Goodbye Corporate Social Responsibility, Hello Corporate Sustainability

I read an interesting article today in the Wall Street Journal called Good Intentions. It addresses the fact that 1/3 of companies cut their corporate social responsibility (CSR) budgets in 2009 and corporate philanthropy fell by 8% in 2008. While just looking at the numbers this may appear to be a great setback, the article discusses how it’s actually not such a great loss because random acts of corporate giving and marginal initiatives are not enough to alter corporate behavior. What’s needed is corporate sustainability.

Will Marre, CEO of Realeadership Alliance, agrees. He states, “Business is not just about making a profit anymore; it’s about creating a sustaining business culture that energizes employees, creates a unique profit edge and makes a positive impact on humanity and the environment. Anything less is a waste of valuable time and resources we need for a sustainable future” (See Leadership Development Speaker, Will Marré, Trains Business Leaders for the Future). So what exactly is the difference between CSR and corporate sustainability? The WSJ article quotes Scott Beaudoin, director of cause marketing at MS&L in Boston, who says: “Companies are asking how they can be socially responsible in a way that also moves the business forward. It’s no longer about having one corporate social responsibility guy who is supposed to be the moral compass for the company, like a chaplain in an Army regiment. It’s about making sustainable business the standard operating procedure.”

Corporate sustainability, according to Wikipedia, is “a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments…Unlike the other phrases that focus on “added-on” policies, corporate sustainability describes business practices built around social and environmental considerations.”

A huge driver of sustainability rather than responsibility is innovation. Corporate Sustainability—It’s About Attitude discusses a paper by BT and Cisco, “A New Mindset for Corporate Sustainability.” It discusses the limitations of CSR thinking, “namely an attitude that these practices are costly to business, inhibit growth and negatively impact the bottom line.” Sustainability, on the other hand, is a catalyst for innovation. It gives ten steps companies should take to drive innovation via sustainability. Some are 1) Make innovating for sustainability a part of your company’s vision, 2) Formulate a strategy with sustainability at its heart, 3) Embed sustainability in every part of your business, and 4) Walk the talk (actions speak louder than words).

A new study, Why Sustainability is Now the Key Driver of Innovation, also discusses the mindset of sustainability. It states, “Sustainability isn’t the burden on bottom lines that many executives believe it to be. In fact, becoming environment-friendly can lower your costs and increase your revenues. That’s why sustainability should be a touchstone for all innovation.” It continues, “In the future, only companies that make sustainability a goal will achieve competitive advantage that means rethinking business models as well as products, technologies, and processes.” The paper goes on to give a five-stage process in becoming sustainable.

Marre, who has long been changing the phrase, Corporate Social Responsibility, to Corporate Social Opportunity, discusses in New Leadership Training for Strategic CSR Announced by Will Marre how business has gone through three phases of CSR. The first was the mandate for businesses to remove the toxic processes and impacts from their operations. This included practices such as eliminating pollution and labor exploitation. Phase two has been to embrace sustainability and contribute to the community. Sustainability practices have yielded huge cost savings as waste is being eliminated from core business processes. Corporate philanthropy has also become increasingly important to promote brand reputation.

Marre even takes it a step further. He says that as good as these initiatives are, phase three is a “quantum leap” in creating strategic business value for companies who see that helping humanity and healing the environment are far bigger opportunities than stopping bad practices or polishing a corporate reputation. Phase three of the CSR revolution is socially strategic leadership that unites a 21st century leadership paradigm, business models and EverGreen™ innovation to create unique value.

According to Marre, “Reinventing the world to be sustainably abundant is the greatest economic opportunity in history.” The possibilities are indeed endless for those who move beyond business-as-usual and embrace the challenge of changing our future. CSR make way for corporate sustainability.

Egomania–Over Believing Our Strengths

Who would have thought Toyota would be brought to its Prius knees because of quality problems?  Who would have thought one of the most disciplined athletes of our time, Tiger Woods, would be so sexually reckless?  Certainly not many of us would have predicted Toyota’s or Tiger’s challenges.  And while it’s tempting to be critical or even condemning, their trials have a common thread that are at the root of all our challenges.  It’s simply this.  Often our greatest failings are found in over-believing our strengths.  And when our strengths are extraordinary we can’t help but think we’re special.  We delude ourselves into thinking that our specialness exempts us from failure, so we ignore the signs of it until it overwhelms us.  The saying is, “Nothing fails like success.”  Which means that extraordinary and consistent success forms mental cataracts that eventually blind us to our failings and weaknesses.  This becomes worse when we are surrounded by an entourage of flatterers who make our blindness darker.

The catastrophe of Toyota is rooted in organizational ego disorder (OED).  For years Toyota led the world in automotive and manufacturing quality.  Business leaders, engineers and researchers from around the globe made pilgrimages to Toyota to learn the secrets of continuous improvement.  Toyota truly set world standards of quality so when drivers started complaining their cars were potential killing machines due to something frighteningly called sudden acceleration and Prius’s, of all cars, had broken brakes, it was natural for Toyota to blame the drivers.  The thinking goes, “We build the best cars in the world; therefore nothing could be wrong with the cars.  It must be our customers.”  When we think we’re invincible or even extraordinary at something we can hardly resist becoming the last place to look when something goes wrong.

First we deny there is a problem.  Next we blame others for it, and finally we say it doesn’t matter.  These three ego defenses give us three off-ramps to seeing the truth and making changes.  When something is going wrong, denying the problem is guaranteed to escalate its damage.  The wisest among us embrace the truth, welcome feedback and hunger for improvement.  Blame of course is always tempting. “She drove me to it” is the common excuse for infidelity or cheating at anything.  Blame is inviting because we are world class at it.  It’s usually rooted in some truth.  The best excuses are always supported by our carefully selected evidence.  After all, I am sure some drivers do step on the gas instead of the brakes when they panic and every spouse provides ample reasons to seek a “better” partner.  But so what?  We aren’t off the hook for all the evidence we choose to ignore.

But our worst ego-failing is the last.  Saying bad stuff doesn’t matter because I am great is the ultimate moral failure.  We’ll see if Tiger can make a heroic comeback.  It’s very tempting for people who are truly great at something to give themselves a free pass on all the things that cripple them.  Just ask any successful politician, singer, actor or sports star.

So what’s the best thing we can do? Be hungry learners.  Seek feedback.  Always invest in our own growth.  Invest in our strengths but always manage our weakness.  Make no excuses.  Don’t blame or rationalize.  Who you are, what you do, what we say all matters.  Most of all we need to take responsibility to clean up our own messes.  That is the essential first step of becoming a decent human being.  And remaining decent is a daily challenge for all of us.

The Problem is About Bigness Itself–Threatened by Dinosaurs

I do leadership consulting for a living. I am fortunate to work with enlightened large companies helping to revolutionize their leadership training to a 21st century model where value is created by creating a sustainable future. What I’ve witnessed in the past 3 years is nothing short of astonishing. While big companies are far from perfect they are making rapid and amazing progress at inventing new products and services that are healthier, sustainable and benefit humanity. But this is far from the norm. There are many, many leaders that pathetically don’t get it. Their self-interest and wholly materialistic view of enterprise is the only Kool-Aid they drink. Increasingly they are desperate to survive, and they have become gigantic parasites sucking the life-blood of our economy and our future.

We used to think that business and government operated with a healthy tension that led to both a vibrant economy and a constrained government, but that is now a sad illusion. Now they simply feed on each other in a new kind of “state capitalism.” Please, please know that this is both an impulse of Republicans and Democrats. We know that by looking at what people do rather than what they say.

According to the Economist, the biggest expansion in the American state since the 1960’s was driven by none other than George Bush. As a give-away to drug companies he expanded a huge drug entitlement program of Medicare at retail prices. He also created the biggest new bureaucracy since World War II called the Department of Homeland Security. He also greatly expanded no-bid contracts to defense and other government contractors. 7000 new pages of government regulations were installed and wiretaps and financial data mining of our bank accounts became government-as-usual.

Since the financial meltdown taxpayers have had to bailout our big financial institutions and auto companies while no one pays any consequences.

Meanwhile both Democrats and Republicans are locked in an ideological cage fight played out in our hyperactive media while our nation convulses in dry-heaves of meaningless sound bites. If children are to thrive we need something more.

But that will be difficult. The marriage between big governments and big business is even greater in other big economies like China and Russia whose governments routinely “buy” private companies, decide who gets capital and who is pushed aside. (Most of these nations’ global companies are in fact owned by their governments!)

Meanwhile, a Saudi Prince (remember the Saudi Arabian government owns all the Saudi oil reserves) is the second largest stockholder in News Corp., which owns Fox “news” and the Wall Street Journal (see Fortune). He is also the largest stockholder in Citigroup, one of our too big failed banks. If you wonder whether this foreign quasi-state investor has much influence at News Corp. or Citicorp, Vikram Pandit, CEO of Citigroup, remarked that Prince Alwaleed’s view of his performance would determine whether he keeps his job! Prince Alwaleed announced he is opposed to new taxes on big banks to recoup U.S. taxpayer support. Big surprise. Isn’t it interesting that a foreign Prince has that kind of influence over the leadership of one of our largest failed banks? More influence than the taxpayers who kept Citicorp afloat.

This is just a symptom of the twisted new world of State Capitalism where the financial power brokers of Wall Street have moved from New York to K Street in Washington D.C.

Now we’re in a brave new world, sanctioned by our Supreme Court that opens the door to global corporations supporting their favorite U.S. political candidates. Welcome to bizarroworld where free speech has become bought and paid for speech by global corporations who claim to have the same rights as individual citizens. How do you like that Thomas Jefferson!

It’s long been observed that when companies are growing, brimming with innovation and new products they spend little on lobbying. However when big corporations grow dull and profits are shrinking they “invest” millions in Washington to impact laws and regulations to tilt the playing field, restrain competition, gut anti-trust laws and create special tax breaks. They simultaneously tout free markets while they work like demons to rig things for personal benefit.

So the problem we face is not only about big government; it’s about bigness itself. Dinosaurs were huge. Their inability to adapt caused them to go extinct. Now we have the dinosaurs of big government and big business mating creating offspring that is simply devouring all the assets and resources of generations of work.

What is the best we can do? State Capitalism is the global rage. It reigns almost everywhere from Japan, China, Malaysia, the Middle East, Western Europe and of course our own bloated version of it. Its failures will be painful and drawn out. The most important issues are personal ones that impact you and your loved ones. My view is don’t expect the system to change soon. There is too much juice in it to voluntarily reform itself. It’s time to live prudently, become multi-skilled in work that ignites our passions and focus on all the things we do control. There will be great churn in the economy and great opportunities to out-run the dinosaurs. It’s a day of constant innovation and, if viewed correctly, unprecedented opportunity. There are still great companies to work for that are innovative, treat their employees well and are thriving even now (Fortune Magazine’s 100 Best Companies to Work For). Remember, it’s our day-to-day life that matters, and in every epoch there are those that adapt, thrive and pursue their dreams. Be one of those. Life is risky. Take charge.