want to create a new brand: the ethos of Nike, but at lower costs!
How else could Nike help poor people? Apart from paying them to be distributors, they could also pay them to do marketing, to be sports coaches (if there was a business case to this then leading to greater sales), or to be involved in manufacturing.
There has been renewed debate against global supply chains and for local supply chains. Global Supply chains are the best way to maintain quality and be cost efficient, but the goods have to travel with climate change impacts and affecting the time to market from production. Groceries is a key player in this discussion at the moment: sourcing locally rather than centrally. But what if Nike's products could be made locally in small workshops, in local houses -much like 200 years ago in pre-industrialisation times.. and what if this was more beneficial than centralising everything, someway?
The point of this post is to show that for any company there are various options of innovating that might provide new market opportunities. Of course none of these might be feasible.. why should nike bother about producing locally, let a local entrepreneur or a mother stitch her own clothes! But, what if companies started to investigate and ask themselves these kinds of questions, to explore all kinds of new opportunties? Then, with some radical thinking, some determination and some innovation, we could get something, maybe. Maybe it won't benefit Nike, but if it can benefit society, someone else can take it up!
Monday, March 27, 2006
Transparency
Transparency is important and becoming increasingly so. I am a big champion of transparency, but then I work for an NGO, so I would be!
I was wondering, in the context of the previous post about the 'invisible line', about how transparent a business could be. Nothing is simple. I looked before at why businesses are not responsible, since no-one seems to focus on this as much! Likewise, why is the 'publish what you pay' coalition (seemingly) such a failure? Why are companies not telling everyone how much taxes they are paying? Why in their Annual Report do they not geographically break down their payments? I think there are some unforeseen consequences. These could be positive but they could be (almost) revolutionary (sounds so dramatic). Let me introduce some scenarios:
-Shell says how much it pays the Nigerian government in taxes; the local people try to find out where it is getting spent and then civil unrest starts. This forces Shell to stop producing and to leave the country -for how long? Alternatively say Chevron pays less taxes and everyone tries to work out if this is justified or not (maybe from less income) -since tax regimes are so complicated that unfair comparisons are likely to be made and little achieved.
-If Wal-mart declared part of internal financial statements then competitors can work out their margins. Suppliers will realise the actually costs or sales of their products and renogotiate. Maybe this is stupid: but this is transaprency. Imagine that the current trend of supply-chain management develops so that customers demand more. Not just wanting to know if the company supports illegal forests, but wants to know if they use any of this or that chemical, they want to know how many products are bought locally (to support the local economy) and they want to know which ones. This could be fantastic: a concerted drive to source locally since customers might pay more for locally sourced goods it if keeps their neighbours in business, and so Walmart buys more locally... One way or another Wal-mart is forced, or voluntarily, reveals all this kind of information.
-If the terms of a contract were made public, how would this impact future competitiors wishing to bid for the contract? Granted if this was unusual, there would be (presumably) inequality in bargaining power, in knowledge disclosure and so on.
What I am really getting at, is that transaprency could work. But if it is to work, it needs a totally new paradigm: a new society with a new perspective on transparency with consequences that would (if transparency were the 'norm' -ie. legally enforced, and so everyone had the same access to the same knowledge) completely revolutionise how business is done. Would business be able to survive in this environment? I wonder if anyone has thought about any modelling of how it might, or how business could compete with total transaprency?
If we presume, that this would not be possible, then we have to work out where the line is between no transparency to total transaprency. Then we need to establish the motivations behind increasing transparency: legal or just self-interest? Transparency will increase when organisations think it is in their own benefit. Otherwise it would not be sustainable. No wonder 'publish what you pay' is destined to fail. NGOs might wield power of a sort, but its influence is limited when its demands unreasonable and when the impact of its activities (even if successful) may be limited: the unintended consequences could be graver. I'm a believer that someone will do something if they think its right. Telling them its right is not as effective as showing them.
Back onto the topic, what if transparency was not total: but more complicated (even those complexity usually makes things worse, in my opinion). What if different disclosures were made to different groups at different times (or when asked) and what those groups did with information did not affect the company's competitiveness or comparative advantage? Well, lets see if this will work. It seems this is the way the World is going... I can imagine in the near future that Transparency International will get certain information, create a report and say 'trust me' without revealing all the details. But what makes this interesting, is that companies are now refusing to trust governments with their details (ID cards in UK, google in the US), so why should we trust NGOs, or any other organisation for that matter?
I'm looking forward to how the current experiment in transparency works out and would be much more interested to look further into a concept of a world with total transparency: what would the ramifications be for salaries, costs, negotiations....?Why, we might end up in a world totally different -would it be a world that works better than the current one? Maybe, but will it be better for those who control the world now -no. So how likely is it to happen? So, going backwards somewhat (to reality), how likely is transparency as a concept to develop anyway? It is a concept that SEEMS to only have negative effects to those benefitting from an untransparent World. What is the future of transparency?
I was wondering, in the context of the previous post about the 'invisible line', about how transparent a business could be. Nothing is simple. I looked before at why businesses are not responsible, since no-one seems to focus on this as much! Likewise, why is the 'publish what you pay' coalition (seemingly) such a failure? Why are companies not telling everyone how much taxes they are paying? Why in their Annual Report do they not geographically break down their payments? I think there are some unforeseen consequences. These could be positive but they could be (almost) revolutionary (sounds so dramatic). Let me introduce some scenarios:
-Shell says how much it pays the Nigerian government in taxes; the local people try to find out where it is getting spent and then civil unrest starts. This forces Shell to stop producing and to leave the country -for how long? Alternatively say Chevron pays less taxes and everyone tries to work out if this is justified or not (maybe from less income) -since tax regimes are so complicated that unfair comparisons are likely to be made and little achieved.
-If Wal-mart declared part of internal financial statements then competitors can work out their margins. Suppliers will realise the actually costs or sales of their products and renogotiate. Maybe this is stupid: but this is transaprency. Imagine that the current trend of supply-chain management develops so that customers demand more. Not just wanting to know if the company supports illegal forests, but wants to know if they use any of this or that chemical, they want to know how many products are bought locally (to support the local economy) and they want to know which ones. This could be fantastic: a concerted drive to source locally since customers might pay more for locally sourced goods it if keeps their neighbours in business, and so Walmart buys more locally... One way or another Wal-mart is forced, or voluntarily, reveals all this kind of information.
-If the terms of a contract were made public, how would this impact future competitiors wishing to bid for the contract? Granted if this was unusual, there would be (presumably) inequality in bargaining power, in knowledge disclosure and so on.
What I am really getting at, is that transaprency could work. But if it is to work, it needs a totally new paradigm: a new society with a new perspective on transparency with consequences that would (if transparency were the 'norm' -ie. legally enforced, and so everyone had the same access to the same knowledge) completely revolutionise how business is done. Would business be able to survive in this environment? I wonder if anyone has thought about any modelling of how it might, or how business could compete with total transaprency?
If we presume, that this would not be possible, then we have to work out where the line is between no transparency to total transaprency. Then we need to establish the motivations behind increasing transparency: legal or just self-interest? Transparency will increase when organisations think it is in their own benefit. Otherwise it would not be sustainable. No wonder 'publish what you pay' is destined to fail. NGOs might wield power of a sort, but its influence is limited when its demands unreasonable and when the impact of its activities (even if successful) may be limited: the unintended consequences could be graver. I'm a believer that someone will do something if they think its right. Telling them its right is not as effective as showing them.
Back onto the topic, what if transparency was not total: but more complicated (even those complexity usually makes things worse, in my opinion). What if different disclosures were made to different groups at different times (or when asked) and what those groups did with information did not affect the company's competitiveness or comparative advantage? Well, lets see if this will work. It seems this is the way the World is going... I can imagine in the near future that Transparency International will get certain information, create a report and say 'trust me' without revealing all the details. But what makes this interesting, is that companies are now refusing to trust governments with their details (ID cards in UK, google in the US), so why should we trust NGOs, or any other organisation for that matter?
I'm looking forward to how the current experiment in transparency works out and would be much more interested to look further into a concept of a world with total transparency: what would the ramifications be for salaries, costs, negotiations....?Why, we might end up in a world totally different -would it be a world that works better than the current one? Maybe, but will it be better for those who control the world now -no. So how likely is it to happen? So, going backwards somewhat (to reality), how likely is transparency as a concept to develop anyway? It is a concept that SEEMS to only have negative effects to those benefitting from an untransparent World. What is the future of transparency?
The invisible line
Assumption:
-Partnership between sectors and organisations are good. eg. government and business collaborating on new laws that businesses could abide by and benefit from or companies in the same sector creating a voluntary code that they will agree to (such as not advertising chocolate to shildren)
-Corruption is bad. eg. business paying government to make, or not make, a certain law or businesses working together as cartels to create artificial price fixes
You'll see what I am leading to... where is the line between partnership and corruption? That the line can be greay and not black/white means it is harder to define the boundary, but more importantly, it is harder to interpret. So a company may quite happily have 2 principles: 1 of partnering to achieve more and 1 of refusing to be involved in corruption. It may strive to work closely with its suppliers and customers so it can better service them, it may give preferential treatment to preferred suppliers. But when does this preferential treatment become bribery?
Consider the case of treating a customer to dinner, or the case of a business partner also being a friend. When does the dinner become a bibe and when does a social conversation about their sector end up as a tacit agreement to collude or lead to sepcial favours? When recruiting someone, it is sensible to take into account personal experience or recommendations, but how valid is this, and does this not lead to discrimination against those who you did not know before?
Thinking about this more and more show that there are so many more examples -how do you draw the line? Presuming you do not intend to break the law then the line is very subjective. It is defined in reference to the 'norm' (ie. the normal circumstances that you think everyone does all of the time as part and parcel of the job). This creates a problem if there is no established 'norm' or if you do not know what the 'norm' is. In the case of China, where everything changes so fast (including the legal framework) and where most foreigners enter the market without understanding the culture or even being able to communicate effectively these issues might become especially valid.
On a slight tangent, this question leads me to think of the separate role of government and business. Is there a separate role? In every country the role is different. In some cases governments provide training, healthcare, utilities, salaries (pensions, unemployment benefit) etc etc. In others it is different. On a micro level in China you will find the British Embassy offering some free advice to British companies wishing to set up here, since the government wants to encourage business success, yet the company could also pay a special consultant for more in-depth advice. In fact often the government might subsidise this kind of advice directly.
What do companies do? Provide services in return for money? well governments do the same: you pay in your taxes and receive benefits. Governments tend to then themselves pay another company to do some of those services (outsourcing) and then it can all get complicated and confusing. I think the concept of CSR is struggling somewhat since it is trying to establish the rold of business in society: in reducing poverty, in creating a successful, sustainable society and so on. But this is also the role of national, local or international governments. Then there are NGOs: many bigger and with more influence than business or governments. Many performing services that are effectively government services outsourced.. but to an NGO not to a company. No difference, except in name.
All types of organisations have the ability to accrue debt or make profit. It could be possible to argue that governments are elected, other organisations are not: but this has nothing related to role of the organisation itself: maybe in the future, since stakeholders are becoming so important in business, that business will not just hold itself accountable to its stakeholders, but will go even further and hold itself electable to stakeholders. It will certainly gain legitimacy and trust! Though this may seem pointless since many countries struggle to have high turn-out in their governmental elections anyway!
So, the invisible line: macro and micro level discussions. Impact on individual level? How the individual defines their own lines, in the context of how the individual believes others see the line, and how the individual thinks others expect the individual to draw the line. Its all to subjective... no wonder corruption is a problem!
-Partnership between sectors and organisations are good. eg. government and business collaborating on new laws that businesses could abide by and benefit from or companies in the same sector creating a voluntary code that they will agree to (such as not advertising chocolate to shildren)
-Corruption is bad. eg. business paying government to make, or not make, a certain law or businesses working together as cartels to create artificial price fixes
You'll see what I am leading to... where is the line between partnership and corruption? That the line can be greay and not black/white means it is harder to define the boundary, but more importantly, it is harder to interpret. So a company may quite happily have 2 principles: 1 of partnering to achieve more and 1 of refusing to be involved in corruption. It may strive to work closely with its suppliers and customers so it can better service them, it may give preferential treatment to preferred suppliers. But when does this preferential treatment become bribery?
Consider the case of treating a customer to dinner, or the case of a business partner also being a friend. When does the dinner become a bibe and when does a social conversation about their sector end up as a tacit agreement to collude or lead to sepcial favours? When recruiting someone, it is sensible to take into account personal experience or recommendations, but how valid is this, and does this not lead to discrimination against those who you did not know before?
Thinking about this more and more show that there are so many more examples -how do you draw the line? Presuming you do not intend to break the law then the line is very subjective. It is defined in reference to the 'norm' (ie. the normal circumstances that you think everyone does all of the time as part and parcel of the job). This creates a problem if there is no established 'norm' or if you do not know what the 'norm' is. In the case of China, where everything changes so fast (including the legal framework) and where most foreigners enter the market without understanding the culture or even being able to communicate effectively these issues might become especially valid.
On a slight tangent, this question leads me to think of the separate role of government and business. Is there a separate role? In every country the role is different. In some cases governments provide training, healthcare, utilities, salaries (pensions, unemployment benefit) etc etc. In others it is different. On a micro level in China you will find the British Embassy offering some free advice to British companies wishing to set up here, since the government wants to encourage business success, yet the company could also pay a special consultant for more in-depth advice. In fact often the government might subsidise this kind of advice directly.
What do companies do? Provide services in return for money? well governments do the same: you pay in your taxes and receive benefits. Governments tend to then themselves pay another company to do some of those services (outsourcing) and then it can all get complicated and confusing. I think the concept of CSR is struggling somewhat since it is trying to establish the rold of business in society: in reducing poverty, in creating a successful, sustainable society and so on. But this is also the role of national, local or international governments. Then there are NGOs: many bigger and with more influence than business or governments. Many performing services that are effectively government services outsourced.. but to an NGO not to a company. No difference, except in name.
All types of organisations have the ability to accrue debt or make profit. It could be possible to argue that governments are elected, other organisations are not: but this has nothing related to role of the organisation itself: maybe in the future, since stakeholders are becoming so important in business, that business will not just hold itself accountable to its stakeholders, but will go even further and hold itself electable to stakeholders. It will certainly gain legitimacy and trust! Though this may seem pointless since many countries struggle to have high turn-out in their governmental elections anyway!
So, the invisible line: macro and micro level discussions. Impact on individual level? How the individual defines their own lines, in the context of how the individual believes others see the line, and how the individual thinks others expect the individual to draw the line. Its all to subjective... no wonder corruption is a problem!
Friday, March 24, 2006
Why do companies behave irresponsibly? -2
So how is the internal environment of an organisation influencing CSR? First I'll convince you that it is important. Look at Shell and BP: 2 of the best companies in the World for CSR (apparently); Shell had to revalue its oil reserves 2 years ago in a transparency disaster and this year BP has had an oil spill in Alaska from pipes that used to be inspected by 4 people but now only by 2 (to cut costs) .
Its clear that many of the best run global companies still have not mastered CSR by integrating it into their culture, despite valient attempts to. It seems that I should try to remember something about the module on 'OB' -Organisational Behaviour that I sudied at University, but I cannot! Anyway once again it shows that if you learn something in real life you'll remember much more. So what have I learnt? (and lets hope I'll remember!)
detachment. I have mentioned this before, and it is hugely important that you see the impacts from your actions. So many people don't even know what their impacts are, let alone try to ackowledge what those impacts might mean if they were aware of them. Will the BP person who originally decided to cut the oil pipe inspectors from 4 to 2 realise what has happened? Or was (s)he sitting in a head office, has now switched jobs or (if (s)he read the news) is (s)he blaming the accident on something else?
individualism. People tend to have individual targets and goals, and this is what they focus on. This detracts from seeing the bigger picture or caring about what other people are doing... or even thinking if what you are doing is related to someone else or not. As long as you do what your job is properly, then that's ok? Probably not, since it won't leverage any synergies in the company, it won't create the best solution for larger problems and it will only create a sense of responsibility to yourself, not to the organisation or to society.
reward and punishment. Punishment is always used too much, and is rarely effective. Reward is a better motivator, yet is rarely motivating anyone towards sustainability or responsible actions. You reward a sales person for increasing sales this year, you don't care whether those sales will be re-sold next year. Similarly you'll reward someone for a project completed on time, but won't think that they should write a report on how they did that which could help someone else repeat that accomplishment or consider the impacts of the project 5 years down the line (by requiring a post-project completion impact report or something). Companies need to reward in the right way in order to create the culture they want, and if they are serious about creating a sustainable, successful, organisation, their reward should support this.
misalignment. I find is fantastic that organsiations have values, goals, strategies and plans. Yet are they aligned? Are you rewarding employees for exhibiting the values you want to encourage? Are the goals sustainable and related to a long-term plan -what is their impact? Its fine to increase sales by 20%, but what will that do? Make people 20% fatter? Make employees work 15% more overtime? Reduce costs by 25% from your supplier who then goes bankrupt or pays their employees 25% less and so reducing product quality or requiring you to change supplier the following year, incurring the necessary switching costs? Will this growth generate bigger bonuses to employees who might then get poached by another company due to their success? All kinds of issues should be considered. I don't know if a framework exists in order to consider these -but maybe one should be! Life and Business is complicated -but it should be possible to make it simple: align, motivate and achieve.
decision-making. Also mentioned before but something i am becoming more intrigued in. What are the improtant factors when making a decision? Why will someone 'take short-cuts' or cheat? Who needs to be consulted for a decision to be made, and if everyone involved all has different motives might the outcome be a compromise for everyone and unsatisfactory for everyone at the same time? Is a decision based on the past, present or future, and how can you measure either: is a projection reasonable or is it biased?
I am sure these kinds of issues play a very important role in an organisation -i guess they are not very well understood. I think they need to be better understood for each of us to be responsible leaders, and for our organsiations to be responsible leaders.
Its clear that many of the best run global companies still have not mastered CSR by integrating it into their culture, despite valient attempts to. It seems that I should try to remember something about the module on 'OB' -Organisational Behaviour that I sudied at University, but I cannot! Anyway once again it shows that if you learn something in real life you'll remember much more. So what have I learnt? (and lets hope I'll remember!)
detachment. I have mentioned this before, and it is hugely important that you see the impacts from your actions. So many people don't even know what their impacts are, let alone try to ackowledge what those impacts might mean if they were aware of them. Will the BP person who originally decided to cut the oil pipe inspectors from 4 to 2 realise what has happened? Or was (s)he sitting in a head office, has now switched jobs or (if (s)he read the news) is (s)he blaming the accident on something else?
individualism. People tend to have individual targets and goals, and this is what they focus on. This detracts from seeing the bigger picture or caring about what other people are doing... or even thinking if what you are doing is related to someone else or not. As long as you do what your job is properly, then that's ok? Probably not, since it won't leverage any synergies in the company, it won't create the best solution for larger problems and it will only create a sense of responsibility to yourself, not to the organisation or to society.
reward and punishment. Punishment is always used too much, and is rarely effective. Reward is a better motivator, yet is rarely motivating anyone towards sustainability or responsible actions. You reward a sales person for increasing sales this year, you don't care whether those sales will be re-sold next year. Similarly you'll reward someone for a project completed on time, but won't think that they should write a report on how they did that which could help someone else repeat that accomplishment or consider the impacts of the project 5 years down the line (by requiring a post-project completion impact report or something). Companies need to reward in the right way in order to create the culture they want, and if they are serious about creating a sustainable, successful, organisation, their reward should support this.
misalignment. I find is fantastic that organsiations have values, goals, strategies and plans. Yet are they aligned? Are you rewarding employees for exhibiting the values you want to encourage? Are the goals sustainable and related to a long-term plan -what is their impact? Its fine to increase sales by 20%, but what will that do? Make people 20% fatter? Make employees work 15% more overtime? Reduce costs by 25% from your supplier who then goes bankrupt or pays their employees 25% less and so reducing product quality or requiring you to change supplier the following year, incurring the necessary switching costs? Will this growth generate bigger bonuses to employees who might then get poached by another company due to their success? All kinds of issues should be considered. I don't know if a framework exists in order to consider these -but maybe one should be! Life and Business is complicated -but it should be possible to make it simple: align, motivate and achieve.
decision-making. Also mentioned before but something i am becoming more intrigued in. What are the improtant factors when making a decision? Why will someone 'take short-cuts' or cheat? Who needs to be consulted for a decision to be made, and if everyone involved all has different motives might the outcome be a compromise for everyone and unsatisfactory for everyone at the same time? Is a decision based on the past, present or future, and how can you measure either: is a projection reasonable or is it biased?
I am sure these kinds of issues play a very important role in an organisation -i guess they are not very well understood. I think they need to be better understood for each of us to be responsible leaders, and for our organsiations to be responsible leaders.
Why do companies behave irresponsibly? -1
It just dawned on me that instead of sitting in these conferences, always talking over and over again about why CSR is so good and why everyone should do it; it might be better to question first why are companies NOT doing it, since it is good business.
Is it a case that these people are stupid? or bad businessmen? Maybe it is. But also maybe it is much more complicated. I really do not think that the managers of mining companies in China want to kill their workers, but many of them end up hurt. Why?
It seems there are 2 main areas for discussion here: the external framework (that is often location specific) and the internal environment of a company/organisation.
At one event I went to recently, the GM of a state-owned railway company, spoke about the pressures he faces: he says a project will take 4 years, the government says to do it in 2 years! How can you implement a prject sustainably when you have to do it in half the time you expected it to take? The private companies also said that when they bid for a project they expect it to cost a certain amount. Then they are told that if they want the project they will have to do it for 25% less. How can they do that? If they do not accept then they have no business -if they do accept they will have to make some short-cuts to save on costs!
It is no wonder that there are health and safety problems: pressures to use cheaper materials, pressure to do things quicker and take less safety precautions. In this short-term situation it is hard to use the normal CSR lines to convince the company. On one hand there will be extra costs if there are injuries or problems with a bridge collapsing for example, but maybe you can complete the project without any of these problems.. and so the company tries to do this. In this case the solution seems to be about the development of the external framework to be more ameniable for CSR.
Thus, NGOs or government will pressurise the organisation awarding the contract, so make sure that all the companies that bid must meet certain minimum requirements. This means there will be a certain cost that no-one can go below, and the awarding body will have to accept that it cannot continue to force down the cost. Alternatively customers will actually start to care about CSR: so they will choose the best company for the project, not the cheapest. Right now costs is always the most important factor. I believe some companies like Shell take other factors into account to some extent, but when you make billions in profits you can afford some luxuries like this!
Is it a case that these people are stupid? or bad businessmen? Maybe it is. But also maybe it is much more complicated. I really do not think that the managers of mining companies in China want to kill their workers, but many of them end up hurt. Why?
It seems there are 2 main areas for discussion here: the external framework (that is often location specific) and the internal environment of a company/organisation.
At one event I went to recently, the GM of a state-owned railway company, spoke about the pressures he faces: he says a project will take 4 years, the government says to do it in 2 years! How can you implement a prject sustainably when you have to do it in half the time you expected it to take? The private companies also said that when they bid for a project they expect it to cost a certain amount. Then they are told that if they want the project they will have to do it for 25% less. How can they do that? If they do not accept then they have no business -if they do accept they will have to make some short-cuts to save on costs!
It is no wonder that there are health and safety problems: pressures to use cheaper materials, pressure to do things quicker and take less safety precautions. In this short-term situation it is hard to use the normal CSR lines to convince the company. On one hand there will be extra costs if there are injuries or problems with a bridge collapsing for example, but maybe you can complete the project without any of these problems.. and so the company tries to do this. In this case the solution seems to be about the development of the external framework to be more ameniable for CSR.
Thus, NGOs or government will pressurise the organisation awarding the contract, so make sure that all the companies that bid must meet certain minimum requirements. This means there will be a certain cost that no-one can go below, and the awarding body will have to accept that it cannot continue to force down the cost. Alternatively customers will actually start to care about CSR: so they will choose the best company for the project, not the cheapest. Right now costs is always the most important factor. I believe some companies like Shell take other factors into account to some extent, but when you make billions in profits you can afford some luxuries like this!
Monday, March 20, 2006
Management problems
When writing my ideas for submitting an essay to the China CSR Map's essay competition I started thinking about CSR in China from an objective, long-term perspective: trying to think about why CSR is growing, is it growing and where is it going...
One of the issues I draw upon is related to the State Owned Enterprises (SOEs) in China. The largest national ones have all been put under the control of SASAC (State-owned Assets Supervision and Administration Commission of the State Council) in order to reform and restructure the SOEs. The question I posed was oringnally just about CSR: If the government wants to encourage CSR then it should tell the SOEs and they will do it, or not?
Now ignoring the issue of CSR and just looking at the issue of owners telling the managers to do something, you come to several problems. Key, for me (especially in a CSR context) is that it is likely that some of the instructions will be beneficial to the SOE, but not to the manager. If we presume that implementing CSR has negative short-term implications (financial and human investment required) but positive long-term implications, then the Manager might not care about the long-term. In addition, they might not want to accept more responsibilities or more targets, or anything that makes their life harder, more complicated or more difficult. How much power does the owner wield? For non SOEs, the bigger issue is that short-term investments often lead to lower profits and lower stock (share) prices; both of which managers are measured against to judge their success.
Presuming that current governance models, therefore (either government owned or publicly owned) have these inherent problems (and many more, that I will not delve into right now), what can be done?
There are 2 focus areas. The first is to try to create an organisation that acts responsibly, which can mostly be done through creating such an organsiational culture (as mentioned many times before on this blog), but this is not easy -especially if you have to change the current culture of a large organisation. It would be easier to try to create the necessary processes that create a responsible organisation. This could be creating a reward system that rewards the kind of beahviours or results that you want, or it could be from the 'stick' approach: through governance and reporting systems.
The second is to create individuals who act responsibly which is also tough. Responsible leadership is important: since setting an example and acting as a role model can really make a difference. You need to create people who see what is best for the company, and do that -even if it is not best for them. Create the culture of 'what is best for the company is best for me'. This is not easy though... so there are some little tricks that can be employed.. For example, try creating buy-in from the individual by tapping into their loyalty to the organisations or by instilling a little fear.
At the end of the day, this problem is one that is inherent and wide-spread, with no simple solution. The solution is tough and demanding: the solution is to recruit and employ individuals with an ethical stance, with the sense of responsible leadership. Create the framework and the system for this attitude to thrive and this should mitigate the ownership-manager conundrum.
One of the issues I draw upon is related to the State Owned Enterprises (SOEs) in China. The largest national ones have all been put under the control of SASAC (State-owned Assets Supervision and Administration Commission of the State Council) in order to reform and restructure the SOEs. The question I posed was oringnally just about CSR: If the government wants to encourage CSR then it should tell the SOEs and they will do it, or not?
Now ignoring the issue of CSR and just looking at the issue of owners telling the managers to do something, you come to several problems. Key, for me (especially in a CSR context) is that it is likely that some of the instructions will be beneficial to the SOE, but not to the manager. If we presume that implementing CSR has negative short-term implications (financial and human investment required) but positive long-term implications, then the Manager might not care about the long-term. In addition, they might not want to accept more responsibilities or more targets, or anything that makes their life harder, more complicated or more difficult. How much power does the owner wield? For non SOEs, the bigger issue is that short-term investments often lead to lower profits and lower stock (share) prices; both of which managers are measured against to judge their success.
Presuming that current governance models, therefore (either government owned or publicly owned) have these inherent problems (and many more, that I will not delve into right now), what can be done?
There are 2 focus areas. The first is to try to create an organisation that acts responsibly, which can mostly be done through creating such an organsiational culture (as mentioned many times before on this blog), but this is not easy -especially if you have to change the current culture of a large organisation. It would be easier to try to create the necessary processes that create a responsible organisation. This could be creating a reward system that rewards the kind of beahviours or results that you want, or it could be from the 'stick' approach: through governance and reporting systems.
The second is to create individuals who act responsibly which is also tough. Responsible leadership is important: since setting an example and acting as a role model can really make a difference. You need to create people who see what is best for the company, and do that -even if it is not best for them. Create the culture of 'what is best for the company is best for me'. This is not easy though... so there are some little tricks that can be employed.. For example, try creating buy-in from the individual by tapping into their loyalty to the organisations or by instilling a little fear.
At the end of the day, this problem is one that is inherent and wide-spread, with no simple solution. The solution is tough and demanding: the solution is to recruit and employ individuals with an ethical stance, with the sense of responsible leadership. Create the framework and the system for this attitude to thrive and this should mitigate the ownership-manager conundrum.
Thursday, March 09, 2006
CSR at Board Level
Where does CSR sit at Board Level? Well probably under the External Affairs team, or maybe there is a specific person responsible for CSR. If there is, what are they called?
A survey of 100 fortune 500 companies could reveal some interesting results. In the meantime I'd like to propose whether the title means a lot or not. Personally I don't think the title means all that much. What is most important is the job description and the responsibility/respect the person has. However the job title might imply these. Thus there may not be much difference between CSR or CR but there is for Community Affairs and Legal (which may also be responsible for CSR).
A few leading companies have redefined 'CSR' as CR or R or many others (some including ethics which is to be aplauded). One that I like is CSO: Corporate Social Opportunity, thus someone's 'CSR' report was titled CSO: Turning Corporate Social Responsibility into Corporate Social Opportunity (it may have been P&G I am not sure). Although this may work for some, for others they may not have the ability to capitalise on CSR as core to their strategy and a source fo comparative advantage or innovation.
What I would encourage for companies not yet at the CSO level is another title; one that is more short term focused, more financiall and legally focused -and thus easier to define a short-term business case: Risk Management. Whilst investigating our own CSR report, we've realised there will be a number of various focuses. 1 is what we are doing badly, not as well as we want to, or can do better and achieve more. Another 1 is what risks we face now that we are not addressing and what ones we should be anticipating in the future.
Risk Management is a really great way of defining the most pressing aspect of CSR: the one with the most examples, and the one that can most easily be understood by other Board level Directors.
A survey of 100 fortune 500 companies could reveal some interesting results. In the meantime I'd like to propose whether the title means a lot or not. Personally I don't think the title means all that much. What is most important is the job description and the responsibility/respect the person has. However the job title might imply these. Thus there may not be much difference between CSR or CR but there is for Community Affairs and Legal (which may also be responsible for CSR).
A few leading companies have redefined 'CSR' as CR or R or many others (some including ethics which is to be aplauded). One that I like is CSO: Corporate Social Opportunity, thus someone's 'CSR' report was titled CSO: Turning Corporate Social Responsibility into Corporate Social Opportunity (it may have been P&G I am not sure). Although this may work for some, for others they may not have the ability to capitalise on CSR as core to their strategy and a source fo comparative advantage or innovation.
What I would encourage for companies not yet at the CSO level is another title; one that is more short term focused, more financiall and legally focused -and thus easier to define a short-term business case: Risk Management. Whilst investigating our own CSR report, we've realised there will be a number of various focuses. 1 is what we are doing badly, not as well as we want to, or can do better and achieve more. Another 1 is what risks we face now that we are not addressing and what ones we should be anticipating in the future.
Risk Management is a really great way of defining the most pressing aspect of CSR: the one with the most examples, and the one that can most easily be understood by other Board level Directors.
Tuesday, February 28, 2006
Organisational Culture
Since CSR is an attitude, it must start with a personal attitude (which each organisation could help develop) but of course, it must also be the organisational attitude.
I say attitude which of course means 'culture' but is more than that. Organisational Attitude is how the oganisation approaches decisions and stakeholders. Decisions should be approached with a view to be fair, to be balanced, to look for the best (long-term) answer. Decision-making processes need to consider so many factors I can hardly list them here, but if employees are aware of the concept of considering the impacts of their decisions on them, on other employees, on other decisions then they might just make better decisions. And these decisions could also be more responsible on a personal, and organisational, level. A good start for decision making could be to look at consequences from a few different models: Triple Bottom Line (Social, Environmental and Economic), Stakeholder (Employee, Customer, Supplier, Shareholder, Community and others), Time (Past, Present, Future) or more 'academic' ones such as the 3 lenses framework* (Contribution to Purpose, Consistency with Principles, Inmpact on People).
According to the World Bank online course on CSR and Sustainable Competitiveness, there are a few other interesting considerations such as Why do 'good' Managers make bad choices? Apparently because they believe the decision is ethical, or it's in the indivudal/organisation's best interests or no-one will discover its impact. An organisation needs to consider issues like these in light of how the people it recruits makes decisions, how it encourages or rewards certain types of decisions and how it creates the frameworks for company decisions as well as personal decisions.
Then there is how an organisation approaches its stakeholders. Does it communicate, and is the communication effective? Does it appreciate or respect them? Are stakeholders able to impact each other (and therefore provide a motivation to manage each other)? How much control can one have over stakeholder's actions (like media, government etc which are not equal to the organisation)?
Crucially with the issue of organisational culture is to start with the most important thing in the organisation: its people, and this is what the term commonly refers to. Some leading organisations tie culture in with branding, since culture is normally internal, and branding normally external. Realising that the 2 are actually the same ensures a cohesive message is portrayed to all stakeholders. Entire courses are written on both branding and culture, so what could I write in 1 paragraph or even claim to know (having not read many of those books)?
Well, as always, I like to focus on the important things: having a culture defined, communicating it to others ALL the time and not just tangibly, but also intangibly. Intangible company culture -hmm, not the easiest of topics -but one that I truly believe is what defined an organisation. Its what you feel when you walk into the organisation's building, its how people talk about their organisation (with love or hate!) and its what keeps employees, keeps customers and creates a team spirit -an attitude of working together towards common goals, or doing so responsibly!
The problem with CSR is that how many organisations have the ability or the time to consider issues like these? Not many -and this typicalises why CSR is currently still dirven by large organisations; those with smart people and the money to pay for people to spend their time on these issues. These are crucial issues. Surely the businesses that can consider them will be more successful than those that cannot, thus ensuring larger businesses go from strength-to-strength but smaller ones might find it much tougher to grow or compete! There are of course many cases of how this cycle is broken (every large company was once a small company!), it would be interesting to find out how?
There is also the problem of outsourcing. Where are the limits of the organisation and how much control does an organisation have? Does it force new employees to change their values? The perils of outsourcing are that you lose control over creating a culture, and this is the reason behind outsourcing failing: conflicting objectives, lack of team spirit towards common goals or passion towards the organisation, no feeling of belonging, trust or respect. In fact, the reason why so many SMEs are so successful and have no 'obvious' CSR' is because they are small, often dominated by the personality of their leader and work closely in a team with a great culture. They don't need to have to analyse so many issues related to decision making or creating and communicating a culture since it happens naturally. But when they start transitioning to becoming larger companies then they face these problems. In fact when any organisation goes through change it faces problems, and this is a topic for a later post.
*For more information on this framework, refer to Lynn S. Payne, Three Lenses for Decision Making, Harvard Business School, August 7, 1996, 2-396-200.
I say attitude which of course means 'culture' but is more than that. Organisational Attitude is how the oganisation approaches decisions and stakeholders. Decisions should be approached with a view to be fair, to be balanced, to look for the best (long-term) answer. Decision-making processes need to consider so many factors I can hardly list them here, but if employees are aware of the concept of considering the impacts of their decisions on them, on other employees, on other decisions then they might just make better decisions. And these decisions could also be more responsible on a personal, and organisational, level. A good start for decision making could be to look at consequences from a few different models: Triple Bottom Line (Social, Environmental and Economic), Stakeholder (Employee, Customer, Supplier, Shareholder, Community and others), Time (Past, Present, Future) or more 'academic' ones such as the 3 lenses framework* (Contribution to Purpose, Consistency with Principles, Inmpact on People).
According to the World Bank online course on CSR and Sustainable Competitiveness, there are a few other interesting considerations such as Why do 'good' Managers make bad choices? Apparently because they believe the decision is ethical, or it's in the indivudal/organisation's best interests or no-one will discover its impact. An organisation needs to consider issues like these in light of how the people it recruits makes decisions, how it encourages or rewards certain types of decisions and how it creates the frameworks for company decisions as well as personal decisions.
Then there is how an organisation approaches its stakeholders. Does it communicate, and is the communication effective? Does it appreciate or respect them? Are stakeholders able to impact each other (and therefore provide a motivation to manage each other)? How much control can one have over stakeholder's actions (like media, government etc which are not equal to the organisation)?
Crucially with the issue of organisational culture is to start with the most important thing in the organisation: its people, and this is what the term commonly refers to. Some leading organisations tie culture in with branding, since culture is normally internal, and branding normally external. Realising that the 2 are actually the same ensures a cohesive message is portrayed to all stakeholders. Entire courses are written on both branding and culture, so what could I write in 1 paragraph or even claim to know (having not read many of those books)?
Well, as always, I like to focus on the important things: having a culture defined, communicating it to others ALL the time and not just tangibly, but also intangibly. Intangible company culture -hmm, not the easiest of topics -but one that I truly believe is what defined an organisation. Its what you feel when you walk into the organisation's building, its how people talk about their organisation (with love or hate!) and its what keeps employees, keeps customers and creates a team spirit -an attitude of working together towards common goals, or doing so responsibly!
The problem with CSR is that how many organisations have the ability or the time to consider issues like these? Not many -and this typicalises why CSR is currently still dirven by large organisations; those with smart people and the money to pay for people to spend their time on these issues. These are crucial issues. Surely the businesses that can consider them will be more successful than those that cannot, thus ensuring larger businesses go from strength-to-strength but smaller ones might find it much tougher to grow or compete! There are of course many cases of how this cycle is broken (every large company was once a small company!), it would be interesting to find out how?
There is also the problem of outsourcing. Where are the limits of the organisation and how much control does an organisation have? Does it force new employees to change their values? The perils of outsourcing are that you lose control over creating a culture, and this is the reason behind outsourcing failing: conflicting objectives, lack of team spirit towards common goals or passion towards the organisation, no feeling of belonging, trust or respect. In fact, the reason why so many SMEs are so successful and have no 'obvious' CSR' is because they are small, often dominated by the personality of their leader and work closely in a team with a great culture. They don't need to have to analyse so many issues related to decision making or creating and communicating a culture since it happens naturally. But when they start transitioning to becoming larger companies then they face these problems. In fact when any organisation goes through change it faces problems, and this is a topic for a later post.
*For more information on this framework, refer to Lynn S. Payne, Three Lenses for Decision Making, Harvard Business School, August 7, 1996, 2-396-200.
CSR is PSR
What is CSR? CSR is an attitude.
This has been one of the key learning points personally over the last year or two and one that others seem to share. It is also what I try to convey to others. Thus CSR is a personal attitude and very much related to how you live your live and what you care about: PSR -personal social responsbility. PSR is mostly about a) awareness and b) action (or laziness to be more pessimistic). There is a continuing need for more awareness around how you can be more personally socially responsible; not because the 'how' is so complex, but because no-one spends 5 minutes to sit down and think about it.
What should you do? Sit down and think a bit about your appartment, your office and what you do in them and in between them (and what you do elsewhere of course too). Do you re-use your cup, turn the lights off in the toilet or your office/room (even if you just leave for 5 minutes), leave your computer on overnight, or whilst you pop out to lunch? How are you travelling, how are you treating people? It would be great to come up with some brief structured list of questions that each person could use to sort of do a PSR report (like a company's CSR report). Maybe this already exists? I am sure there could be some basic award or something that a school could give to the most PSR schoolkid (or most improved!).
Actually, the best thing to do might be to team up with someone else and take it in turns to spend a day monitoring the other person and what they do. It can be a competition to see who can list the most things the other person could do to improve their PSR, since it is hard to recognise your own actions but easier to observe someone else's. It is with great joy I discovered the 'We are what we do' website yesterday (www.wearewhatwedo.com/).
It lists 50 things each person can do at work, at home, at school and 'out and about' (and have received a further 5,000 suggested actions!!). Have a look, and maybe they could develop their concept further. So think about your PSR today!
This has been one of the key learning points personally over the last year or two and one that others seem to share. It is also what I try to convey to others. Thus CSR is a personal attitude and very much related to how you live your live and what you care about: PSR -personal social responsbility. PSR is mostly about a) awareness and b) action (or laziness to be more pessimistic). There is a continuing need for more awareness around how you can be more personally socially responsible; not because the 'how' is so complex, but because no-one spends 5 minutes to sit down and think about it.
What should you do? Sit down and think a bit about your appartment, your office and what you do in them and in between them (and what you do elsewhere of course too). Do you re-use your cup, turn the lights off in the toilet or your office/room (even if you just leave for 5 minutes), leave your computer on overnight, or whilst you pop out to lunch? How are you travelling, how are you treating people? It would be great to come up with some brief structured list of questions that each person could use to sort of do a PSR report (like a company's CSR report). Maybe this already exists? I am sure there could be some basic award or something that a school could give to the most PSR schoolkid (or most improved!).
Actually, the best thing to do might be to team up with someone else and take it in turns to spend a day monitoring the other person and what they do. It can be a competition to see who can list the most things the other person could do to improve their PSR, since it is hard to recognise your own actions but easier to observe someone else's. It is with great joy I discovered the 'We are what we do' website yesterday (www.wearewhatwedo.com/).
It lists 50 things each person can do at work, at home, at school and 'out and about' (and have received a further 5,000 suggested actions!!). Have a look, and maybe they could develop their concept further. So think about your PSR today!
Saturday, December 17, 2005
The multiplier effect
This is something that is often mentioned in my posts, but here I want to take the multiplier effect on a bit of a tangent and see where it goes. I first really encountered this 'Multiplier Effect' in an employment concept: Shell, for example, talk about 100,00 directly employed, 500,000 indirectly employed and many more receiving benefits from their operations (and I suppose also encountering the opposite too!). I next encountered it in an excellent report by SustainAbility (I highly recommend everything they have written) who commented on the fact that of the 3 aspects of the Triple Bottom Line, the Economic one was the one least understood, least measured and least reported.
So this post is not rocket science but it is written to emphasis the importance the multiplier effect has. From the oft-quoted 'giving the fisherman a fishing rod is better than giving the fisherman a fish' type of quote that appears often in poverty-reduction papers, to the 'shall i work for a small NGO and change a few lives lots or work for a Multinational and change more lives, but probably less'. As these examples highlight the multiplier effect is not just about a company's supply chain or employment chain, although these are the most obvious consequences of a business's activity.
On the topic of responsible leadership, I feel the need to stress how the consequences of an organisation are normally so poorly understood. In fact impact is a better word. What is the impact of an organisation and how can this be effectively utlilised? The stakeholder mapping technique is a good start, but normally these stakeholders are engaged with on a quantitative level -by this they are asked questions about the current impacts the organisation has and then asked to quantify them (good, bad etc). What would be interesting is to ask a bunch of people "What impact am I having on you?". Maybe you randomly saw a quote from my CEO who inspired you, maybe your school got a computer from my company, maybe because you eat my chocolate, you have to empty the litter bin more often -extreme examples as they may be, but I find it intriguing to think of all the small consequences that occur, all the time, from so many small, minor actions that each individual makes.
Some practical examples: how Coca-cola cans were used to create art or to create practical objects..how some are reused for years... these cans have probably helped some of the poorest people in the world carry their water around, make things to keep themselves entertained (or even to sell) and so on. Or how the company that wrapped their sweets individulally for hygiene purposes (and to make it last longer) then realised that someone was able to buy the whole pack and then sell each individually wrapped sweet in order to make money and sustain an income for them!
On a more extreme note...Maybe paying the fees of my company's service meant you could not afford medical care for your child or you could not take a holiday. A massive undertaking it would be, to interview so many people, but with such a simple question. It would of course be hard to get the answers needed -most people don't think very creatively any more! And i doubt the results of the survey would matter that much, but there could be some interesting clusters that are new, some impacts that no-one realised; these impacts could create business opportunities or minimise business risk. So please do create as many jobs as you can, please do spread your values to your suppliers, distributers, manufacturers, staff and so on. Please ensure your staff recycle at work, and encourage them to do so at home. But please also be more creative, more innovative, more open to really understanding what impact you are making on this World. Leading is about making an impact -the question is how responsible is the impact you are having?
So this post is not rocket science but it is written to emphasis the importance the multiplier effect has. From the oft-quoted 'giving the fisherman a fishing rod is better than giving the fisherman a fish' type of quote that appears often in poverty-reduction papers, to the 'shall i work for a small NGO and change a few lives lots or work for a Multinational and change more lives, but probably less'. As these examples highlight the multiplier effect is not just about a company's supply chain or employment chain, although these are the most obvious consequences of a business's activity.
On the topic of responsible leadership, I feel the need to stress how the consequences of an organisation are normally so poorly understood. In fact impact is a better word. What is the impact of an organisation and how can this be effectively utlilised? The stakeholder mapping technique is a good start, but normally these stakeholders are engaged with on a quantitative level -by this they are asked questions about the current impacts the organisation has and then asked to quantify them (good, bad etc). What would be interesting is to ask a bunch of people "What impact am I having on you?". Maybe you randomly saw a quote from my CEO who inspired you, maybe your school got a computer from my company, maybe because you eat my chocolate, you have to empty the litter bin more often -extreme examples as they may be, but I find it intriguing to think of all the small consequences that occur, all the time, from so many small, minor actions that each individual makes.
Some practical examples: how Coca-cola cans were used to create art or to create practical objects..how some are reused for years... these cans have probably helped some of the poorest people in the world carry their water around, make things to keep themselves entertained (or even to sell) and so on. Or how the company that wrapped their sweets individulally for hygiene purposes (and to make it last longer) then realised that someone was able to buy the whole pack and then sell each individually wrapped sweet in order to make money and sustain an income for them!
On a more extreme note...Maybe paying the fees of my company's service meant you could not afford medical care for your child or you could not take a holiday. A massive undertaking it would be, to interview so many people, but with such a simple question. It would of course be hard to get the answers needed -most people don't think very creatively any more! And i doubt the results of the survey would matter that much, but there could be some interesting clusters that are new, some impacts that no-one realised; these impacts could create business opportunities or minimise business risk. So please do create as many jobs as you can, please do spread your values to your suppliers, distributers, manufacturers, staff and so on. Please ensure your staff recycle at work, and encourage them to do so at home. But please also be more creative, more innovative, more open to really understanding what impact you are making on this World. Leading is about making an impact -the question is how responsible is the impact you are having?
CSR -who is responsible?
Not a particularly new or insightful topic but still one without an answer: In a company do you have someone specifically responsible for CSR or not? And if you do, how much of 'CSR' are they responsible for?
In theory CSR would be so well integrated into the company that you would not need someone responsible for it. If you do then it means that everyone else ignores CSR and lets that person deal with it -an impossible task. From my experience of contacting companies here in China and finding out who is responsible for CSR; it generally falls to the corporate affairs team and for them their main priorities tend to be around philanthropy, branding and environment. I am not sure how much they play a role in the many HR aspects of CSR or governance, amongst others.
This question opens up a wider one of how to integrate anything really. I suppose my solution is that you always need a champion, even after the initial introduction of an idea or activity; but the key is to try to integrate the idea into a reward system, into every day life and into the values of an organisation. The general consensus tends to be that initiatives need to have top level support -which they do AND most initiatives tend to come from the top. This is something I disagree with. For sure if the initiative is driven by external needs or is based on solid stakeholder engagement and feedback then this is ok, but (and I have limited experience); most initatives are driven from the top with only minimal support from the bottom. By this I mean that one department or other has suggested something, the Execs have done their research and decided to implement it. This will work for most initatives; but for big things -things that affect the culture of the organisation, such as CSR, this is wrong.
I am not saying all organisations do this wrong, but I bet some do. What is the right way? I am a big supporter of faclitated discussion -of coaching. Coaching is, in my definition, where the coach never gives the 'coachee' the answer or tells them anything, they just ask the right questions, listen and guide the coachee to come up with their own answers. This is how organisations should run -I have read many CEOs say the hardest thing they have had to do is change the culture of an organisation -it takes years. I am not saying its simple -the organisation might have the wrong people in it; it may have systemic problems. But what I am saying is that those at the bottom need to realise that the organisation's current culture is not right and they need to work out what the culture should be. They need to be the ones who suggest how to get there too, and then they can give this remit to the team tasked with driving this change: thus the team knows the whole organisation supports it, and the organisation will change much quicker.
With CSR, this is about the values of an organisation and then how these values are translated into process and then what actions result from these processes. Ideally everyone should be recruited based on these values AS WELL as their abilities. And I highly recommend this for any values (CSR) driven organisation. However what do you do with those already in the organisation? Well you may have to lose some of them -you may have to change some, but most I expect you just need to make them realise what their values are... and they should align with the organisation (them already working in the organisation). I am amazed at how much effort companies place on internal values education programmes and handbooks. I am amazed in a good way -it is very impressive, but I must also wonder if they ever question their employee's values? Do they do personal value alignment exercises....if you don't there's little point in changing the organisation's culture!
So who is responsible -everyone should be responsible for CSR; adhering to an organisation's principles (values) should be in every employee's annual assessment -and this can partly be a self-assessed exercise. For some of the more concrete outputs of 'CSR' (and the term is being used loosely here) then that needs to be delegated out. If you have to choose a department 'responsible' then for me it is the 'branding department'. Most business gurus will express how important a brand is - it is the essence of an organisation. In fact a branding department rarely exists (if i create an organisation i think I will call it an 'identity' department -my organisations will wear their identity and their values on their sleeves). Nowadays it ends up in communications department -fair enough I suppose. I am hoping to get a deeper insight into how different communications departments work, what they prioritise and what they achieve in different companies, sectors etc. It would be very interesting research. So responsible leaders? Do what's right -for everyone. Find out what everyone thinks is right; do it; tell others about it; judge people on it; walk the talk. Lead.
In theory CSR would be so well integrated into the company that you would not need someone responsible for it. If you do then it means that everyone else ignores CSR and lets that person deal with it -an impossible task. From my experience of contacting companies here in China and finding out who is responsible for CSR; it generally falls to the corporate affairs team and for them their main priorities tend to be around philanthropy, branding and environment. I am not sure how much they play a role in the many HR aspects of CSR or governance, amongst others.
This question opens up a wider one of how to integrate anything really. I suppose my solution is that you always need a champion, even after the initial introduction of an idea or activity; but the key is to try to integrate the idea into a reward system, into every day life and into the values of an organisation. The general consensus tends to be that initiatives need to have top level support -which they do AND most initiatives tend to come from the top. This is something I disagree with. For sure if the initiative is driven by external needs or is based on solid stakeholder engagement and feedback then this is ok, but (and I have limited experience); most initatives are driven from the top with only minimal support from the bottom. By this I mean that one department or other has suggested something, the Execs have done their research and decided to implement it. This will work for most initatives; but for big things -things that affect the culture of the organisation, such as CSR, this is wrong.
I am not saying all organisations do this wrong, but I bet some do. What is the right way? I am a big supporter of faclitated discussion -of coaching. Coaching is, in my definition, where the coach never gives the 'coachee' the answer or tells them anything, they just ask the right questions, listen and guide the coachee to come up with their own answers. This is how organisations should run -I have read many CEOs say the hardest thing they have had to do is change the culture of an organisation -it takes years. I am not saying its simple -the organisation might have the wrong people in it; it may have systemic problems. But what I am saying is that those at the bottom need to realise that the organisation's current culture is not right and they need to work out what the culture should be. They need to be the ones who suggest how to get there too, and then they can give this remit to the team tasked with driving this change: thus the team knows the whole organisation supports it, and the organisation will change much quicker.
With CSR, this is about the values of an organisation and then how these values are translated into process and then what actions result from these processes. Ideally everyone should be recruited based on these values AS WELL as their abilities. And I highly recommend this for any values (CSR) driven organisation. However what do you do with those already in the organisation? Well you may have to lose some of them -you may have to change some, but most I expect you just need to make them realise what their values are... and they should align with the organisation (them already working in the organisation). I am amazed at how much effort companies place on internal values education programmes and handbooks. I am amazed in a good way -it is very impressive, but I must also wonder if they ever question their employee's values? Do they do personal value alignment exercises....if you don't there's little point in changing the organisation's culture!
So who is responsible -everyone should be responsible for CSR; adhering to an organisation's principles (values) should be in every employee's annual assessment -and this can partly be a self-assessed exercise. For some of the more concrete outputs of 'CSR' (and the term is being used loosely here) then that needs to be delegated out. If you have to choose a department 'responsible' then for me it is the 'branding department'. Most business gurus will express how important a brand is - it is the essence of an organisation. In fact a branding department rarely exists (if i create an organisation i think I will call it an 'identity' department -my organisations will wear their identity and their values on their sleeves). Nowadays it ends up in communications department -fair enough I suppose. I am hoping to get a deeper insight into how different communications departments work, what they prioritise and what they achieve in different companies, sectors etc. It would be very interesting research. So responsible leaders? Do what's right -for everyone. Find out what everyone thinks is right; do it; tell others about it; judge people on it; walk the talk. Lead.
Tuesday, December 06, 2005
CSR in China -chinese giving
A few things recently happened:
1) I came into contact with a minute chinese NGO -well actually just 2 ladies with an idea for asking some volunteers to help them with something. But they required each volunteer to get 5 hrs training for doing 2 hrs work and after 2 hours of trying to help them with their idea, they said they had no location and no funding -yet the event was in 4 days. This is, unfortunately, typical of Chinese NGOs. Not legal, just run by a few people with no money, but who care a lot abotu society and are doing something about it. Its a shame, but its true. There are a lot of organisations helping with NGO capacity building in China - I wish them luck.
2) ACNielsen (a market research company) produced a report of Chinese consumers' attitudes. Lots of the donate and more want to, if they could trust NGOs more.
3) I spoke to someone else who told me that companies he knows have money to donate to NGOs, but cannot find any worthy to give to -they want to give to local NGOs, but none are professional enough.
4) I met a group of women working in good companies in Beijing who got together to donate money to a school in South China to pay for some children's education. They didn't want to go through some big organisation, but wanted to go directly. So they are doing that. I am inspired that they go to the trouble to organise this.
The conclusion. The chinese like to give, they want to help. But right now the environment in China is not helping them. What is needed are more credible NGOs, easier ways for them to get in touch with the right (corporate or personal) donors and trust in the system.
China has lots of responsible citizens. It needs some responsible leaders to help those citizens exercise their feelings of responsibility. Who else will step up to the plate and help solve these market inbalances?
1) I came into contact with a minute chinese NGO -well actually just 2 ladies with an idea for asking some volunteers to help them with something. But they required each volunteer to get 5 hrs training for doing 2 hrs work and after 2 hours of trying to help them with their idea, they said they had no location and no funding -yet the event was in 4 days. This is, unfortunately, typical of Chinese NGOs. Not legal, just run by a few people with no money, but who care a lot abotu society and are doing something about it. Its a shame, but its true. There are a lot of organisations helping with NGO capacity building in China - I wish them luck.
2) ACNielsen (a market research company) produced a report of Chinese consumers' attitudes. Lots of the donate and more want to, if they could trust NGOs more.
3) I spoke to someone else who told me that companies he knows have money to donate to NGOs, but cannot find any worthy to give to -they want to give to local NGOs, but none are professional enough.
4) I met a group of women working in good companies in Beijing who got together to donate money to a school in South China to pay for some children's education. They didn't want to go through some big organisation, but wanted to go directly. So they are doing that. I am inspired that they go to the trouble to organise this.
The conclusion. The chinese like to give, they want to help. But right now the environment in China is not helping them. What is needed are more credible NGOs, easier ways for them to get in touch with the right (corporate or personal) donors and trust in the system.
China has lots of responsible citizens. It needs some responsible leaders to help those citizens exercise their feelings of responsibility. Who else will step up to the plate and help solve these market inbalances?
CSR in China -western philanthropy
So many western companies have a great reputation for CSR, but I'll lift the lid on a few things:
1) even those who are the best, globally, will find their chinese branches not having much of a clue. There is a global CSR strategy and the chinese office will do the big of the global strategy relevant to them. They won't look at the global strategy and create a relevant national strategy under that, but they should. This means CSR has a muddle understanding by many Multinationals here. Obviously many HQs still have some way to go, but the chinese branches have even further
2) most companies donate money. some based on their company priorities, or because its linked to their core strategy... more people alive are able to buy more of your products, for example! But it seems, many -especially the medium-large ones, just find a project that the local government supports and fund that one, in order to get local government support. Its a shame, but I guess its a good reason to donate, and irrelevant of the reason, the outcome is still beneficial. I was just shocked that for many, that is how it is.
1) even those who are the best, globally, will find their chinese branches not having much of a clue. There is a global CSR strategy and the chinese office will do the big of the global strategy relevant to them. They won't look at the global strategy and create a relevant national strategy under that, but they should. This means CSR has a muddle understanding by many Multinationals here. Obviously many HQs still have some way to go, but the chinese branches have even further
2) most companies donate money. some based on their company priorities, or because its linked to their core strategy... more people alive are able to buy more of your products, for example! But it seems, many -especially the medium-large ones, just find a project that the local government supports and fund that one, in order to get local government support. Its a shame, but I guess its a good reason to donate, and irrelevant of the reason, the outcome is still beneficial. I was just shocked that for many, that is how it is.
CSR in China -chinese philanthropy
So some Chinese companies do CSR, not many, in the modern concept of CSR though.
Quite a lot do philanthropy; but it seems 1 of 2 things. Rich people with a kind heart donating, or the government telling companies to donate.
We spoke to some companies who are in the media for CSR reasons, and after struggling to reach the right people, they said, though they have a good reputation for CSR, in reality, they don't do CSR by western standards. They just do what the government tells them to do. And they don't really understand CSR.
I respect that their CSR is still developing and they do not want to pretend to be CSR experts, but its frustrating they do not understand the concept of CSR -even the concept of philanthropy. CSR has a long way to go in China. From the poor turnout at last week's Global Compact Summit, I am even more convinced of this. There is a lot of talk, especially in the last 12 months. I am not best placed to judge how much action, or whether the mindset has changed -I think it has in some private, more dynamic companies, but otherwise... I am not so sure
I look forward to learning more and being proved wrong...
Quite a lot do philanthropy; but it seems 1 of 2 things. Rich people with a kind heart donating, or the government telling companies to donate.
We spoke to some companies who are in the media for CSR reasons, and after struggling to reach the right people, they said, though they have a good reputation for CSR, in reality, they don't do CSR by western standards. They just do what the government tells them to do. And they don't really understand CSR.
I respect that their CSR is still developing and they do not want to pretend to be CSR experts, but its frustrating they do not understand the concept of CSR -even the concept of philanthropy. CSR has a long way to go in China. From the poor turnout at last week's Global Compact Summit, I am even more convinced of this. There is a lot of talk, especially in the last 12 months. I am not best placed to judge how much action, or whether the mindset has changed -I think it has in some private, more dynamic companies, but otherwise... I am not so sure
I look forward to learning more and being proved wrong...
Thursday, November 24, 2005
CR or CSR?
Corporate Responsibility or Corporate Social Responsibility?
I touched on this briefly in my introduction post and wish to explain my thoughts behind this right now. Looking at the triple bottom line (economic, social, environmental impacts) no business can survive without being sustainable across all 3 fronts, however since we are people and no business can survive without people to buy from, sell to, or to employ; personally my take is that the social aspect is the most crucial and the most important.
The Economic impact is important because it provides income to people, who can continue to work for the business, or impact on other stakeholders who are also people. The environmental impact is important because without it, many of the inputs required for business (water, electricity, air) would not be there, and people would not be able to survive. Its all about people.
Thus I prefer to keep the term CSR, to make sure that every business is specifically focused on the people around them. I also want to mention the term social entrepreneur: the idea of creating a business that explicitly has social and financial benefits. This business aims to solve a social issue, but without needing to be a charity, and as it makes money, it can scale-up its business much easier than a charity.
I am aware of the controversial nature of this CSR stand-point, since the trend seems to be towards Corporate Responsibility, Corporate Citizenship, Business Responsibility and so forth. In many cases the term is not important, it's what you actually do as part of this work that is important, however in other cases the term is important since it defines what is done. Personally I don't believe many businesses do accurately explain what they mean by CC or CR or CSR -I think its important, since it means stakeholders have a better understanding of the motivation behind the work, the intended consequences and so forth. In a World where trust is so lacking and transparency and dialogue so crucial to success, explaining crucial differences in terminology (maybe crucial is too harsh a word, but in come circumstances it can be a crucial difference) can make a difference to how successful the business's CSR, and indeed the entire busienss is.
Thus my standpoint is for responsible leaders to recognise the impact of decisions they make on definitions early on; justify those decisions and thus not be surprised by the impacts. If a company think CSR is philanthropy its because there is a mis-understanding of what CSR is, that's because no-one ever explained what it actually is to the company. I don't believe there is a universal definition of CSR. Every business must interpret it in its own way -but not enough businesses are going through this important process of interpretation.
I touched on this briefly in my introduction post and wish to explain my thoughts behind this right now. Looking at the triple bottom line (economic, social, environmental impacts) no business can survive without being sustainable across all 3 fronts, however since we are people and no business can survive without people to buy from, sell to, or to employ; personally my take is that the social aspect is the most crucial and the most important.
The Economic impact is important because it provides income to people, who can continue to work for the business, or impact on other stakeholders who are also people. The environmental impact is important because without it, many of the inputs required for business (water, electricity, air) would not be there, and people would not be able to survive. Its all about people.
Thus I prefer to keep the term CSR, to make sure that every business is specifically focused on the people around them. I also want to mention the term social entrepreneur: the idea of creating a business that explicitly has social and financial benefits. This business aims to solve a social issue, but without needing to be a charity, and as it makes money, it can scale-up its business much easier than a charity.
I am aware of the controversial nature of this CSR stand-point, since the trend seems to be towards Corporate Responsibility, Corporate Citizenship, Business Responsibility and so forth. In many cases the term is not important, it's what you actually do as part of this work that is important, however in other cases the term is important since it defines what is done. Personally I don't believe many businesses do accurately explain what they mean by CC or CR or CSR -I think its important, since it means stakeholders have a better understanding of the motivation behind the work, the intended consequences and so forth. In a World where trust is so lacking and transparency and dialogue so crucial to success, explaining crucial differences in terminology (maybe crucial is too harsh a word, but in come circumstances it can be a crucial difference) can make a difference to how successful the business's CSR, and indeed the entire busienss is.
Thus my standpoint is for responsible leaders to recognise the impact of decisions they make on definitions early on; justify those decisions and thus not be surprised by the impacts. If a company think CSR is philanthropy its because there is a mis-understanding of what CSR is, that's because no-one ever explained what it actually is to the company. I don't believe there is a universal definition of CSR. Every business must interpret it in its own way -but not enough businesses are going through this important process of interpretation.
Friday, November 18, 2005
CSR is about strategy
Although you could look at CSR as common sense (and justifiably so), I prefer to look at it from a strategic perspective. From most of the people I have spoken to they can grasp what CSR is, but they still cannot quite grasp how it can be implemented strategically to the company's advantage.
Actually I find that most people have different definitions of strategies anyway, and unless you are at the head of an organisation, you never really get to really think about 'what a strategy is'. I believe a strategy is an idea of how to take the organisation forward. Normally I find that a strategy is just the detailed description of achieving a goal. This is important for sure, and maybe can be called a strategy -in which case my definition of a strategy can be looked at as a strategic strategy.
A Strategic strategy is thus a strategy that is often new, most definitely long-term thinking, definitely involves some kind of changes and should be related to the nature of comparative advantage. Comparative advantage is the notion of how your organisation can be better than the competition. This requires identifying what the company has that others don't (it could be a certain patent, it could be a certain person, specific resource, or just an idea) and then exploiting that advantage to push the organisation ahead (it thus also requires an alaysis of who the competition are and what they are doing, as well as a similar internal analysis). A Strategic strategy is a strategy that specifically aims to ensure the company's growth and sustainability long-term, it looks to exploit an opportunity.
I think you'll understand what I mean if i continue with how I see CSR as a strategic strategy. A bad understanding of CSR is the notion of CSR as charity. A better understanding of CSR is the notion of CSR as new market opportunities or as comparative advantage. An excellent example of the former is GE's ecomagination initiative and of the latter is the Co-operative Bank. Briefly explained, GE wants to make more money whilst making the World a better place and the Co-operative Bank attracts more customers because it refuses to invest in certain companies, sell its products to certain customers and does a lot of other ethical/enviro-friendly initiatives in order to build its brand as distinct from its competition.
However, this is still not how I see CSR as about strategy (although both companies may actually see it my way, I don't know). I see CSR starting from the question how a company can be more responsible; and realising that a company must operate responsibly. But ideally if the company has positive impacts on society then it must ensure that the company continues to have that positive impact and thus continues to exist and increase that impact. Thus CSR is about the future, about building a sustainable business. From this premise the company needs to look at how it can survive and how it can grow and how it can continue to do this responsibly. This is the ultimate aim of CSR.
Below this the focus can be on the company's triple bottom line impacts, on its processes and operations, on its stakeholder engagement and so on. First companies must see CSR as a top line strategic strategy, then they can see how their processes can support this. Then they can look at what else is needed -such as how can we distinguish ourselves, how can we be more flexible, opportunist and creative. These ideas need to be thought through because they support the ultimate strategy of creating a lasting, responsible enterprise. Certainly these aspects are the core of CSR, but until the employees view these aspects as part of the broader, ultimate strategy, they will never quite understand CSR. They will continue to see just one of these aspects (Health and Safety for example) and most unfortunately they will fail to recognise that their HR activities, their reporting/accountability processes and more are a crucial part of CSR.
Since CSR is about doing good business, responsible leaders should understand this concept -of strategy and how CSR is related to that. Most importantly leaders should ensure those they are leading understand this. CSR should be used as a fad, as an excuse to drive an organisation forward, as a focus for generating ideas and improvements to the company: Ultimately as a way of bringing diverse ideas and components of an organisation together with the goal of making the organisation more sustainable.
Actually I find that most people have different definitions of strategies anyway, and unless you are at the head of an organisation, you never really get to really think about 'what a strategy is'. I believe a strategy is an idea of how to take the organisation forward. Normally I find that a strategy is just the detailed description of achieving a goal. This is important for sure, and maybe can be called a strategy -in which case my definition of a strategy can be looked at as a strategic strategy.
A Strategic strategy is thus a strategy that is often new, most definitely long-term thinking, definitely involves some kind of changes and should be related to the nature of comparative advantage. Comparative advantage is the notion of how your organisation can be better than the competition. This requires identifying what the company has that others don't (it could be a certain patent, it could be a certain person, specific resource, or just an idea) and then exploiting that advantage to push the organisation ahead (it thus also requires an alaysis of who the competition are and what they are doing, as well as a similar internal analysis). A Strategic strategy is a strategy that specifically aims to ensure the company's growth and sustainability long-term, it looks to exploit an opportunity.
I think you'll understand what I mean if i continue with how I see CSR as a strategic strategy. A bad understanding of CSR is the notion of CSR as charity. A better understanding of CSR is the notion of CSR as new market opportunities or as comparative advantage. An excellent example of the former is GE's ecomagination initiative and of the latter is the Co-operative Bank. Briefly explained, GE wants to make more money whilst making the World a better place and the Co-operative Bank attracts more customers because it refuses to invest in certain companies, sell its products to certain customers and does a lot of other ethical/enviro-friendly initiatives in order to build its brand as distinct from its competition.
However, this is still not how I see CSR as about strategy (although both companies may actually see it my way, I don't know). I see CSR starting from the question how a company can be more responsible; and realising that a company must operate responsibly. But ideally if the company has positive impacts on society then it must ensure that the company continues to have that positive impact and thus continues to exist and increase that impact. Thus CSR is about the future, about building a sustainable business. From this premise the company needs to look at how it can survive and how it can grow and how it can continue to do this responsibly. This is the ultimate aim of CSR.
Below this the focus can be on the company's triple bottom line impacts, on its processes and operations, on its stakeholder engagement and so on. First companies must see CSR as a top line strategic strategy, then they can see how their processes can support this. Then they can look at what else is needed -such as how can we distinguish ourselves, how can we be more flexible, opportunist and creative. These ideas need to be thought through because they support the ultimate strategy of creating a lasting, responsible enterprise. Certainly these aspects are the core of CSR, but until the employees view these aspects as part of the broader, ultimate strategy, they will never quite understand CSR. They will continue to see just one of these aspects (Health and Safety for example) and most unfortunately they will fail to recognise that their HR activities, their reporting/accountability processes and more are a crucial part of CSR.
Since CSR is about doing good business, responsible leaders should understand this concept -of strategy and how CSR is related to that. Most importantly leaders should ensure those they are leading understand this. CSR should be used as a fad, as an excuse to drive an organisation forward, as a focus for generating ideas and improvements to the company: Ultimately as a way of bringing diverse ideas and components of an organisation together with the goal of making the organisation more sustainable.
Friday, November 04, 2005
responsible companies with irresponsible products
No company or organisation does no harm at all. every time we use up energy for example, we are harming the environment to some extent. The world is so complex that supply chains are enormous, and no organisation can operate without using paper, electricity etc.
All of these products somewhere along the line are harming the environment, but yes, some products are more harmful than others -arms and cigarettes some of the worst, but then many arms are used for peaceful means (well, some are, not that i am defending the industry!)
the way business works is complex -for example Altria makes cheese as well as cigarettes... so what do you say about that company? BAT employs over 100,000 people providing them and their families with livelihoods for example, so there is no easy solution.
what do i think? i think organisations exist because there is a demand for them. what they should do is behave ethically as they meet that demand. in extremes that often means reducing demand (eg. not advertising for cigarettes), but it needn't be. Governments can create the framework defining ethics (it could ban arms, but does not).... when society deems a company unethical then eventually the government (in a functioning society) will act (maybe cigarettes will be banned at some point). The good thing is that it will take a long time for the governments to act, depending on corporate lobbying, sufficient public pressure and evidence... thus during this time the corporation will either die or diversify and hopefully those beneficiaries will find other work etc.
Leaders in these controversial organisations (like any other organisation) should strive to behave ethically, but this will always be within boundaries -human defined boundaries, boundaries that move, boundaries that vary per person. Those boundaries will differ individually and define what is and is not a good product or company. Leaders should strive to consider the impacts of their organisations and maximise the benefit to society and their organisation at the same time. Its not easy -being a leader is not. Ethics is not black and white. Pick a shade of grey. Pick the shade that you are comfortable with. How do you define responsible?
All of these products somewhere along the line are harming the environment, but yes, some products are more harmful than others -arms and cigarettes some of the worst, but then many arms are used for peaceful means (well, some are, not that i am defending the industry!)
the way business works is complex -for example Altria makes cheese as well as cigarettes... so what do you say about that company? BAT employs over 100,000 people providing them and their families with livelihoods for example, so there is no easy solution.
what do i think? i think organisations exist because there is a demand for them. what they should do is behave ethically as they meet that demand. in extremes that often means reducing demand (eg. not advertising for cigarettes), but it needn't be. Governments can create the framework defining ethics (it could ban arms, but does not).... when society deems a company unethical then eventually the government (in a functioning society) will act (maybe cigarettes will be banned at some point). The good thing is that it will take a long time for the governments to act, depending on corporate lobbying, sufficient public pressure and evidence... thus during this time the corporation will either die or diversify and hopefully those beneficiaries will find other work etc.
Leaders in these controversial organisations (like any other organisation) should strive to behave ethically, but this will always be within boundaries -human defined boundaries, boundaries that move, boundaries that vary per person. Those boundaries will differ individually and define what is and is not a good product or company. Leaders should strive to consider the impacts of their organisations and maximise the benefit to society and their organisation at the same time. Its not easy -being a leader is not. Ethics is not black and white. Pick a shade of grey. Pick the shade that you are comfortable with. How do you define responsible?
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