Some years back, Deborah Doane wrote a hard-hitting article about the “myth of CSR”. In it, she argued that CSR was a reaction rather than an action; that it was essentially a collective response to uprisings against the behaviours and morals of corporate institutions and that it had been encouraged by an historically weak NGO sector as a way to bring about change.
Her concerns mirror many that I have independently raised.
Trade-offs made between profit and ethics in CSR programmes seem often to err in favour of the finances, betraying what has seemed an irreconcilable gap between what’s good for the world and what’s good for business. (I was quite taken with an idea quoted from Marjorie Kelly that “It is inaccurate to speak of stockholders as investors, for more truthfully they are extractors.”)
While stated concern by consumers over ethical matters is high, actual commitment remains low.
I don’t see any evidence that that has changed since the Stanford article was published. Ethical behaviour is now very much an expectation on the part of consumers. There is little moral high ground (in the sense that such behaviours are consistently and abundantly rewarded), only the status of non-low ground if you like – that a company’s social responsibility behaviours are acceptable and therefore the brand is not financially punished. Consumers want companies to be good but are not prepared to pay more for them to be so. They are however prepared to use ethics as a filter for their choice set – to rule a particular brand in or out.
No surprise either that far from encouraging competition to demonstrate best ethical practice, there has been an unhealthy emphasis on compliance. As Doane observes, “companies often fail to uphold voluntary standards of behavior in developing countries, arguing instead that they operate within the law of the countries in which they are working.” In other words, the behaviour dials have been set to minimum rather than maximum.
Doane continues, “At some point, we should be asking ourselves whether or not we’ve in fact been spending our efforts promoting a strategy that is more likely to lead to business as usual, rather than tackling the fundamental problems. Other strategies — from direct regulation of corporate behavior, to a more radical overhaul of the corporate institution, may be more likely to deliver the outcomes we seek.”
Should you regulate responsibility?
That I struggle with – because to me, such strategies risk replacing one form of compliance that hasn’t worked with another form of even more heavy-handed compliance that could be equally ineffectual. Regulation encourages discipline – absolutely – but I’m not sure it fosters innovation. Equally, I’m unconvinced that changes in governance are the answer (although they could prove an important incentive, but only if and when the “extractors” are prepared to stop demanding short term gains.)
I do agree though that CSR has promoted business as usual, or perhaps more to the point, compliance as usual. But I also think CSR has proven a non-answer partly because we’ve been asking the wrong question. The question that continues to be asked of brands is “what are you doing to do good in the world?”, which naturally prompts the response “this much” and/or “as much as the next guy”.
Changing the returns
What would happen, I wonder, if we linked responsibility and creativity? What if we made it a way for the world’s biggest brands to tackle, solve and profit from the world’s biggest problems? I don’t mean that at all in an exploitative sense. In other words, what if we tied responsibility not to “do-good” compliance but rather to big-bang competitive difference? And what if the responsibility element of that wasn’t about inventing an answer that was monopolistically priced, but, on the contrary, was about an insistence on globally scaled, volume-focused answers that everyone could afford?
In other words, what if we took Chris Trimble and Vijay Govindarajan’s wonderful concept of “reverse innovation” and made that the focus of the next era of responsibility? Then companies wouldn’t boast to their investors about what something cost, but rather what their expertise, innovative prowess and commitment to responsibility meant the innovation didn’t cost. And the global uptake that resulted would ensure investors got the returns they were looking for.
That would also generate a very different and quite disruptive question for responsibility going forward – one based on responsible leadership rather than a fading corporate social responsibility model: What is the biggest problem in the world that your brand is in the best position to (affordably) solve?
Now that really would be something worth reporting on.
This is always going to be sticky subject mate. I remember distinctly working on Procter when renewables & recycling was the fad in North America. Unlike Europe (especially Switzerland and the Nordics) recycling has always been paid legislative lip-service so it did require companies and consumers to lead by example. Regardless of research findings and the inevitable consumer commentary, none were prepared to pay a premium for packaging that was more expensive because it was recyclable.
I do take some solace in meta-social initiatives like collaborative consumption models (AirBnB, Autoshare, Uber) where people are sharing resources versus the previous obsession with ownership…and all the societal impacts that has. Those models, while not perfect, are less societally-agregious.
Also fascinated by the increasing numbers of crowd-sourced initiatives intended to take a more heuristic and holistic approach to business models. Look at Innocentive or even KickStarter as signs that folks are looking for, and are prepared to support monetarily, initiatives showing a lower societal impact.
Sadly the blunt instruments you detail – governance, legislation – are the only one’s currently available AT SCALE. Ergo those are the tools that can be wielded against large MNC’s. The real hope is that engaged, connected and technologically empowered consumers can now band together and agitate for these changes from the bottom up…or create their own mini systems that is more in keeping with their own ethics and conscience.
Hi Hilton – great insights as always, and nothing I actually disagree with.
I’m encouraged by collaborative models and crowd-sourcing because, as you say, of the shifts in mindset that they represent. I also agree with governance and legislation as long as they encourage change and not just more compliance and bureaucracy. Certainly the misadventures of the free market model (hello Enron) have convinced me that markets must be guided – but not guarded.
I guess I’m looking to ask a different question and it’s this: what if the challenge is really to make changing the world affordable for everyone – hence the reverse innovation reference. Would accessibility speed up acceptability? Is that what CSR should be focused on?
Would would happen for instance if GE went after this problem, “How do we make a wind generator for your home that costs $60 retail?” Answering that to me would test GE’s engineering prowess to its limits, prove their place in the world if they were successful and, because of the affordability, encourage mass take-up that investors would be happy with.
Thanks as always for your views.
Cheers, Mark.
In some ways this is already happening via mobile and the access to education, commerce and markets that mobile + data networks are creating. When working with Nokia, they were always touting the case of the Kerala Fishermen and how access to mobile phones meant access to markets, income and financial freedom they’d never had. A decent write-up in this blog: http://pinchzoom-archive.tumblr.com/post/1099231269/mobiles-and-the-fishermen-of-kerala
Look at Africa for the seismic shifts that mobile-enabled consumers are being able to access. Perhaps not exactly what you’re looking at but there are signs. The Gates Foundation work with malaria and water sanitation are also the types of meta-initiatives that show that reverse engineering can work. It probably helps that the Gates Foundation, unlike your GE example, isn’t beholden to making quarterly shareholder returns which probably hampers their desire to make big bets with questionable ROI. Certainly IBM appears to be making the types of investment that could make the impacts that you’re talking about. 3M too.
To me it’s the next era of CSR – the shift from philanthropy per se to widespread adoption of what are currently isolated initiatives as per your reference to IBM. I think it’s exciting. I hope it happens.
Here’s a brilliant example of crowd sourcing and collaborative effort aimed at impacting climate change, initiated by an ex schoolmate of mine: http://carbonstory.org/
A lot of CSR efforts are nice in theory, and a good pet project for (far too often) quite junior members of Marketing or PR departments. As such they seldom do any major good, beyond giving the company something to put on their website, make X-mas cards about or sell at employer branding events.
Actually leveraging innovative power of the company to do good, without profit in mind, is an extremely interesting idea that more companies should pick up. Who wouldn’t want to associate themselves with a brand that “saved xxx” or “solved yyy”?
Karl-Oskar