Global Responsibility as Corporate Strategy

The process of change starts most easily at home, and each company can begin to develop an appropriate strategy for involvement by focusing on the most important risks and opportunities in its business system. Perhaps the biggest opportunity is the chance to review the content of current business strategy with a view to addressing societal responsibility. For each element of strategy, integrating the content of a broader societal agenda with the strategic and operating objectives that businesses pursue in their daily operations can have great impact. That integration can be easier if there is a common model of strategy and a common language of values and objectives.

A common approach can serve two objectives. First, the full set of skills and disciplines developed by private enterprises can be applied to make more effective societal investments and achieve far better results. At the same time, the common approach will make it easier to integrate the elements of a strategy of responsibility and engagement into the core operating strategies of the participating businesses.

By using the strategic model set out above, there is an opportunity at each of the 10 levels to fuse commercial and financial strategies with a strategy of broader societal engagement.

Vision

Depending on the nature of the vision statement, there may or may not be room for reference to objectives of broader social responsibility. For some businesses the vision is a single statement with little room for broader elaboration. MBNA's succinct vision, for example, would not leave room for anything but these well-chosen words: "acquiring the best customers and keeping them."

But one recently appointed chairman and CEO of a multibillion-dollar world famous company launched a corporate statement of purpose that was far more comprehensive, extending to many pages. The format was chosen specifically to include statements on the environment, community, and diversity of all kinds as core elements of his company's vision for the future.

Values

Here it is essential to be clear and explicit on the values related to societal responsibility which are a core part of the company's values, internal and external.

Internal values related to corporate responsibility could include a commitment to the highest environmental standards in manufacturing and the treatment of industrial waste, developing diversity in the management team, creating a supportive environment for women, supporting the demands of family life, and adopting accounting standards that reflect a longer-term sensitivity to ecology, community, and diversity. Principles of behavior between colleagues may also be addressed if they are of particular relevance or concern.

External values need to capture the principles that govern how an organization operates and how it interacts with the outside world. One interesting summary value was captured in the new chairman's statement of purpose mentioned above: "We must be welcome in every community in which we operate." That value led to an entirely new approach to environmental standards, regulators, community leaders, and the local media. Other values could include a need to become involved with other companies in the business system-joint owners, suppliers, and distributors-as allies or partners in broader social programs rather than as adversaries in a perceived zero-sum commercial game.

One set of key values that need to be specified is related to how the company's products and services will be viewed by consumers and potential consumers: mass market, customized, low price, high quality, high service, transactional vs. relationship, etc. The external values that set out a policy of social responsibility need to be fully aligned with these company, brand, and product values and perceptions. A company seen as a caring member of the community creates a platform for establishing brand values and relationships with important customer groups that is far different from one characterized as uncaring, uninvolved, or even just indifferent.

Imperatives

Within the set of chosen imperatives, it is highly likely that at least one will address the enterprise's engagement with the community.

Adherence to set standards-or even leadership of a more ambitious agenda in the environmental area-can be a critical imperative. Participation in societal initiatives related to core business or brand assets may be significant enough to merit a specific imperative. For one luxury goods company-concerned about its image in a world where the view of its products as frivolous or unnecessary could be commercially damaging-sponsored a campaign for wildlife preservation. One of the world's leading beverage companies is becoming more involved in a global clean water campaign. A leading plantation company in the Philippines sponsors a communitywide support program where it is active-building and staffing schools health care centers, and providing other benefits to the local communities that are home to its employees.

All these programs were developed in response to a common imperative: to be, and to be seen as, responsible contributing members of the communities they do business in. Although the strategies and initiatives varied by the circumstances and needs of the individual businesses, the same overarching imperative was considered to be an essential part of the overall purpose.

Strategies

It is essential for the long-term success of any business setting out on a more responsible path that the principles and activities of social engagement be integrated with its core strategies. There may be some benefit from charitable contributions and corporate brand development related to standalone financial donations. But severing policies and programs of broader responsibility from core operations and organizational activities imperils their continuity and reduces their impact.

Environmental policies, for example, need to be integrated into manufacturing strategies. Diversity targets need to be integrated into hiring and development programs. Participation in global initiatives needs to be integrated into individual objectives, factored into time and expense allocations, and adjusted to fit overall objectives for the organization. Leadership of a larger program may require a multiyear funding commitment. Appropriate resource commitments will need to be made up front and budgets adjusted accordingly.

In all programs of broader social and corporate responsibility, as for ordinary commercial business initiatives, the same disciplining questions need to be answered. What is the objective? What are the measures of success? Is the proposed funding sufficient? Is it necessary? Is the timing right? Are there more efficient, or more effective, alternative approaches? Who should be involved? What interdependencies are there with other organizational initiatives or activities? Is this better done alone or with partners? How can shareholder benefit be maximized from the investments being made?

The application of a rigorous business logic provides focus and discipline to resource planning, increasing the benefit from the resources dedicated to the effort. A businesslike approach will magnify the impact of the funds invested in the first instance and increase the likelihood of their continuation into the future.

Experience suggests two principles at the strategic level. First, it may be more effective to group or to harmonize social investments across a more limited range of activities than to fragment effort. Despite good intentions, and usually driven by a desire to let local operations decide the list of their own investments, fragmentation across a broad range of unrelated activities may reduce the return on investment. A shorter list of activities may allow for greater learning, valuable synergies between projects, greater media value, and better morale within the organization. Clarity and simplicity of purpose can make a program more understandable and more motivating, promoting greater progress toward the goals of the programs selected.

Second, it may be more effective to link the programs selected to the core skills, products, services, and strategic assets of the sponsoring business. The organization can bring greater expertise to bear on the specific challenges, thus improving results. It can also increase the external and communications benefits. Association with the effort is more easily remembered and understood by key external constituencies.

• A clean drinking water initiative may well make more sense for a beverage company than for a clothing company.
• An Indian poverty relief or educational program makes more sense for a multinational company operating in India than it does for a domestic U.S. utility.
• Providing disposable syringes to impoverished African health care centers may be more the province of a medical products company than an engineering firm, which would be better placed to advise third world municipal authorities on sanitation and infrastructure.
• Investment to bring Internet access to third world countries-bridging the digital divide-may make more sense for a computer hardware or software company than for a financial services company. All synergies-operating, financial, conceptual, and associative-can create extra value in a program of social responsibility, and none should be ignored.

In a more associative program, where the initiative selected for societal engagement has a higher degree of sharing with a core business, brand impact can be greater and more positive since the created benefits are closer, conceptually, to the core operations and brands of the participating enterprise.

Initiatives

It is essential that programs of social responsibility be sharply defined, with their content clarified to the same level as other commercial initiatives. Programs and policies of social responsibility can be built into core operations as a key part of operating strategy-or set out as specific initiatives in the overall context of a group strategy. These specific initiatives can be led at corporate, business unit, or even individual levels. In all cases accountability and ownership of each initiative needs to be specified-reflecting the structure and quality of other strategic initiatives.

There is no shortage of initiatives that an organization can choose to support. Part 3 lists more than 100 initiatives, an initial list to prompt discussion and debate. A set of initiatives already being pursued within an organization can be accelerated, enhanced, or focused. Any roundtable discussion of senior managers-or a cross-section of managers and employees-will soon bring to the surface a long list of opportunities. Businesses are, in the main, made up of caring individuals who can soon translate their better intentions into a list of concrete opportunities to develop a thoughtful and more commercially related set of relevant initiatives.

Businesses can choose either to lead a focused initiative-or to participate in one of the larger public-private sector programs. Larger companies may choose to do both. But a clear role and impact needs to be firmly determined within each initiative, and roles and responsibilities in relation to other parties need to be specified. Investment decisions can be made only in the context of a full understanding of the strategies, roles, and objectives of all relevant parties.

As a rule, the characteristics and treatment of an initiative aimed at a broader engagement in social responsibility should be identical to those of other initiatives in the planning process. The same forms and reviews should be observed, the same rigor in assessment and detailing applied. Principles and proven approaches to alliances and associations should be equally specified, with their implications integrated into strategic and tactical decisions.

Only by applying all the disciplines and values of the entire business process can programs benefit fully from the intellectual capital in an organization.

Tactics

Just as the full value of the business process needs to be extracted at the stages of strategic resource allocation and initiative definition, the tactics of execution need to be subject to, and benefit from, the full intellectual capital of the organization. How, when, by whom, with whom, and other essential tactical issues need to be reviewed and debated to ensure that the strategy is executed in the marketplace with maximum effect.

Tactics need to be flexible, but an investment in tactical planning up front can have great benefits farther down the road. New options can be developed, alternative plans assessed, and other initiatives fully coordinated for maximum impact. The full repository of expertise needs to be tapped to ensure that the best tactics are deployed. The process and the content of tactical decision-making need to be fleshed out. If public and private sector bodies are involved in a large initiative, knowledge from both sides needs to be pooled to agree on the best tactical approach.

And as always, the tactics selected need to be compared with the values and other elements of strategy to ensure that the effort is fully aligned and fully consistent with the overall objectives-both of the initiative and of the organizations involved in it.

Organization

Just as tactics vary dramatically, the right organizational approach, so critical to successful implementation strategy, needs to be set, with creative options and individual circumstances fully considered in each case.

Board involvement may be essential to draw deeper experience and knowledge of the relevant communities-financial and social. From a purely practical view, board endorsement may be essential in advance. Although very much a part of modern business strategy, engagement in programs of social and corporate responsibility may still be seen as a distraction from core financial or operating objectives. In the words of one newly appointed business leader in America, "I want to do the right thing, but I also don't want to be toast if we miss one quarter's earnings expectations and people associate me too much with these broader issues." In a harsh world of ever-shorter CEO tenure and ever-increasing earnings pressure, building the most appropriate program content, program profile, and program support would be well advised.

A second organizational need is to ensure that program ownership is sufficiently senior, integrated with the main functions of an organization. Just as human resource programs can be fully integrated or considered marginal in their relevance and impact, strategies and initiatives of greater responsibility can be effectively "hardwired" into an organization-or considered a distraction. Ensuring that the right level of engagement within an organization is achieved early on by designating the right leadership team may determine the ultimate value of the effort.

This broader involvement would also be enhanced through a more creative approach to the sourcing and structuring of the organizational resources allocated to the effort. Task forces-so effective in bringing together a diverse set of individual skills, personalities, and experiences for commercial initiatives-may again be the best approach in this.

Results

Consistent with the theme of applying the full disciplines and values of a business approach to a strategy of involvement in a program of broader engagement and responsibility, each individual initiative, each individual's involvement, and each investment should have an associated set of targeted results. The same is true of the program as a whole. Goals should, as always, be SMARTER: specific, measurable, achievable, realistic, tangible, effective, and realistic.

The major weakness of most strategies-and of most strategic models-is their failure to lead to tangible results in the real world. By setting goals and targeting results early on, this risk can be avoided, and expensive investments can be fully justified by the results they create. By monitoring progress against pre-set milestones, the program can be kept on track, with necessary adjustments along the way.

Communications

One of the most important components of an effort of broader engagement and social responsibility by corporations, and by the individuals involved in the effort, is communications. Much of the value created-tangible and intangible-will depend on an effective communications program.

Both internal and external constituencies need to be considered. Channels and content need to be carefully selected, and a single approach crafted. A thoughtful architecture of message content is important to be worked out in advance. What needs to be communicated, to whom, by whom, and on what schedule needs to be determined and built into strategic, organizational, and tactical discussions. Those decisions need to be developed and coordinated within an overall program of corporate activity and communications.

All media need to be considered-internal organs, intranets, Internet, and electronic and print. Even informal internal communications channels need to be considered-the famous conversations at the water cooler-to ensure that full support is rallied and full potential realized.

Another feature of best-practice communications programs is that they are interactive. They allow for feedback, contribution, and involvement by a range of individuals and groups. Broadcasting of intention and results, although an important part of the program, diminishes the potential of the effort and should be avoided as a sole process in a more dynamic development.

Only through an active, comprehensive, and creative program of communications can the investment be connected with external communities that might contribute to the program. And only through that program can the full benefits in the broader community be realized.

Leadership

Consistent with the broader principles of leadership in a modern organization, the broader program of social responsibility should be led from the front and from the back. Visible, motivating leadership is essential. But for the program to be successful, leadership must also operate behind the scenes-encouraging, adjusting, refocusing, and ensuring that the strategies are well-executed in the marketplace.

In a networked organization, leadership does not always need to come from the most senior ranks. Often, the younger generation of managers and colleagues can provide effort, inspiration, and examples of personal dedication. Passion, even more than position, can make for a good leader and role model in the effort to participate in programs of societal progress.

One particular risk to be considered is associated with a detached chairman's sponsorship of the effort. The chairman may be at the heart of strategy and operations and thus a natural leader of the effort. But a non-executive chairman could be seen as imposing an onerous or irrelevant personal agenda on an unwilling organization and management team if there is not broad support from the organization at large. Beyond good intentions and sound reasoning, the ownership of the effort needs to be fully shared across many levels of an organization for the full potential to be realized.

The impact of this structured and integrated approach will be to ensure that all strategies of an organization are fully understood, aligned, and implemented. No element of strategy should be isolated or pursued in a vacuum. Only a common approach to the determination and execution of strategies-including this forward-thinking set of engagements-will lead to the achievement of the full potential in an enterprise or initiative. And only the common adoption of a best-practice approach will lead to the realization of the shared vision of the leaders and participants in the overall effort.