Is CSR a case for linear evolution?

In his thought-provoking  blog entitled ‘Don’t abandon CSR for creating shared value just yet’ on The Guardian’s Sustainable Business pages, John Elkington suggests that although CSV had many virtues, it is unlikely to deal with the thornier CSR issues such as human rights or corruption. But it is his cautionary advice that “we should beware of kicking out the bottom rungs of the evolutionary ladder just as emerging market companies are waking up to CSR” that interests me most.

I am struck by this notion of an  ‘evolutionary ladder’. It suggests some linearity but as we have seen in the case of many other modern movements, is there not some room for a parallel and, even a ‘leap frog’ progression? . It is not beyond human ingenuity to find a different, a more disruptive and innovative solution to what might be seen as unchangeable or inevitable.

I draw upon an analogous experience to frame this question. When I first entered the telecommunications market in the early 80s, our offer to the emerging markets looking to invest in telecommunications infrastructures tended to be one of ‘invest in fixed networks’. Partly because it was the known and familiar thing to do and partly because of regulatory environment and other factors that either got in the way or helped us along.  By the early 90s, our offer had changed to one of ‘invest in mobile networks’ – on the basis they were easier and cheaper to install in a rapidly liberalising market , the cost of components was dropping, no one had to dig up roads and disrupt everything etc etc. Our particular offer was based on a global satellite-based system which required even less disruption on the ground , covered all parts of the planet and was ultimately more cost efficient.  We spoke the ‘leap frog’ language. Many emerging markets – nay, even big transitional economies like China faced with building telecommunications infrastructures to cover its land mass – had woken up to the economic and social benefits of investment in mobile telecommunications and were receptive to placing mobile technology on top of their agenda. The rest is history.

So is it not conceivable that some more enlightened markets may choose to explore and do CSR, CSV – and – sustainability – at the same time?  The permutations are many.  And even a more exciting thought – that in moment of pure genius, we will see a pioneer  do a leap frog to commit to and deliver a sustainability model?. The question then is not the ‘what’ (they should do) but the thornier ‘how’….

Supporting CEOs beyond the ‘what’ to ‘how’ of responsible business management

Recently, a spate of materials landed in my neck of the cyberspace – all well intended – around responsible business leadership. The usual exhortations for  business leaders to do more to be socially, environmentally responsible or to come clean about their failures and misdemeanors in responsible business management.

The problem is that they all make the same error. They treat business leaders as one type and all business sectors as one big homogeneous tribe sharing the same attributes and features and capable of evolving at the same time and same pace.  When there is an attempt to differentiate, it is to segregate business leaders into those that do, and those that don’t.

Neither the one-size-fits-all approach to the business sector nor the segregation of business leaders into Black Hats (bad people) and White Hats (good people) is helpful.

Could we blame CEOs if they were to sometimes feel fatigued  by the plethora of exhortations to spend more, do better,  inspire more, do more, be more, do faster, be everywhere –  be more open, share/air views, ideas, plans – join this group or that one……

Much that needs to be said about the importance of responsible leadership and management has been said – for a long time – and from every quarter of the business, academic, political, civil society and media world?. How can repeating and rebottling what business leaders need to do to change themselves and their businesses in new contexts get us anywhere faster?.

 The reality is that the ‘what’ needs to come with the ‘how’. 

From long standing experience of managing people in dynamic global businesses, I have learnt that if you want to improve and inspire better performance, you have to get down from the pulpit (if you are preaching) or the pedestal (if you are holding yourself up as a paragon)  and work with people on the ‘how’.  On their home turf.

You have to sit with them to identify and develop practical, home-grown/fit for purpose processes, plans, frameworks and tools ways that make contextual sense for the particular individual or team or unit or organisation at that time and stage in their life cycle.  Such customized attention is hard work but worth it; huge upsides if you get it right. In contrast, broad, generalised one-size-fits- all approaches neither inspire nor deliver.

Change comes from within. No amount of rhetoric or discussion  or models developed outside waiting to be grafted on to an organisation will deliver change. They can go only so far ….

A home-grown customised approach requires very different skill sets and experiences.  If we are to influence and change responsible business leadership paradigms, then we need  to work with (even create) change agents who understand and respond to the nature, challenges and opportunities of the SPECIFIC sector, organisation, executive team and leadership they are targeting.

My experience further tells me  that you need to take into account many factors when designing and delivering transformation: from the personal values of a CEO and his/her top team to the organisation’s cultural/historical/business DNA to the external environment (legislative/regulatory, political, market, social, technological) in which the business is operating.

As an external change agent, this requires you to do more than swot  up on the organisation or the sector. It also requires willingness to be a compatible and complementary – almost an ‘invisible’ – part of a team.  You cannot work as an outsider telling what should be done to change responsible business policies and practices, but as a welcome insider working with the CEO and his/her executive team on the how . In many respects you work as an internal broker – able to bring together different parts of the organisation and different people to set up internal partnerships that will deliver the transformation whether at the functional, unit or organisational level. And like all good partnership brokers, the goal is to make yourself ultimately unnecessary – move on after you have supported and served the needs of the partnership.

If we are to truly engage business leaders in making effective change, then we need to look critically at  existing approaches. Do those focused on collective influencing of business sector as one big entity (irrespective of sectoral or market differences) and leaders as one type really appropriate?. Or should we now explore the use of some more directed approaches?

Internal brokering along the lines I have suggested is certainly one approach. Another way is to work with ‘retired’ highly-respected CEOs and senior executives  from different sectors to work  on a one-to-one/one-to-few basis with other CEOs on ethical/governance and leadership development.  This concept of role-model CEOs working with their peers in an über-mentoring way has some merit. Especially if we accept that behaviour is likely to be influenced through ‘viral ‘/’peer-to-peer role modeling that is personal, focused and specific than by any amount of broad scatter-gun ‘advertising’  that fails to recognise the current context and circumstances in which  a particular CEO is  operating.

One advantage of a targeted approach is that it puts the emphasis on the ‘how’ –engaging with business leaders around practical ways in which they can start evolving their business, organisational and management models – one business cycle at a time – to build long term-sustainability. This may be an idealist way of looking at change – certainly if you think about the manpower required to mentor hundreds of CEOs. But then the whole point is that it is a ‘viral’ process – the CEOs themselves work to bring about change.

Seeing around the corner to find philanthrocapitalism in 2011

As New Year predictions go, I have warmed to the ten made by Matthew Bishop of The Economist and Michael Green, his co-author of Philanthrocapitalism: How the Rich Can Save the World in their blog The Year of Fighting Over What Works this week.

Incisive and helpful and what’s more, set up to challenge some existing notions– including mine – about whither the way of corporate giving that so many companies pin their CSR masts to.

Matthew and Michael foresee a growth in several areas: in “impact investing”; in the “privatisation of aid” from private donors and impact investors as government aid is curtailed; in the number of private donors – the  “philanthrocapitalists” –  but with strings attached as these  “new super-donors put their money to work in a thoughtful, impactful way” putting as much emphasis on quality as on the quantity of their giving; and in celebrity philanthropy from the Hollywood, sports and music elite.

This has interesting implications for corporate philanthropy – especially in those companies which are publicly listed and where the founder  is no longer in charge but free to go solo on whatever mission he or she aspires to or where they have set up corporate foundations to channel their  giving.

Will we see more corporate foundations popping up from more Global Fortune 500 companies and more ex-CEOs and Chairmen setting up shop as “philanthrocapitalists”?.

Matthew and Michael predict that a key global target for philanthropists will be maternal and child health. This is consistent with the Global Strategy for Women’s and Children’s Health that came out of the UN Millennium Development Goals Summit in September 2010, securing the UN  US$ 40 billion in resources  for a global effort  aimed at 16 million women and children up to 2015.

The duo also predict a closer link between mass philanthrocapitalism and politics, where they suggest that entities such as Kiva which have built up a sizeable community of donors and micro-lenders will channel their collective power for political influence and policy shaping. This takes the impact we have seen of technology–particularly of mobile phones – to mobilize citizen power into yet another dimension.

But I reserve my most favourite prediction till the last – that “maybe, just maybe, 2011 will be the year when social enterprise jumps the shark”. It challenges my notion that social entrepreneurs , operating as speedboats to the super tankers that big business tends to be, stand a better chance of finding quicker solutions to development challenges.

Although Matthew and Michael acknowledge the impact of social entrepreneurs, they also voice the concern that some may not be effective and suggest that the wishy-washy language of social entrepreneurship does no good.  So they are hoping that 2011 will yield a “much needed, more precise lexicon to describe what, in the world of social innovation, actually works”.   Now this I go along with – as it echoes my concern over loose language slowing us up.

Whose sustainability are we talking about?

I am back at the Tower of Babel … It has been a bad month, trying to pick through the tangle of different descriptions and positions around topics to get to the nub of things.This time, my challenge is with ‘sustainability’

The sustainability story started so well over a decade ago – with the appropriate definitions and concepts being put forward to describe  ’sustainability’. There was both discipline and fluency. Now, a whole new industry of services and experts has sprung up around sustainability, and with it a  new language and grammar spoken in multiple tongues. The risk with such unbridled popularization is that  it will confuse rather than enlighten.

We hear ‘sustainable’, ‘sustaining’ and ‘sustain’ and ‘sustainability’ – and its variants – ‘environmental sustainability’, ‘business sustainability’, ‘economic sustainability’, ‘sustainable innovation’, ‘sustainable practices’ . When you look closely, these all have different attributes and outcomes.

Sure, there is a virtuous circle of  inter-dependency between business + societal + environmental relationships – healthy businesses and healthy environments mean healthy societies and vice versa. But we do need to be clear about whose sustainability we are talking about. Is it about a business’s long term survival?. This is the easiest and most comfortable notion for a business to pursue as it is tied in with assuring its longevity. Many Fortune 500 companies we know are centenarians – ‘built to last’ .

Or is it about the survival of the communities in which businesses operate?. This is a bit trickier. For instance, it is often tied in with the debate on (a) the role of government versus business in generating societal well being – who does what in what proportion  to create the whole; (b)  the paradox of balancing shareholder value interests with  those of the society; and (c) with articulating  exactly what a business’s social licence to operate means in practice.

Or is it about the survival of the planet? This is another comfortable place for many conscientious businesses  to be in. It relates to compliance with national and international environmental regulations and standards and practices that support  responsible use of natural resources, reduction of carbon footprints,  waste management , re-usage/recycling/disposal of raw materials and finished products in their operations.

Well managed businesses will ensure the survival of all three – their business, communities and the planet. But it is the precise combination of strategies and tactics they will use which should constitute their unique sustainability paradigm for the 21st century.

In the triple bottom line context, this would equate to a deeper emphasis on the visible outcome of decisions and actions that businesses build into their business planning cycles, their corporate value systems and cultural DNA and their organizational transformation . It would go beyond the sustainability arising from sound environmental compliance and practices to touch every commercial and operational aspect of the  design and delivery of the value chain; every aspect of a product’s life cycle – from procurement of raw materials to product development to manufacturing to distribution and marketing to consumption and disposal. Separately and together,  these activities define the kind of sustainability the business and its employees and other stakeholders , the community and the environment will experience.

Managed well, it will bring back some much needed clarity and discipline into the concept and language of sustainability.

The road to CSR integration is neither easy, nor quick

The call to action to business leaders to do more to embed ‘CSR’ into mainstream business is not new. Many thought leaders – such as John Elkington, Rosabeth Moss Kanter, Jane Nelson, Michael Porter and Simon Zadek have been arguing that companies need to re-define their core business models, management and organizational cultures and their partnership models to deliver a more sustainable social impact for almost a decade.

In my experience , most business leaders respond to the need for new ‘CSR’ paradigms intellectually. Their real challenge is one of implementation – about the quality, the depth and breadth and pace of integration into their business.

A factor here is that ‘CSR’ and ‘sustainability’ which are often used interchangeably mean different things to different business leaders and their staff, organizations, sectors – indeed to the business and national cultures of the markets in which they operate. It also depends very heavily on the life cycle of the business. A mature business with sophisticated systems and practices is likely to look at integration very differently from one that is in the early stages of its life cycle and still developing its public and social identity.

Integration also depends on the CEO and his/her leadership team. It is closely tied in with their personal vision and values and how these get imprinted on the organization they are leading. It should not come as a surprise that the CEOs and global businesses which get surveyed are already passionate converts to the cause and advocates for adopting new ‘CSR’ paradigms into their strategies and operations. They are ahead of the curve – as can be proven by the fact that the same group of companies and CEOs keep cropping up in case studies, reports, theses and surveys again and again. They make great role models. But they are a minority. They are the classic early adopters.

The real work is yet to be done -with the early and late majority. Their rate of adoption of new  ’CSR’  paradigms is likely to be colored by many issues. And the notion that ‘one-size’ will fit all will not work and the expectation that businesses will take a couple of planning cycles and intensive transformation to move ‘CSR’ from the periphery into mainstream is unrealistic.

I do not envisage  the thousands of global MNCs from across the world – or for that matter all of Fortune 500 – will achieve  CSR nirvana in the timelines people expect them to. Despite the external environmental pressures – and we will see plenty of them over the next decade  -  each business leader, organization and sector has to define, articulate and implements their own home-grown solution to crossing the chasm that they see from the default model of corporate philanthropy, employee volunteering and community investment to the one where everything their business does inherently delivers social, economic and environmental benefits now and in the future. That will take time before it becomes second nature. Our role is to help them get there.

Are rumors about demise of CSR exaggerated? Depends on what you mean

Recently, we have come across claims that ‘CSR’ as we know has failed. That it is no longer  effective. That it is no longer a ‘bolt-on’ activity because it is being ‘integrated’  into mainstream business. That CSR departments are closing down.

The risk with taking such claims at face value without probing them is one of distortion. Because it depends very much on how you define the term ‘corporate social responsibility’.

If you define CSR in its most common incarnation of business contribution to society-  one which most organizations de facto have lived in the longest  - as a combination of corporate philanthropy/corporate giving, employee volunteerism and community investment/involvement – then the claims are misleading.

Because good corporate citizens will continue to give in times of disasters and to humanitarian causes; their employees will continue to seek opportunities to contribute their time and effort to charitable causes they espouse through their workplace; and they will continue to invest in community projects which respond to a local need.  It will be hard to resist the call of help from the local community in which you operate your business and draw your employees and resources from.

What is possible, however, that a department with a sign on its door saying ‘CSR’ may be disbanded and the responsibility for corporate giving, employee volunteering and community projects gets dispersed across the organization to communications, HR or other departments. Such a structural change should not be confused with a fundamental change in business strategy.

If you define ‘CSR’ as ‘responsible business management’ , then the claims about its demise, transformation and integration take on a different hue.

Because that takes us into the realm of a business doing everything in a conscious and deliberate way to adopt policies, standards, processes and practices that will inherently deliver a positive impact on its employees, consumers or business customers, communities and other stakeholders, and on the environment whilst delivering a healthy bottom line.

This is about the pursuit of deliberate inclusion of the wider societal interest into corporate decisions and strategies which create a win-win for both the business and its stakeholders. It means built-in, self-regulation of corporate behavior and actions which comply with legal, ethical, social and cultural standards and norms. It means developing products and services that inherently bring economic, social and environmental benefits to people and the planet in a way that keeps up with emerging challenges and opportunities. This is something I find easier to hook integration around – sustainable innovation.

It is this kind of integration we should be talking about and looking into. None of what I say is original, but it does remind us that we need to be disciplined about our language – lest it over-hypes and under sells the reality of CSR integration.

Making the most of human capital in recession

Communications and marketing budgets are not the only casualty in an economic downturn. Companies seek to reduce their wages bill and so layoffs are also a common occurrence

Many organisations do it in the right way. But there are also those who get it wrong. In the rush to gain short term benefits for the bottom line, the longer term consequences are overlooked. Decisions get truncated into quick fixes. This often leads to self-deception about how long recession will last or how much capacity might be needed to manage recovery.

Miscalculation around capacity can be risky.  If you lose the right 2 people from your customer-facing operations, will you also lose 40% of the capacity to deal with your core business? Equally, if you recruit the additional 2 right people, could you boost your capacity by 100% and generate income? This might be a simplistic view, but it stems from my belief that you must balance the cost management side of the equation with the income generating side. Plans for cost management must be accompanied by plans to grow income – by doing new, doing different or doing better. Necessity, after all, is the mother of invention and nowhere more so than in an economic recession.

Reducing staff without a contingency plan for when things pick up will slow down the pace and tempo of recovery especially where the companies have already committed to growth. How well is a company positioned to deal with any upturn? Agility and flexibility to come back into and win the game will be slow if you are fielding a B team.

Keeping hold of talent

Rumours of layoffs or voluntary redundancy schemes will encourage the more marketable, talented staff to leave. In the absence of ‘drivers’, the organisation has to contend with ‘passengers’- people who are happy to plod on because their decisions are driven by lifestyle choices or low ambition . Layoffs predictably also lead to a ‘survivors’ syndrome’, affecting productivity and effectiveness of the staff left behind. They are either distracted by speculation about where the cuts will come next or they are working beyond their capacity or capability. A disengaged or overwhelmed workforce will slow down recovery and do more damage to the bottom line.

It is important that managers understand and factor the risks and impact of cutting the wages bill into decisions they take about shifting their human capital. It also has implications for how they communicate and manage staff cuts. Managers should communicate face-to-face as much as possible. They should be honest – it is strength to admit to uncertainty and ask for ideas from your subordinates – “this is an uncertain time – some operations and activities will be recoverable, others will be difficult to continue… we are not sure what is emerging, so we need your help in building a new shape for this company”.  By treating them as bright and resourceful people, you will create competent rescuers, not saboteurs.

Change your HR practices

Managers should also review their Human Resources practice on compensation, reward and recognition,  development and retention with the aim of developing and retaining the ‘drivers’ and converting the untapped potential in others to expand capacity and capability of the organisation to deliver  both short term and the longer term plans.

In recession, the ultimate objective should be to turn diversity into opportunity, any disadvantage into an advantage. It can be done – by making the most enlightened use of your human capital.

Sustaining communications spend in an economic squeeze

In the past few months, I have heard many stories about communications budgets being cut or capped and recruitment being frozen. Most people shrug this off by saying ‘this is nothing new, communications is always the first casualty when a company hits the buffers. It is the most obvious line to delete or slice off in the budget”.

I am not sure which is worse – the myopia of the managers who arbitrarily and without assessing the associated risks cut back on investment in communications or the resignation of the people who accept it. Because what it does is perpetuate an act that on balance is a false economy. You lose a great deal of ground which then you have to work twice as hard or more to regain when the ‘crisis ‘ is over. This applies as much to well-functioning organisations as it does to dysfunctional ones. Reducing or switching off investment in communications hurts everyone.

One critical outcome of the recent economic crisis has been loss of market confidence – and indeed loss of trust in and credibility of big businesses – with far reaching consequences: the drop in consumer spend loss of shareholder confidence, more vocal media and public opinion and greater political intervention. Not only do sales suffer but also employee morale and ultimately the reputation of the company. It is precisely to counter all of this that companies need to sustain their investment in marketing, corporate and internal communications. They need to keep talking, influencing and engaging their customers, employees, shareholders, legislators, the general public, and the opinion formers.

I am not advocating spending money the companies do not have. I am, however, suggesting that they think differently and more creatively about how to spend what they can afford. I am suggesting they view the crisis as an opportunity for communications both as a functional discipline and as the backbone of the organisational culture. It might be the perfect time to adapt core processes, channels and media mixes – to bring in different ways of reaching, influencing and engaging stakeholders. To do new, do different, do better. For instance, instead of sinking capital in big ticket items such as advertising, consider the use of the web – say, digital viral marketing – as viable substitutes. Internally, create more opportunities for multilateral conversations and interactions – online or face-to-face – to boost normal channels and products.

Whatever changes you make to the communications mix, the fact is that you are maintaining continuity – in the perception of your stakeholders, there would appear to be hardly any noticeable change in your attitude, presence, volume or tone – may be only in your style. Maybe a glossy expensive TV ad has been replaced by a more intimate and direct online or personal experience.

To employer brand or not?

 Some say yes. Some say, it depends. If the brand is well known to those you are trying to recruit, then playing with an employer brand might be safe. If they have no idea what your brand is or what it stands for, then an employer brand would be a disaster.

Me?  I am unconvinced that an employer brand adds any real value to an organisation. It merely breeds a whole new parallel industry and language, carrying the risk at some stage of straying on to a tangential and rather unhelpful path. It causes confusion as people try and make sense of brand, corporate and their personal values. Brand is more than a blend of products, corporate identity and marketing communication. It is what the company stands for, believes in, acts on. It is about behaviour across every part of the organisation, which drives the business model to success and longevity. Behaviour that has both ‘internal’ and ‘external’ expressions.

In my last brand management role, we took a ‘holistic’ approach to brand – that it was the interdependency and cohesion between products, identity, communication and behaviour that made our brand proposition come alive. And every function – from product design to HR – could overlay their expressions of the four elements on to a grid and say ‘this is how we integrate, express and live our brand’. Which made an employer brand a redundant notion.

The HR team had the know-how to interpret and frame the corporate brand and corporate values is such a way that they communicated very clearly and effectively to potential recruits : ‘this is who we are, this is what we  do, this is what we stand for and believe in, this is what we are passionate about, this is how contribute to society, planet, communities, ourselves and people we care about, these are the traits and qualities we look for in our people….”

And the “we” was ‘we, the people of this company’, not the royal ‘we , the company’. HR knew how to integrate and subsume the corporate brand into recruitment, induction, development and retention practices. It was certainly very important as the business model and hence the brand strategy got remodelled that all incoming leadership and specialist talent could understand, relate to and deliver the corporate brand vision. And at the same time could see and buy into the manifestation of that vision in the company’s people practices.

I have another reason why I do not favour an employer brand. Brand is an asset. Brand vision and proposition is part of the genetic code of a business – driving its purpose in a way that sets it apart from the competition and bonds –both commercially and emotionally – its people, consumers and other publics to that purpose. Which means that brand has to be integrated deeply into every core process – and in a very clear, well-defined, well-understood and unambiguous way. As an asset, it has to be managed in a responsible, cohesive, coherent and consistent way – it is not an asset you expose to risk.

 

 

Time to modernize Corporate Responsibility?

For the past few months, I have been reviewing the current scene in corporate responsibility.  And I see two pictures  - one in which most companies still make do with the  de facto model of  arm’s length corporate philanthropy, bolt-on community and employee volunteering programmes. And in the other,  few progressive companies – like Nokia – which strive to go beyond the arm’s length model to transform their business models, business operations or their way of working.

The fact that the same few names keeps cropping up in case studies, sustainability indices and annual reports suggests that CR reformation is far from universal.

Don’t’ get me wrong. There is a place for corporate philanthropy.  It is good corporate behaviour.

The real mark of achievement is when companies get the courage to re-design their business model and mutate their corporate DNA in such a way that everything they do inherently brings about some social, environmental and economic benefit.

When such a focus on ‘triple bottom’ performance is done right, all those desires –  to generate shareholder value (the usual reason why some businesses might procrastinate around radical CR thinking), to create a competitive advantage over rivals, to generate healthy profitability  – and to be a good employer, community and planetary citizen  - can be fulfilled.

Second bit of evidence – the competition for finding solutions to social, economic and environmental problems is hotting up. People no longer rely on enlightened businesses to help them. Why? Because there are some very smart new kids on the block.

There is an expanding social business ecosystem across the globe driven by the success of several pioneering social entrepreneurs and the growth of for-profit but socially-motivated enterprises. Sure, there are some social foundations set up by corporate philanthropists and some progressive initiatives between corporations and NGOs delivering some good work.  But it is the entrepreneur – the micro-financier in particular – that is grabbing the attention. And I do see them as very credible and respectable competition – not only for people’s hearts and minds (still a big reason why companies embrace CR – the PR and reputational value) , but also their wallets.

There is another reason why businesses should look closely at social entrepreneurs and businesses in their marketplace.  They might make good partners. Instead of relying on the original holy trinity of corporate+public+civic society sector partnerships, it might be possible to bring about some radical change from the outside.

I am not alone in advocating change. There is a whole group of CR scholars, advocates and practitioners who want businesses to be very radical. They want the companies to re-define their core business models, management and organisational cultures; and the way they build their cross-sector partnerships.