Not Strictly PG - The CSR Brand
Qualityworld
The CSR brand
What were once regarded as 'soft' business issues are now hard: hard to predict, hard to ignore and very hard to manage when they go wrong. There are heightened expectations of business behaviour - in terms of how a business runs its own core activities and how it contributes to tackling wider societal problems. David Grayson OBE, a director of Business in the Community, outlines how CSR is pushing business in a new direction
Heightened expectations of organisations' commitment to good environmental and societal practice now extends through the lifecycle of a product or service: from initial sourcing, through manufacturing, marketing and distribution to final disposal. People are interested in the labour conditions of factories in Indonesia or Thailand, producing training shoes and branded goods for famous labels, but they are also interested in how businesses market and handle final disposal of their goods. There is not a single business sector that is unaffected by these developments.
What is driving greater expectations of business? We are now in a time of dramatic change. A year's worth of growth in the US economy in 1830 happens in a single day today. All the telephone calls made around the world in 1984 and all the emails sent around the world in 1989 now happen in one day. A revolution of technology permits: automation, customisation, sub-contracting, global supply chains, home working, manufacturing and extraction in remote areas and back-offices across the world. Information and communications technologies mean that there is instant access and no hiding places. Vigilant consumers, concerned citizens and activist NGOs can mobilise powerful campaigns against corporate behaviour of which they disapprove, via the internet and other new media. In March 2000, Mitsubishi and the Mexican government announced that they were abandoning plans to build a massive industrial salt plant at Laguna San Ignacio, the last undisturbed birthing and nursery grounds of the grey whale.
The decision, which came unexpectedly, was a victory for an international coalition of environmentalists, fishermen, scientists and consumers that fought the saltworks with protest, negotiations and consumer action. More than one million people sent petitions, letters and e-mails to Mitsubishi demanding the company give up its plans to industrialise Laguna San Ignacio. Others made their wishes known by refusing to buy Mitsubishi products and letting the company know why. The wired world can prove to be trip-wired for business.
In the short decade since the collapse of communism, three billion consumers have joined the global market economy and there has been a relentless process of liberalisation, privatisation and globalisation. More than $1.5 trillion is now exchanged in the world's currency markets each day - compared with only $15 billion in 1973, while global foreign direct investment reached $1.1 trillion in 2000 (versus $160 billion in 1991 - an increase of nearly 600 per cent in less than a decade). There are now over 60,000 multinational companies (versus 7,000 in 1970) with over 600,000 foreign affiliates. According to management consultants Accenture, between 1997 and 2000 the typical large firm formed 177 alliances with other companies.
All this is taking place against the background of the growing power of brands and corporate reputation. The leading international branding consultancy, Interbrand, reckons that 96 per cent of Coca Cola's stock market value is in intangibles such as reputation, knowledge and brand. Kellogg's is estimated at 97 per cent, with Amex's at 84 per cent. And of the intangibles, that brand accounts for a growing proportion. Interbrand predicts that the proportion of the intangible valuation of companies represented by brands will rise from five per cent in 1960 to 30 per cent in 2000 to 45 per cent by 2010. As Interbrand CEO Rita Clifton says: 'Branding will ultimately be the only unique differentiator between companies. Brand equity is now a key asset.'
'The brands that will be big in the future will be those that tap into the social changes that are taking place', believes Sir Michael Perry - chairman of Centrica Plc and Dunlop Slazenger Group. In a global war for talent - where information about a company can be beamed from a hand-held camera in Sierra Leone or the Amazon Rainforest via satellite or e-mails to opinion- formers and activists around the globe - trust is an irreplaceable commodity. Reputation is an important and intangible asset. As celebrated investor Warren Buffet put it: 'It takes 20 years to build a reputation and five minutes to ruin it.'
World extremes
In the favellas of South America and the shantytowns of Africa, individuals can watch the Western TV soaps showing the glamorous and the affluent lifestyles so different to their own. Today, technology gives us the power to change in one generation or less, things that have previously taken decades to change. But the fact is, we live in an increasingly desperate world. According to the World Bank, 1.2 billion people live on less than one US dollar a day and 2.8 billion live on less than two dollars a day. One billion people - a third of the world's three billion workforce, are unemployed or under-employed. Forty million are infected with HIV/AIDS.
As businesses operate in more parts of the world, these development realities impact directly on the freedom of business to operate. In sharp contrast to these statistics, significant increases in wealth, choice and education mean that for the first time in history, large numbers of people across the globe are free to express their own values and often do so in unstructured, unpredictable and spontaneous ways. We are increasingly defining ourselves by biography rather than by geography - in other words, we identify less with geography and more with people who are like-minded or have similar interests.
A study by Stanton Marris - 'Magnetic attraction' - looks at the relationship between corporate brand and reputation, and the attraction and retention of talented people. Based on interviews with 150 employees in 24 organisations such as Goldman Sachs and the Financial Times, the message from the study was clear: 'You would be surprised how much the corporate reputation - the face the organisation presents to the outside world - matters to us,' said one interviewee. 'When we meet someone and tell them where we work, what does the label say about us? It's an important part of our self-image...'
This is borne out by a string of consumer surveys from around the world showing that there are significant and growing minorities of vigilante consumers who are sufficiently concerned about the companies behind the brands, and the way that goods are sourced and made. In today's global society, at least some customers are demanding more:
value-for-money - but also reassurance about the values of the business
reliability - but also that they can rely on the assurances that the products have been sourced fairly
quality - but also that this is not at the expense of the quality of life of the people responsible for getting it to the customer
availability - but also that it is available without making things unavailable for future generations
identification with lifestyle and image - but that this is the kind of image that they want to identify with - summed up in the words of a 14-year-old New Yorker: 'I don't want to wear clothes - however famous the label - made by kids younger than me'
The implications for quality professionals
Quality professionals should be looking at the implications of CSR on both their organisations and profession. They must ask themselves:
does my company have a CSR strategy? Has it signed up - for example - for the UN's Global Compact with business or the World Economic Forum's corporate citizenship statement - or is it a member of an organisation promoting responsible business practices like Business in the Community. Do we understand the significance of these commitments?
does your company have a director in charge of CSR? If so, do you know him and are you regularly reviewing with them how you can support each other's work?
if your business is using the excellence model, have you involved those responsible for CSR in reviewing the society results part of the excellence model?
how does your work on quality affect the organisation's ability to improve continuously its positive impact on business and society?
how can the organisation's quality expertise be applied to help the company's suppliers to meet faster, cheaper and more effectively the environmental and social impact standards that the company has/may impose on suppliers?
how can the quality function assist the community partners and causes that the company supports?
how can the company's track-record be harnessed as a responsible business in order to motivate employees to be more committed and engaged with quality circles and continuous improvement drives?
how might a commitment to minimising negative environmental/social impacts and maximising positive ones become the basis for driving value up and cost down?
A call to arms for business
The power of the market can bring about positive change. The need to protect and develop brands and corporate reputation; and the need to attract and retain talented staff, can be harnessed to improve business behaviour. An organisation can be brilliant on sourcing, innovation, customer-focus and all-round marketing, but if it gets some aspects of CSR wrong it puts all that investment and work at risk. The result is a series of tough 'emerging management issues' like health and well-being, diversity and human rights, and environmental impacts. The business world needs a 'winwin' strategy that minimises risks and maximises opportunities from these issues, for both business and society. Since business today is the principal motor of economic development around the world, the prize - if a critical mass of businesses can be motivated to adopt this approach - is worth fighting for.
Biography
David Grayson is a director of Business in the Community and the founder principal of the BLU - the new virtual corporate university for the Small Business Service and Business Link operators. His book: Everybody's Business: Managing risks and opportunities in today’s global society - co-authored with Adrian Hodges - is published by Dorling Kindersley and the Financial Times. He was awarded the OBE for services to industry in 1994 and the CBE for services to disability in 1999. Interview with David Grayson
The CSR brand
What were once regarded as 'soft' business issues are now hard: hard to predict, hard to ignore and very hard to manage when they go wrong. There are heightened expectations of business behaviour - in terms of how a business runs its own core activities and how it contributes to tackling wider societal problems. David Grayson OBE, a director of Business in the Community, outlines how CSR is pushing business in a new direction
Heightened expectations of organisations' commitment to good environmental and societal practice now extends through the lifecycle of a product or service: from initial sourcing, through manufacturing, marketing and distribution to final disposal. People are interested in the labour conditions of factories in Indonesia or Thailand, producing training shoes and branded goods for famous labels, but they are also interested in how businesses market and handle final disposal of their goods. There is not a single business sector that is unaffected by these developments.
What is driving greater expectations of business? We are now in a time of dramatic change. A year's worth of growth in the US economy in 1830 happens in a single day today. All the telephone calls made around the world in 1984 and all the emails sent around the world in 1989 now happen in one day. A revolution of technology permits: automation, customisation, sub-contracting, global supply chains, home working, manufacturing and extraction in remote areas and back-offices across the world. Information and communications technologies mean that there is instant access and no hiding places. Vigilant consumers, concerned citizens and activist NGOs can mobilise powerful campaigns against corporate behaviour of which they disapprove, via the internet and other new media. In March 2000, Mitsubishi and the Mexican government announced that they were abandoning plans to build a massive industrial salt plant at Laguna San Ignacio, the last undisturbed birthing and nursery grounds of the grey whale.
The decision, which came unexpectedly, was a victory for an international coalition of environmentalists, fishermen, scientists and consumers that fought the saltworks with protest, negotiations and consumer action. More than one million people sent petitions, letters and e-mails to Mitsubishi demanding the company give up its plans to industrialise Laguna San Ignacio. Others made their wishes known by refusing to buy Mitsubishi products and letting the company know why. The wired world can prove to be trip-wired for business.
In the short decade since the collapse of communism, three billion consumers have joined the global market economy and there has been a relentless process of liberalisation, privatisation and globalisation. More than $1.5 trillion is now exchanged in the world's currency markets each day - compared with only $15 billion in 1973, while global foreign direct investment reached $1.1 trillion in 2000 (versus $160 billion in 1991 - an increase of nearly 600 per cent in less than a decade). There are now over 60,000 multinational companies (versus 7,000 in 1970) with over 600,000 foreign affiliates. According to management consultants Accenture, between 1997 and 2000 the typical large firm formed 177 alliances with other companies.
All this is taking place against the background of the growing power of brands and corporate reputation. The leading international branding consultancy, Interbrand, reckons that 96 per cent of Coca Cola's stock market value is in intangibles such as reputation, knowledge and brand. Kellogg's is estimated at 97 per cent, with Amex's at 84 per cent. And of the intangibles, that brand accounts for a growing proportion. Interbrand predicts that the proportion of the intangible valuation of companies represented by brands will rise from five per cent in 1960 to 30 per cent in 2000 to 45 per cent by 2010. As Interbrand CEO Rita Clifton says: 'Branding will ultimately be the only unique differentiator between companies. Brand equity is now a key asset.'
'The brands that will be big in the future will be those that tap into the social changes that are taking place', believes Sir Michael Perry - chairman of Centrica Plc and Dunlop Slazenger Group. In a global war for talent - where information about a company can be beamed from a hand-held camera in Sierra Leone or the Amazon Rainforest via satellite or e-mails to opinion- formers and activists around the globe - trust is an irreplaceable commodity. Reputation is an important and intangible asset. As celebrated investor Warren Buffet put it: 'It takes 20 years to build a reputation and five minutes to ruin it.'
World extremes
In the favellas of South America and the shantytowns of Africa, individuals can watch the Western TV soaps showing the glamorous and the affluent lifestyles so different to their own. Today, technology gives us the power to change in one generation or less, things that have previously taken decades to change. But the fact is, we live in an increasingly desperate world. According to the World Bank, 1.2 billion people live on less than one US dollar a day and 2.8 billion live on less than two dollars a day. One billion people - a third of the world's three billion workforce, are unemployed or under-employed. Forty million are infected with HIV/AIDS.
As businesses operate in more parts of the world, these development realities impact directly on the freedom of business to operate. In sharp contrast to these statistics, significant increases in wealth, choice and education mean that for the first time in history, large numbers of people across the globe are free to express their own values and often do so in unstructured, unpredictable and spontaneous ways. We are increasingly defining ourselves by biography rather than by geography - in other words, we identify less with geography and more with people who are like-minded or have similar interests.
A study by Stanton Marris - 'Magnetic attraction' - looks at the relationship between corporate brand and reputation, and the attraction and retention of talented people. Based on interviews with 150 employees in 24 organisations such as Goldman Sachs and the Financial Times, the message from the study was clear: 'You would be surprised how much the corporate reputation - the face the organisation presents to the outside world - matters to us,' said one interviewee. 'When we meet someone and tell them where we work, what does the label say about us? It's an important part of our self-image...'
This is borne out by a string of consumer surveys from around the world showing that there are significant and growing minorities of vigilante consumers who are sufficiently concerned about the companies behind the brands, and the way that goods are sourced and made. In today's global society, at least some customers are demanding more:
value-for-money - but also reassurance about the values of the business
reliability - but also that they can rely on the assurances that the products have been sourced fairly
quality - but also that this is not at the expense of the quality of life of the people responsible for getting it to the customer
availability - but also that it is available without making things unavailable for future generations
identification with lifestyle and image - but that this is the kind of image that they want to identify with - summed up in the words of a 14-year-old New Yorker: 'I don't want to wear clothes - however famous the label - made by kids younger than me'
The implications for quality professionals
Quality professionals should be looking at the implications of CSR on both their organisations and profession. They must ask themselves:
does my company have a CSR strategy? Has it signed up - for example - for the UN's Global Compact with business or the World Economic Forum's corporate citizenship statement - or is it a member of an organisation promoting responsible business practices like Business in the Community. Do we understand the significance of these commitments?
does your company have a director in charge of CSR? If so, do you know him and are you regularly reviewing with them how you can support each other's work?
if your business is using the excellence model, have you involved those responsible for CSR in reviewing the society results part of the excellence model?
how does your work on quality affect the organisation's ability to improve continuously its positive impact on business and society?
how can the organisation's quality expertise be applied to help the company's suppliers to meet faster, cheaper and more effectively the environmental and social impact standards that the company has/may impose on suppliers?
how can the quality function assist the community partners and causes that the company supports?
how can the company's track-record be harnessed as a responsible business in order to motivate employees to be more committed and engaged with quality circles and continuous improvement drives?
how might a commitment to minimising negative environmental/social impacts and maximising positive ones become the basis for driving value up and cost down?
A call to arms for business
The power of the market can bring about positive change. The need to protect and develop brands and corporate reputation; and the need to attract and retain talented staff, can be harnessed to improve business behaviour. An organisation can be brilliant on sourcing, innovation, customer-focus and all-round marketing, but if it gets some aspects of CSR wrong it puts all that investment and work at risk. The result is a series of tough 'emerging management issues' like health and well-being, diversity and human rights, and environmental impacts. The business world needs a 'winwin' strategy that minimises risks and maximises opportunities from these issues, for both business and society. Since business today is the principal motor of economic development around the world, the prize - if a critical mass of businesses can be motivated to adopt this approach - is worth fighting for.
Biography
David Grayson is a director of Business in the Community and the founder principal of the BLU - the new virtual corporate university for the Small Business Service and Business Link operators. His book: Everybody's Business: Managing risks and opportunities in today’s global society - co-authored with Adrian Hodges - is published by Dorling Kindersley and the Financial Times. He was awarded the OBE for services to industry in 1994 and the CBE for services to disability in 1999. Interview with David Grayson
posted by T at 5:29 pm
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