I wrote the article below soon after completing the Corporate Responsibility course work in my MBA at Henley. At the end of the coursework, I took a torch and a microscope to the corporate responsibility proclamations of a large corporation and its actual activities and highlighted the gaping gorge between the two. During the work, it hit me that most corporate responsibility initiatives are an after thought – done to appear good – and not embedded into the every day life lived by the corporation or small business – actually ensuring that good is done. In the piece below, I workshopped a model for entrenching good corporate citizenship behaviours in a firm’s strategy. Today, as we see the Covid-19 pandemic redefine societal and economic boundaries, the need for businesses, governments and individuals to be more responsible can not be overstated.
I have spent a lot of time these past few weeks on the subjects of corporate reputation and corporate responsibility. I ended up with an essay nearly 6,000 words long, but I currently do not have the liberty to share this essay in full as it gets confidential in places for the subject of my scrutiny – no it wasn’t an investigative journalism piece :-).
First, a disclosure: I fancy myself as a conscious capitalist. And have consistently imbibed the values of the social entrepreneurship movement – the triple bottom line of people (improvements), planet (sustainability) and profits (yeah, my revenue must exceed my cost of sale) in most places where I have full control, including when advising clients. So you may understand why I am not a firm subscriber to the theory that the business of doing business is strictly to do business.
Times are hard – for individuals and businesses alike. Some will argue that corporations are greedy too – I must say, I think so at times :-).
But again, times are hard and businesses do a lot to get by.
However, doing everything except noting and addressing the effects of one’s actions should not be excused. And so does the pretence we have seen over the years where marketing efforts are clandestinely masqueraded as corporate responsibility initiatives – complete with the associated tax breaks originally engineered as an incentive to get the corporate types involved in the lives of the people in the society – need some calling out. As, in the long run, we’d all be (and our children and their children too) better off, if businesses today are to become more responsible and avoid asset creating activities that put some of their stakeholders (especially those ones without any powers to address these effects – the poor citizens who for example will have no choice than drink the polluted water) at a disadvantage today and puts all of us in hot water in the future.
Since the 2008 global financial crisis – possibly the only crisis of that scale most people who are reading this now, have experienced – the subject of corporate greed…oops…corporate responsibility has somewhat again been mainstreamed. Most, post-2008 literature on the subject dropped the word ‘social’ from the previous phrasing of corporate responsibility (corporate social responsibility) in a move to remove the contrived ‘optionality’ from doing what is right or masking efforts to gain market-share as efforts at making the world better.
Today, more than anytime ever before, it becomes important that ‘responsibility’ becomes an integral part of corporate strategy for serious corporations – irrespective of size. And, increasingly, people are keen on knowing that their food, clothes, electronics etc. have been responsibly sourced/produced.
Soon, the evil that corporations do, will run them out of business – oh wait, it is already happening – remember Cambridge Analytical? And Bell Pottinger? Some will also remember Enron and Arthur Andersen.
In answering the how of doing corporate responsibility, I recommend the strategic model of firm performance introduced by Wiedmann & Prauschke (2005), which I have slightly modified in my presentation below to include feedback loops from measuring the effects of the deliberate adoption of corporate responsibility as a cardinal input into all asset creating activities on market performance and overall performance of the business.
In essence the how is simple – build responsibility into your strategy and then monitor outcomes and do more to get more responsible, thus:
- Determine and include corporate responsibility targets in corporate strategy (its a shame if you are not already doing this or if your corporate responsibility strategy is simply a cherry atop the cake of corporate irresponsibility)
- Deliberately aim at reaching corporate responsibility targets as much as you aim to reach all other corporate targets e.g. grow market share, reduce cost of sale, cross/up sell existing customer base etc. (also a shame if this is not already the case in the business you run)
- Based on new knowledge and/or experiences of all stakeholders, make sincere changes to your corporate responsibility targets
- Then, repeat bullet points (1) to (3) to infinity.
PS – an earlier version of this article is available on LinkedIn