November 19th marks the 100th anniversary of the birth of Peter Drucker, one of the most influential business thought leaders of the 20th century. His predictions about the emergence of knowledge workers, the strategic value of marketing, and the importance of information in our society were amazingly clairvoyant. Were he alive today, Peter Drucker might offer us much needed help connecting two of his ideas:
“The purpose of a business is to create a customer,” and
“Management is doing things right; leadership is doing the right things.”
If “right” means including a dollop of good, old-fashioned ethics, solving the connection challenge becomes thornier. How would Mr. Drucker respond to otherwise-intelligent business executives who only pay homage to the first idea (see Pfizer’s Ethics Violations Hurt All of Us [1])?
Calling Pfizer’s consumer exploitation “callous greed” makes the company seem kinder than it really is. But forget about moralizing. For many corporations, numbers—the raw material of finance, and contained within spreadsheets—influence the ethical outcome of decision making. After all, unethical choices are more palatable when they’re represented by numbers in columns, and not by sick patients who unwittingly take prescribed medication that might kill them. But Pfizer’s bad ethics remind us there are opportunities to differentiate through good ethics. That’s a strategic decision, and the same risk-reward calculus applies. If bean counters, entrepreneurs, and starched-shirt executives can agree on anything, it’s that responsibility as a business strategy—even as a distinguishing competitive asset—merits strong consideration.
Interest in the topic has coalesced under the umbrella of Corporate Social Responsibility [2], or CSR. According to Art Stewart, a thought leader on CSR, and developer of the New Responsibility Paradigm [3], “Senior executives have an opportunity now more than any time in recent history to acquire an enduring leadership position for their organization and its brands in the ground swell of consciousness for, and accountability to, the public interest.”
No longer an oxymoron, today's responsible corporation creates a catalyst to rethink entrenched views of marketing, business development, and sales. As Stewart describes, “marketing is a discipline steeped in manipulative techniques such as micro-targeting and promotional psychology that many argue creates an unhelpful conflict of interest for responsible corporate leadership.” The chasms between the needs of shareholders, corporate communities—including customers, suppliers, and employees—and society have driven many enterprises off the rails of social responsibility.
Stewart’s company, Stewart Strategies Group [4] has innovated to make sure that doesn’t happen by combining five distinct methods:
1. Connecting internal management systems to activism and other demands from external forces.
2. Creating and communicating dynamic corporate codes of conduct, standards, and principles.
3. Integrating verification, monitoring, and certification standards to ensure the corporation’s communications and policy positions are congruent with their operational actions and behaviors.
4. Engaging stakeholders in outreach programs through social networking and other communication tools for environmental and social action, and ethical governance.
5. Transforming brand to align with public interest values.
Social media has had a significant impact on CSR, and the two are natural partners, as these examples illustrate:
Transparency:
According to Jeffrey Hollender, Executive Chairperson of the green products company Seventh Generation [5], “it’s a mistake for companies to think that they cannot tell the truth and hide anything they do . . . Whether it’s a customer, or an employee, or a reporter, someone will disclose a corporation’s dirty little secrets.”
Customer engagement and brand co-creation:
Shared values create a bond, and some companies see social issues as a way to engage in a mutual embrace. Retailer Patagonia [6] and footwear manufacturer Oboz [7] both champion ethical ideals. Initiatives listed on the Oboz website such as the One More Tree Program, clean energy and offsets, Greater Yellowstone Coalition, and shoe recycling resonate with the company’s communities. Coleman Corporation [8], an outdoor products company with far greater marketing resources than Patagonia or Oboz, might learn from them. Coleman doesn’t even mention environmental stewardship anywhere on the company website.
Solutions for challenges that unite disparate global communities:
Intel [9] provides a stellar example of a global company that addresses concerns common to communities worldwide. The company’s Corporate Responsibility Report [10] discusses the company’s efforts in the areas of environment, workplace, supply chain, community, and education.
Peter Drucker might agree that delivering shareholder value remains a leadership priority, and profitability is part of that equation. Intel and other for-profit corporations view CSR through that lens. When Intel states “we are working to further embed corporate responsibility into our decision-making frameworks,” it’s reinforcement that Ghandi’s idea, “be the change you wish to see in the world” has compelling strategic value as well.
Further reading:
“Does Your Company Differentiate by Offering Good Products with Virtue?” [11] by Andrew Rudin
“Why Social Media is Vital to Corporate Social Responsibility” [12] by Melissa Jun Rowley
“Overview: Sales Practices” [13] for risk mitigation