Social Responsibility 2.0 – From Why? to How? to Better?

Hi-tech leaders, from Google to Cisco, all carefully practice social responsibility. To understand the strategic advantage of doing so, we must trace the concept of “social responsibility” among corporate leaders as it has evolved from “why?” to “how?” to “better?”

There was a time in the early 1970s when Milton Friedman famously wrote that the sole purpose of a company was to make money. At that time he was stating an obviously belief of most people. Those days are long gone.

“The theological question—should there be CSR?—is so irrelevant today,” says John Ruggie of Harvard University’s Kennedy School of Government. ‘Companies are doing it. It’s one of the social pressures they’ve absorbed.’”

The Business Council of BC reported in a recent survey that 83% of companies make corporate social responsibility a priority, compared to just 54% three years ago. Michael Porter, the renowned strategic thinker notes that, “CSR has emerged as an inescapable priority for businesses in every country.”

Concern over climate change is viewed as one of the biggest drivers behind the social responsibility movement. The venerable Economist explains, “Company after company has been shaken into adopting a CSR policy: it is almost unthinkable for a big global corporation to be without one.”

The discussion then moved from “why?” to “how?” Companies recognized the many benefits of social responsibility. “One way of looking at CSR is that it is part of what businesses need to do to keep up with (or, if possible, stay slightly ahead of) society’s fast-changing expectations. It is an aspect of taking care of a company’s reputation, managing its risks and gaining a competitive advantage.”

A strong social responsibility program also benefits employees. For example, “Ask almost any large company about the business rationale for its CSR efforts and you will be told that they help to motivate, attract and retain staff.” Often company-wide efforts, such as participating in a walk for cancer research, will be engaged in not only for supporting a worthy cause but also as a team-building exercize.

The emphasis in today’s market among many companies relates to how to practice social responsibility. With respect to the how of social responsibility, large hi-tech companies generally take on projects in which they can leverage their expertise and make a difference in a practical way.

These large companies practice very deliberate strategies to leverage their time, expertise and financial resources. The vision and mission of the Cisco Foundation, for example, is to address basic human needs, education and economic opportunities and to “focus this work on underserved communities and look for solutions that harness the power of the internet and communications technology.”

Smaller companies likewise generally look for selective opportunities but they may end up being pursued in an uncoordinated manner. Smaller companies can not always allocate resources to devise a deliberate social responsibility strategy. In addition, they are not always able to convey a clear message into the marketplace as to the causes they support.

So, how to practice social responsibility “better?” According to the Economist, “The next wave, some believe, will be one of disruptive innovation, featuring a new breed of “social entrepreneur” that will take over from the established big companies as the driving force. [One respected executive,] Mr. Benioff of salesforce.com reckons that social entrepreneurs have “cracked the code” of the next generation of corporate responsibility: it will be for-profit and self-sustaining.”

Joseph Schumpeter’s gale of creative destruction will descend upon the environment of social responsibility and from it will eventually emerge new models. The next generation of social entrepreneurs will likely be those who can combine a for-profit enterprise with social good—and demonstrate that they are not polar opposites.

The next generation of social entrepreneurs will surely include those who integrate Web 2.0 strategies and technologies. These will be the companies that make the world a better place. And they are more likely to do so by working with socially-responsible corporations rather than supplanting them. This will have moved us from “why?” to “how?” to “better?”

Can a company “do well by doing good?” Hi-tech behemoth Cisco Systems, which generated about $40 billion last fiscal year, thinks so. Carlos Dominguez, Senior Vice President, Cisco highlighted to me last week that corporate social responsibility (CSR) is part of the cultural aspect of Cisco.

At Cisco, CSR practices are governed through a partnership between the Sustainability Business Practices (SBP) organization and affected business functions. SBP provides shareholder feed back to the management team, as well as guidance on potential environmental, social and governance and employee-related initiatives. There are four aspects of how CSR business processes are reflected at Cisco.

First, business and CSR goals are becoming integrated at Cisco; both financial and non-financial issues factor into business decisions. This harkens back to the balanced scorecard approach, originated by Robert Kaplan and David Norton in 1993.

Second, cross-functional collaboration allows for greater business impact by actively engaging diverse points of view and incorporating CSR objectives into each affected business functions’ business processes. This is an inclusive approach that reflects a broad view of stakeholder theory.

Third, collaboration at the industry level is vital to understanding and effectively addressing emerging CSR issues and concerns. Cisco actively participates in various CSR working groups around the world. In other words, CSR is not treated like proprietary technology but rather an area where cooperation is view as part of the package.

Fourth, Cisco actively engages with global organizations that encourage cooperative engagements among corporations, governments and other stakeholders to proactively address global CSR issues (i.e. World Economic Forum, UN Millennium Development Goals). Dominguez notes that, “With respect to NGOs, Cisco can provide technology, people, ideas and support.”

But, is Cisco typical? Cisco may be at the head of the pack, but other companies are stepping into line, whether willingly or not. The Economist intoned earlier this year that, “Company after company has been shaken into adopting a CSR policy; it is almost unthinkable today for a big global corporation to be without one.” [“Do it Right,” January 17, 2008]

In fact, John Rugge of Harvard University’s Kennedy School of Government noted that, “’The theological question—should there be CSR?—is so irrelevant today. Companies are doing it. It’s one of the social pressures they’ve absorbed.”[cited in “The next question,” January 17, 2008]

Michael Porter and Mark Kramer, writing in the Harvard Business Review, called CSR “shared value”—benefits for both business and society. [“Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility,” Dec 2006]. Their framework shifts CSR from pitting business against society to one leveraging their interdependence. The bottom line with respect to CSR is that “few big companies can now afford to ignore it.” [“Just good business,” January 17, 2008]

As companies such as Cisco become more proactive with CSR, I asked how this impacts the role of charities? Dominguez explains that, “”companies will not take over the work of charities. Companies, however, are changing significantly how charity gets done.” Dominguez notes that, “the culture of a commercial organization is quite different than that of a charity.” Dominguez notes that, “Cisco is very entrepreneurial and always looking to leverage its core expertise.”

The world of CSR, and the interaction between companies and charities, is changing rapidly. Dominguez explained that “CSR is not just about giving dollars, but finding people that are innovative and who can bring entrepreneurial savvy to the table. We focus on helping these great organizations scale and build sustainable businesses.” The internet is facilitating change. Companies, from small to Cisco, are working to meet the challenge. But few question that this is a challenge that must be met. And more companies, like Cisco, realize that they can do well by doing good.

Could you be an entrepreneurial leader and not be socially responsible? Not likely. That was one of the major themes of an event held recently in Vancouver. The Centre for Entrepreneurial Leaders, Trinity Western University held its 4th Annual Entrepreneur Forum on October 29th at the Vancouver Convention & Exhibition Centre.

The annual event focuses on entrepreneurial leadership and attracted a sell-out crowd of 500 people across a wide range of business, including the high tech sector. The event is believed to be the largest of its kind in the world, drawing attendees from throughout Canada, the US and Europe.

The vision of the CEL is “to empower entrepreneurial leaders for global impact.” The focus is on using entrepreneurial skills in a non-profit context, not only to have an impact in their businesses and in society, but also in charitable organizations.

The crowd feedback was that the program, speakers and networking was excellent. Kris Krug of Raincity Studios noted: “It was great to connect with such a bright group of entrepreneurs at the Entrepreneur Forum. I saw lots of old friends from TWU who are up to interesting technology business ventures and projects. I also met a couple companies I’m interested in working with.” TWU grad and principal of Burnkit Creative, Josh Dunford, was sharing table space with Krug.

Prior to the keynote speaker Peter Heslam, director of Transforming Business, a research centre at the University of Cambridge, talked about the importance of enterprise solutions to poverty in third world countries. He highlighted the notion that funds are only one part of the capital required for success in developing countries. In addition, there must be the active contribution of social, moral and reputational capital. This requires the involvement of individuals who will implement social responsibility, whether motivated by faith or other reasons.

The keynote speaker was Larry Farrell, of Farrell International, a company that has likely taught more people about entrepreneurship than any other in the world. Larry, based in Staunton, VI, spoke about the essentials of entrepreneurship: sense of mission; customer/product focus, high-speed innovation and self-inspired behaviour. One of his key examples is the storied career of Steve Jobs of Apple.

Shelley Kuipers, President, Cambrian House noted, “The keynote again reminded me of the basic entrepreneurial instinct and key guiding principles that we must retain, in good times and bad times – keep it simple, don’t over complicate your business, high-tech included. I also believe that this is the time when we can create amazing opportunities for our ventures and us as entrepreneurs.”

One of the sponsors of the event was Domain 7 Solutions, a growing web development firm in Abbotsford. Fluevog Shoes was a contributor to the silent auction.

One of the major sponsors was MakeGood Technologies. MakeGood allows businesses to effectively convey social responsibility to the market and to build their business. Doug van Spronsen, Interactive Technology Analyst, noted, “Excitement over the product was high, as people loved the branding and concept.” Many of the entrepreneurs had heard about social responsibility, and most were actively practicing it, however few were actually communicating it to their customers.

The Forum continues to gather momentum, having more than doubled in size over the past four years. As one attendee said, the CEL “has targeted the right niche—the desire for people to understand and to be inspired by entrepreneurial leadership.” And social responsibility is one key component of entrepreneurial leadership.

(NOTE: By way of disclosure, I am the Director of the Centre for Entrepreneurial Leader and the founder of MakeGood.)

Web 2.0 is the future of communicating social responsibility. Not everyone knows it yet, and only a few are practicing it, but Web 2.0 will revolutionize how social responsibility is practiced.

The International Association of Business Communicators Conference in Vancouver on communicating Social Responsibility, held on October 16th – 17th, hinted at the potential of Web 2.0.

The interest in social responsibility continues to increase even in today’s environment—it is part of the landscape regardless of economic gyrations. What is social responsibility? It is defined by the International Organization for Standardization (ISO) as: the “responsibility of an organization for the impact of its decisions and activities on society and the environment through transparent and ethical behaviour.”

James Hoggan, President of PR firm, Hoggan Associates noted that the environment became the #1 issue in late 2005 and still remains important today. One of his initiatives was to set up www.Desmogblog.com. DeSmogBlog exists to clear the PR pollution that is clouding the science on climate change.

Hoggan’s view is that an overwhelming majority of the world’s climate scientists agree that the globe is warming – the world’s climate is changing – and that the indiscriminate burning of fossil fuels is to blame. According to the site, “We know that the risks are incalculable and, increasingly, we understand that the solutions are affordable.” Hoggan wants to get that message to the public.

Robert Safrata, CEO, Novex Couriers, aspires to be the greenest courier company in the world (they offer Vancouver-area same day courier). He wants his company to be an engine for change—and at the same time be a profitable business. His triple bottom line focus is people, planet and profits.

His website is largely an open book. His business plan is online (just short of showing his EBITDA). Part of his open disclosure is the use of “See-it” “a real time sustainability reporting system.” All of Novex’s stakeholders can see their environmental initiatives online; this has replaced the traditional sustainability report

William George of PR firm Edelman Canada, noted that consumers want to do good through their spending. People are mobilizing to say good things about companies; in the past they got together only to complain.

George pointed out how the online environment changes how people form decisions. The Globe & Mail is useful as a way to keep up to date for some one who has already formed a view. However, if a person is doing research and hasn’t form a view yet, then they are more likely to go online.

Further, people give direct sources more credibility. A blog can become a powerful way to create a peer or direct relationship, much more so than reading a newspaper article. A blog facilitates interaction.

Of course, not all companies are paying attention to conversations going on in the online environment. Companies may struggle with giving up control when they open up an online conversation, but it is necessary to create trust. This concept was explained masterfully in The Clue Train Manifesto a number of years ago.

William Azaroff, Director, Online Banking & Engagement, Vancity, spoke about corporate social responsibility as a key differentiator for companies. We are moving to “the social age.” People want to do good and be connected.

One of their initiatives is www.changeeverything.ca. They originally thought of a Facebook page, but couldn’t figure out how to add value in that environment so they went with their own site. This site has garnered much traffic and attention and has had an overall positive return for Vancity.

Azaroff noted the challenges of getting a presence online. People today have “profile fatigue,” so it is hard to get them plugged into yet another site. In addition, the site has to truly get the public involved. A key point is to ensure that people who are commenting are not part of the company otherwise credibility is gone.

James Tansey, Associate Professor, UBC, explained that businesses have to change the way they operate; today’s markets are more connected to consumers. Likewise, social responsibility has evolved over the last 10 – 20 years from being a “fig leaf” application to part of a deliberate strategy.

Tamsey is also co-founder of Offsetters.com which provides “carbon offsets.” These are investments in projects that prevent greenhouse gases from being emitted into the atmosphere. A company can purchase carbon offsets to counterbalance it own direct emissions.