Corporate Social Opportunity Rules

I’m always talking about changing the view of corporate social responsibility into corporate social opportunity.  How if done right, companies don’t have to choose between profits, people, and the planet.  This is what I mean.

I was reading an interesting article today of an interview with Rosabeth Moss Kanter, Professor Business Administration, Harvard Business School. She was asked a very good question, “Can one realistically expect values to prevail over profits?”  She answered, “It does not have to be principles over profits. In fact, principles often get you profits.”  She goes on to give an example of Banco Real, a bank in Brazil that has environmental and social responsibility criteria on loan applications.  By so doing, the bank has customers coming back to them with a plea to help them comply and also new customers who, because of this standard, won’t put their money anywhere else.

Another example Kanter cites is P&G and their water purifier called PuR.  At first, the company couldn’t make a profit out of it and many wanted to stop the project.  But instead the company embraced the product’s importance for people who don’t live near clean drinking water and created a non-profit organization to distribute it.  It turns out that after the tsunami, the demand skyrocketed so they not only recovered the cost but even more value came from employee commitment, demonstrating their values to customers, etc.

These two examples are proof that if we truly embrace our social responsibilities and transform them into social opportunities, the rewards will be endless.  The triple bottom line is not too idealistic…it works.

CSR Will Survive the Economy

As the economy continues to spiral, all over the news we hear companies desperately seeking to cut costs.  And, I think it would be safe to assume that the first place most companies would look to save money is in their Corporate Social Responsibility efforts.  After all, unfortunately the common view of CSR is still to donate money rather than include CSR into the core business strategy making it an integral part of the business practice. I am pleased, to report, however, that this is not the case for everyone.  Many strong leaders despite their economic woes are embracing their Corporate Social Responsibility.

In Surprising survivors: Corporate do-gooders found in Fast Magazine Jan. 20, 2009, Lawrence Delevingne explores how some companies are “sticking with the program” of CSR.  One company profiled is Intel.  While Intel’s stock has fallen and their fourth-quarter numbers were down, Intel is still devoted to their CSR initiatives.  In fact, the company recently launched the Small Things challenge, a $300,000 partnership initiative with non-profit groups Kiva.org and Save the Children.  Delevingne states, “That’s part of the company’s pledge to maintain its commitments in 2009, which includes $100 million for global education programs from the Intel Foundation ($1 billion has gone to the cause over the past decade) and such green investments as energy conservation efforts (a $20 million investment since 2001) and the purchase of 1.3 billion kilowatt hours of renewable-energy certificates.”

Delevingen quotes Intel chairman Craig Barrett: “You can’t save your way out of recession - you have to invest your way out.  We look at our CSR activities in pretty much the same way: you can’t just do them in good times and then just forget about them in bad times and hope to get any results.”  What great words of wisdom.

Another company highlighted in Fortune’s article that is devoted to its CSR strategy is Starbucks.  Even though Starbuck’s stock lost more than half its value in 2008, leading to more than $400 billion in cost reductions, their corporate responsibility remains as strong as ever.  Delevingne refers to a recent article in Huffington Post by Howard Schultz, CEO of Starbucks, titled Yes Business Can in which Schultz makes a strong and passionate case for Corporate Social Responsibility especially in today’s economy. Delevingne quotes Schultz, “Short-term thinking in a recession can lead to the ‘false belief that investments in people and training can wait; that corporate social responsibility can be put on the back burner…Now is a time to invest, truly and authentically, in our people, in our corporate responsibility and in our communities. The argument - and opportunity - for companies to do this has never been more compelling.’”

Will Marré, CEO of REALeadership Alliance, couldn’t agree more.  In his recent article, “Good First,” Marré states, “When times are tough it’s hard not to be hijacked by fear. Thinking about how much good we can do becomes downright unnatural when we’re genuinely afraid we won’t have what we need.  But what if we turn that fear upside down?  Imagine that the key to security, prosperity, and happiness comes from doing good.  As much good as possible.  Just imagine.”

Marré goes on to discuss the concept from his book, Save the World and Still be Home for Dinner, he calls Good, Grow, Gain.  He states, “The Good, Grow, Gain model simply means that we think first of how much good we can do, knowing that the more real value we offer the world, the more we will responsibly grow our opportunities and gain the resources for everything we truly need.”  Marré believes that the best way out of the current economic state is also the way up.  Seeking ways in which companies can do good will drive new growth based on real value creation, and that will be rewarded in the marketplace.  He concludes, “In tough, tough times when the winds of fear howl and the smog of distrust fills our lungs, the world calls for people who are willing to transcend their fears and seek good first. By putting giving value first, we truly gain more than we ever thought possible.  That’s how the world will change.”

In CSR in an Economic Dip CSR Digest discusses how sticking to CSR strategies is a no-brainer during these economic times if one’s CSR is truly based on how profits are made.  The article quotes Dan Gray’s blog, Can CSR survive a recession? stating, “Companies that pull back from CR are liable to label their activities as opportunistic, rather than an integral part of a considered, long-term strategy.”  CSR Digest also refers to several benefits of CSR as to why companies should remain strongly devoted to CSR efforts such as reputation; transparency—and integrity—are still important; recessions don’t last forever; and communities feel vulnerable.

Christopher Flavelle in Responsibility Is Still Good For Business quotes Geoffrey Heal, a professor at Columbia Business School: “”Since the concept of CSR became popular, there’s never been a recession like the one we’re going into right now. Profits are going to be very hard to come by for many corporations. If they see CSR as contributing to their bottom line, they’ll continue to act responsibly. If they see CSR as a kind of a PR campaign, they’ll probably cut back on it.”

Yes, it is easy to get caught up in the constant turmoil and negative messages we are bombarded with everyday and think only of the bottom line.  But there is good news.  Strong leaders are not running with their tail between their knees, only willing to do good when doing good is easy.  They are embracing their social responsibilities, and this will make all the difference.

Unnecessary Layoffs Reprehensible

Will Marré, CEO of REALeadership Alliance and author of Save the World and Still be Home for Dinner, recently wrote an interesting blog, Microsoft is Stupid, in lieu of Microsoft’s recent announcement to layoff 5000 employees.  Marré’s stand is that when a profitable company lays off employees, it is irresponsible and poor leadership.  He states, “I am of the firm belief that the foundation of Corporate Social Responsibility is that competent, committed employees should not be fired while a company is profitable.  It’s even more outrageous when Microsoft has tens of billions in cash languishing uninvested because they can’t think up new ways to grow.  This is an immense failure of leadership.”

While Marré’s view is certainly controversial, especially since it is not an uncommon practice of top leadership made famous by Jack Welch, CEO of GE, to me, it is dead on.  After all, shouldn’t a company’s top priority be to its employees?  Michelle Sterling, founder and President of building b: solutions, in Heads up HR: CSR is Knocking, states, “Research continually shows that the number one item that consumers look at to judge the CSR of a brand is how that company treats its employees.  Numero Uno.  Top of the lists.”  Marré states in Corporate Social Responsibility Needs HR,  “Doesn’t it make sense that an organization’s first social responsibility is to benefit and develop their own employees?  It seems that most American’s don’t care if businesses are recycling if they treat their own people like trash.”

Not everyone agrees, however, with this viewpoint.  In Some Firms Cut Costs Without Resorting to Layoffs by Cari Tuna it states, “Some workplace experts say layoffs are a useful part of the business cycle, allowing employers to weed out poor performers, increase efficiency and promote a high-performance culture.” Tuna continues, “Today, many companies argue that alternatives such as across-the-board salary freezes and budget cuts are more harmful, because they can drive away top performers.”

I have to disagree.  Aren’t layoffs, instead, the ultimate failure in taking care of one’s employees? Tim Sanders, author of Saving the World at Work, states, “In my view, socially responsible companies don’t have layoffs when they are still viable or making money. It is not an expense reduction strategy with an upside.”

IAC Chief Executive, Barry Diller, was quoted in Diller to profitable companies: Lay off the layoffs at Huffington Post: “The idea of a company that’s earning money, not losing money, that’s not, let’s say ‘industrially endangered,’ to have just cutbacks so they can earn another $12 million or $20 million or $40 million in a year where no one’s counting is really a horrible act when you think about it on every level. First of all, it’s certainly not necessary. It’s doing it at the worst time. It’s throwing people out to a larger, what is inevitably a larger unemployment heap for frankly no good reason.”

Employee layoffs should not be the easy way out for companies, even though they see a decline in profits.  Top leadership should be doing everything they can, trying every other option before resorting to layoffs, especially when remaining profitable.  In Some Firms Cut Costs Without Resorting to Layoffs Cari Tuna also explores what some companies are doing to avoid layoffs. Tuna states, “Some employers are freezing hiring, offering voluntary retirement packages, cutting hours, reducing salaries or delaying raises. Other cost-saving tactics include raising employee health-care contributions and slashing bonuses, employer contributions to retirement plans and budgets for training, travel and other perquisites.”  Alex Chang, founder of real-estate search engine Roost.com, has gotten creative to save of his employees jobs from moving to a smaller office space and allowing some employees to work from home and asking vendors for discounts.

The bottom line is that CSR must start with responsibility to employees. As Marré concludes in Microsoft is Stupid, “[Microsoft’s] first Corporate Social Responsibility is to hold leaders accountable for their persistent inability to use their resources to create products and services that people value.  Laying off 5000 people is reprehensible.”

Corporate Social Opportunity with Organic Light Bulbs

Yesterday I met with the owners of eFactor Media about one of their name brand clients who is a leader in creating the next generation of lighting.  It’s called organic light emitting diodes or OLEDs.  The world has been waiting for affordable OLED lights for a long time.  They light 10 times longer than the longest lasting florescent lights, have no mercury and now are made out of organic polymers.  The vision is that in the coming decades all electric lights in the world will be replaced with lighting that uses a fraction of the current energy to manufacture and illuminate.  This is a genuine opportunity to help create a more sustainable future that brings the benefits of technology to all corners of the globe.

It also turns out that literacy rates go up by where electric lights are introduced because it creates more productive awake time to read and learn and even to do homework.  What my colleagues and I were talking about is how to help this global technology company translate their green science into a culture with the visionary zeal to convert the world’s use of lights to organic ones.  This is how Corporate Social Responsibility becomes Corporate Social Opportunity.

Corporate Social Opportunity

“CSO [Corporate Social Opportunity] is the greatest opportunity of the 21st century.  It’s an opportunity to stand for something that matters, to make a difference in the lives of others, and it’s the greatest economic opportunity in the history of the world.”