A Critique of Pure Reason – Business forgot how to listen

Immanuel Kant Deutsch: Immanuel Kant

Immanuel Kant Deutsch: Immanuel Kant (Photo credit: Wikipedia)

Kant said; “Enlightenment is man’s leaving his self-caused immaturity. Immaturity is the incapacity to use one’s intelligence without the guidance of another. Such immaturity is self-caused if it is not caused by lack of intelligence, but by lack of determination and courage to use one’s intelligence without being guided by another. Sapere Aude! Have the courage to use your own intelligence! is therefore the motto of the enlightenment…” (Critique of Pure Reason)

But it would seem that Business did not learn that listening meant one had to listen to somebody else than the ones that represent the status quo.

What happened when it became common sense and a taken for granted thinking, that any business venture claiming to be socially responsible had to have a direct link to the bottom-line? As a keen follower of CSR and developments within business ethics it seems that the discourse of Corporate Social Responsibility have steered of course and to some extend have fall down a cliff.

CSR was about (I thought) making a difference to society not because it made good business sense, but because it was the right thing to do. Now it seems to be the other way around. Even though I to a large extend blame Porter and Kramer for their so-called “shared value” they only tap into a discourse, which already existed in the mainstream business culture. That “there is one and only one social responsibility of business – to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud “(Thanks, Friedman for making it clear). That in order to be a legitimate in business one had first of all to think of the bottom-line, that even though business might disclaim Freidman’s claim they continue to follow his credo. CSR have become a business opportunity rather than change in they way that business relate to the society and communities that they are a integrated part of.

It seems to me that companies that pursue profit in the name of CSR are trying to stand on both sides of the river. Claiming that they have not left their liberal roots, while at the same time trying desperately to convince their more critical stakeholders that they are continuing down the path of rightness.

However, at the core of CSR is the ability to see beyond narrow self-interest looking beyond profit seeking and towards doing the right thing rather than doing things right. I do not claim that any business will be any more successful, or that they will even have a better brand or see an increase in dedicated employees. What my argument is that in order to really and I do mean really, know ones business environment one have to be open, open in a way that puts aside narrow interests of division leaders and executive managers and beyond one owns business raison d’etre. Individual business leaders have to realise that their actions cannot only be guided by the search of “the business case” they will have to use their intelligence to incorporate the guidance of the people who is affected by their decisions.

Has the CSR movement really won the battle or have they lost the war?

Bank of America Tower

Image via Wikipedia

In the article from the Economist from 2005 Clive Cook argued that the CSR movement have won the battle for ideas about the virtues company and not least the harts and minds of executives around the world.

As Cook put it in 2005 “CSR commands the attention of executives everywhere—if their public statements are to be believed—and especially that of the managers of multinational companies headquartered in Europe or the United States. Today corporate social responsibility, if it is nothing else, is the tribute that capitalism everywhere pays to virtue.”

And there is no doubt that CSR have made its way into almost every crack of the business process from Human Resources and employee benefits to product development and production. These seem to be no escape from CSR everywhere one goes there seem to be a big sign that boasts about how corporations in some obscure way bring good to the world. Reports are being issued, social media are bring utilized and campaigns are being run just to boast about how this company is creating shared value or is leading the fight against green house gasses.

It would seem that the CSR movement have not only got the a good grip in the tail of the business beast but that it is also able to make a good buck for itself along the way.

“The winners are the charities, non-government organisations and other elements of what is called civil society that pushed for CSR in the first place. These well-intentioned groups certainly did not invent the idea of good corporate citizenship, which goes back a long way. But they dressed the notion in its new CSR garb and moved it much higher up the corporate agenda.”

But now six years down the road and one maybe two economic crisis’s down the road it the effects have not been what Cook describes. Companies have not flogged around the charities, the NGOs or CSOs in order to create a new type of development system in the face of government cut downs. In fact there have been a tendency to streamline efforts into the main business process to search for the ever-elusive business case.

While the CSR movement had hoped that companies would come to them because they had to power to publicly humiliate them through exposure in the press and other media this has not happened. Instead business have initialised CSR as part of the conditions of doing business like it has done with marketing, lobbying, employee benefits, supply chain management, etc. One could say that in public-relations terms, their victory is total but the war on ideas was not really won by the CSR moment in the end. CSR did not change the face of corporations in any significant way. So when Cook argues that “…their opponents never turned up. Unopposed, the CSR movement has distilled a widespread suspicion of capitalism into a set of demands for action.” It is a truth with modifications it would be more accurate to say that corporations reorganised.

One can just take a quick look at some of the so-called “green” companies that have been hailed by the CSR

moment as frontrunners. Companies like BP that even adopted a green logo but ended up with a huge crisis on their hands in the Gulf of Mexico. Novo Nordisk that have been instrumental in the CSR reporting scene and the fight against diabetes that seem to go from one bribery scandal to the next on a almost continues basis or Bank of America who were in the centre of the financial crisis creating bank products that they themselves had a hard time understanding and in the end lead to the fall of several major financial institutions around the world.

And maybe it was because that they did not really believed in the idea of corporate social responsibility that they were lead astray. That “they were starting to suspect that they have been conned. Civil-society advocates of CSR increasingly accuse firms of merely paying lip-service to the idea of good corporate citizenship.” So corporate executives started to think how to make the best of it, how can I “conn” everybody back, so that was what the executives did. They might have called it something different but in reality they started to dress their unsustainable products in a think “green” coating just think of the three companies I just mentioned and the companies they have been running while at the same time doing some of the most unethical acts in corporate history.

We should not blame the companies for being what they have always been. All companies are in some way or another born out of the basic idea of greed that the owner somewhere along they way would make a buck or two from what the

company was doing. So companies continue to be build around the idea that the main interest should be to make some kind of profit from its activities. “When commercial interests and broader social welfare collide, profit comes first.” And we seemed to forget that when everything went fine and that there would be a price to pay when markets started to go downhill.

As Cook so rightful said but might not have fully realised the corporations have not changed their DNA they are still the same beast that they have always been. What we need to learn is that the state, society, the environment and business need to co-exist like everything else in the world but that we will never live in perfect harmony with each other but constantly need to keep each other accountable for our actions no matter what role we play. So when Cook says “Capitalism does not need the fundamental reform that many CSR advocates wish for. If CSR really were altering the bones behind the face of capitalism—sawing its jaws, removing its teeth and reducing its bite—that would be bad: not just for the owners of capital, who collect the company’s profits, but also for society at large.” I think that this is even more true now that it was when the word were spoken in 2005 when we really did not fear the big fundamental chang

 

es that we soon after experienced.

Private business on a leash

Business needs frames and structures that they can relate to not given control over and it is the role of the state and society to constantly provide and negotiate these in order for business to strive. Like a cage in a zoo business need to be reminded that not all animals can be give the same level of freedom no matter how cute or well dressed they appear to be. A tiger however cute is still a very deadly beast and it is the same with business no matter how well one dresses up a oil company it is still producing a product which eventually will dry out and pollute atmosphere. “Private enterprise requires a supporting infrastructure of laws and permissions, and more generally the consent of electorates, to pursue its business goals, whatever they may be.” The last thing they need to be given the key to the cage under the pretence of CSR and corporate sustainability reporting and then be left to govern themselves.

Governments and interstate institutions like the federal government in the US and European union should realise that they play an important art in creating these structures that by hindering the movement of business that actually help business being sustainable. For fare too long have governments give over power to private business for them to control and decide what was good and what was not. This has only resulted in agony and pain for the populations of the world creating huge scandals, systems without transparency and business who does not realise the consequences of their actions.

Business ethics at a all-time low

Eventhough we live in a time were ethics seems to be one of the most important issues that business needs to take into consideration it would seem that the field.

After a search on the word “Business Ethics” on google trends it looks like that ethics is just not what it used to be. We have seen a small increase on business ethics searches in the later part of 2011 but it is still a long way from where I would like it to be. Maybe it is as Godin says “There is no such thing as business Ethics”

Getting to the early adaptor using IMC – Strategies for implementing CSR

When trying to implement any kind of new innovation within an organisation or in a social context it is not without importance how and with what tools this is done. With CSR or Business ethics it is even more important because it is hard if not impossible to remove or erase what has already been done. What is important is that you get the ethics of your business into the DNA of your organisation, as Wayne Visser would put it. While this might not seem a like an enormous task it is not as complicated as it might seem. It might take a while for it to sink in but if you keep it simple and stay close to your strategy at hand you will get there eventually.

First of all one needs a holistic but structured approach. What you need to do is to answer the What, Why and How and When of your organisational CSR. This is not to say that this is a simple four step model or the only way of finding out what is important but it makes sense to establish a clear platform from were your business ethics can be expressed.

You need to define what is important to your organisation. If you are consulting company it might make much sense for your organisations members to talk about carbon footprint even though it is a very ‘hot’-subject in the CSR community. What might make more sense is to talk about how you see your relationship with the customer, how far will you go in coaching them, and at what point will it be important to say stop or escalate a issue to your management. If you are a designer it might be important to look into the people who produce your cloth. Are their any child labour and what about women’s rights in the factories that produce your unique designs? It is the ‘What’ is important to my company, and to me that should be in focus not what is the hot issue in the news or what the marketing department tells you will sell.

When you have made it clear what you stand for you need to investigate why these issues are important to You and not somebody else. It might seem trivial but if you can’t answer why something is important it will be really hard to persuade your employees, management, customers and suppliers why change is such a great idea. There is no one-size-fits-all on the Why of CSR and Business ethics. You might have personal reasons why this issue is important or it might be part of the collective memory of your organisation the central issue is that it is an ethical issue that you feel strongly about. This dos not mean that you should be blind for other would be subjects out there, but if you are going to build you business on ethical grounds than it should at least have a strong foundation and answering the Why will help you do just that.

What you have looked at the What and Why you turn to How. You have gathered some thought on how you are going to interpret the issues, which are important to you into some kind of guideline for the whole organisation. The How can have many forms it can be codes of conduct or code or ethics or it can be less visible as part of the standard operating procedures that you ask everybody to follow. In my experience the later is the better because it directly influences human behaviour, but one as an organisation you might have to make a clear statement both inside and outside its boundaries and then a code could be a good option. Both because it create a clear statement to your employees and management on what is acceptable behaviour but also because it tells your external stakeholders and not least your customers what you stand for.

Last one in the initial exercise is to plan the When and this is where you need to think about your early adaptors. You now know your What, Why and How of your organisational ethics now you need to let your invention grow. You know that your idea about the ethics of your organisation is founded in its DNA and the idea behind and know that it is rooted in your product and cultural heritage.  This means that you need to identify who you want to communicate with and find an appropriate channel that will enable you to reach these people.

However, you need to communicate the same message to all stakeholders not only the ones that you want to adopt your innovation. As you only have one opportunity to communicate your message and reach the people who will act as agents for change you have to use all the channels at your disposal. Integrated Marketing Communication is concept that is designed to make all aspects of marketing and internal communication such as advertising, publications, sales promotion, public relations, issues management, media relations, direct marketing and not least CSR to work together as one unified and powerful force, rather than permitting each to work in isolation. The combination of marketing and public relations tools lets an organisation influence for instance the image, public reputation and employee attitudes through the consistence and persistence of a few powerful messages.

“[IMC] is a process which involves the management and organization of all ”agents” in the analysis, planning, implementation and control of all marketing communication contacts, media, messages and promotional tools focused at selected target audiences in such a way as to derive the greatest enhancement and coherence of marketing communication effort in achieving predetermined product and marketing communication objectives.” (joep Cornelissen, 2008 among others)

The selected audience in this case is your agents of change. So even though all members of your audience will have the information at hand about what you are communicating it is the agent who is in your mind when you design your message. He or she properly already known to you or at least your vision of such a person, he is competent both as a person but also as a technician. It is a respected person who has their own values but is loyal giving the person credibility among his peers. It is a person who lives for the future and is willing to take a limited risk in trying something new her or his fuel is passion and the willingness and ability to transform a vision into something more tangible (such as your vision for a ethical business platform). It is a self-starter and motivator that do need fuel to run but ones started will interpret your vision and make it his or her own.

One of the main features about the change agent is that it does not have to be a employee it can be a customer who likes your product and buys in to your corporate culture and want to be evolved. It can be a supplier who sees the long-term benefit of a close relationship with your organisation or a junior member of your staff who buys into your idea. The innovation can get hold anywhere where there is a change agent present who displays the features that you are looking for.

Next week I will try to have a go at how you can use different types of communication channels including social media to get your change agent motivated and not least engaged in your strategic CSR efforts.

Stakeholder Theory explained

Here is a video by Edward (Ed) Freeman on stakeholder theory and what he means by organizations need to engage with the community, customers, business partners and other interested parties. I think the stakeholder theory is central to the concept of CSR and if one wants to understand business ethics, corporate governance, triple-bottom line, and other concepts within the CSR discourse one also need to understand how stakeholders and stakeholder theory plays a central part. Enjoy.

What are the best Blog and News sites to follow on CSR and sustainability issues?

Every morning I check my RSS feed and IGoogle on some of what I believe is some of the best sources of current issues on CSR and sustainability. The list is far from complete but form the basis of what I think I need to know to follow some of the issues that I’m concerned with.

Of cause the list is not complete and if you think that a link should be added then drop me a comment.

Transocean the Unethical Company of 2010

The drilling company behind the 2010 BP disaster has issued the agenda for their annual meeting (Transocean_2011)and it is somewhat of a horror to see. The executive committee thinks that they did such a good job in 2010 that they have granted themselves over 43 million USD in compensation. Based on the 9,3 billion USD the company had in revenues in the same year. On top of that they took a substantial amount of money out as part of their long-term incentive plan.

Mr. Newman (President and Chief Executive Officer) . . . . . . . . . . .$5,400,000

Mr. Rosa (Chairman of the board). . . . .  . . . . . . . . . . . . . . . . . . . . . .$1,500,000

Mr. Brown (Executive Vice President, Legal & Administration).  .$1,500,000

Mr. Bobillier (Executive Vice President, Asset and Performance). $1,500,000

Mr. Toma (Executive Vice President, Global Business). . . . . . . . . . $1,200,000

Ms. Richard  (Senior Vice President, Human Resources and Information

Technology)…… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ……$1,200,000 

For the compensation of non-employee directors for 2010 was 4,254,066 USD.

A long-standing reputation for safety

So did Transocean learn anything in the past year? Well when investigating the document they issued it could be interesting to look at how they precise themselves in the area of safety. And behold there is a paragraph in the executive summary on the high lights of 2010.

“We are the world’s largest offshore oil and gas drilling contractor and the leading provider of drilling management services worldwide. We provide drilling services, including the equipment and personnel for operations, to our customers—the oil and gas companies throughout the world. We have a long-standing reputation for safety and for being able to manage and deliver on extraordinarily complex offshore drilling projects in challenging environments. Our vision is to be universally recognized for innovation and excellence in unlocking the world’s offshore resources.”

I think that the people they asked about safety can’t have been the US government, all the residents along the Mexican gulf including the local fishermen nor can they have asked all the scientists, experts or NGOs that have been involved in the clean-up.

This statement just shows displays the complete arrogance of Transocean and its executive board about the people they are affecting. In my mind (and I think in a lot of others) they should be sued until the end of days for what they have done.

Keeping your money safe

But luck-be-hold the board and executive committee have already taken this into account by proposing that shareholders should not be able to sue them for their activities in 2010. Or formulated as an agenda point it look like this:

“Agenda Item 2: Discharge of the Members of the Board of Directors and Executive Management from Liability for Activities during Fiscal Year 2010.

As is customary for Swiss corporations and in accordance with article 698, para. 2, item 5 of the Swiss Code of Obligations, shareholders are requested to discharge the members of the Board of Directors and our executive management from liability for their activities during fiscal year 2010.

The pending shareholder derivative claims allege the breach by our directors of their fiduciary duties based on allegations that our directors failed to monitor safety risks, including risks related to the Company’s blowout preventers, and made misleading statements regarding the Company’s safety risks, the safety of the blowout preventers, and the Company’s financial condition. In addition, other allegations have been made against us in investigations and other contexts that are publicly available and could form the basis of similar claims against our directors and executive management.”

So if any critical shareholder world be out there thinking about sue the company for its mismanagement and poor governance in 2010 then forget about it.

A final insult

These statements just underline the ethical perceptions that the top of the company has on all its stakeholders.

“We will never forget the brave crewmembers of the Deepwater Horizon, nor will we cease in our efforts to ensure such an incident never occurs again. The lingering pain of the Macondo tragedy reinforces our efforts to conduct operations in an incident-free environment, all the time, everywhere.” And “It remains our view that Transocean is contractually indemnified against all claims stemming from the environmental and economic impacts of the hydrocarbons spilled into the Gulf of Mexico from the Macondo well after the sinking of the Deepwater Horizon.”

I hereby nominate Transocean management and its executive board of directors as the unethical company of the year for their outstanding performance in avoiding all decency and totally ignoring, and disregarding their key stakeholders.