A glimmer of hope for the “little-man” and you

I always enjoy stories about the ”little-man” against the system and with this story from china where a guy and his family refused to leave his home hit the mainstream news I was instantly captured.

Even though the ”little-man” usually looses in the end these is something about these stories that make them more than just news. They capture our imagination about our own struggles in life and make us think bout how we would react. And even though we would properly give in, just like the “little-man” does in the end, it would give us the idea that for once we fought the systems and for a small glimmer in time we had the feeling that we were winning.

It is something to remember when the system is trying to keep you down.

Before (believing that winning is possible)

TOPSHOTS

After

654380-china-freeway-house

Democratic deficit and the uneaven playing field

This is the next chapter in my series on Social Risk, enjoy.

What do “doing business” and the degree of democracy have to do with each other?

Well for one there is no doubt that companies that operate in environments where there is none or very few institutions in place to ensure a stable business environment often find themselves in situations where ethic and morality is strained. Just take a look at Shell in Nigeria (Oil drilling), H&M in Bangladesh (Clothing factory) or Maersk in China (Container factory) and one will know what it means to operate in such an environment.

To some degree the democratic deficit is self-imposed or reproduced through the understanding that we are “all on the same boat together”. Businesses blame the business environment, Governments blame international society, NGOs blame international business and the population blame politicians. So what we need is stable democracies that are characterized by good governance e.g. institutional structures in which the individual´s rights and freedoms are respected are a prerequisite for sustainable development. This means improvements in two areas:

  • That Rule of Law is upheld, ensuring a level playing field.
  • Democratic structures in place that ensures that can ensure that power is distributed and not centralized to a few individuals.
  • Cooperation should be undertaken with NGOs and civil society forces that work to achieve openings for democracy. In other cases, such as where civil society is small or non-existing, the focus should be on communicating an awareness of democracy, human rights, gender equality and market economy

In Sub-Saharan Africa, a region where economics determines politics of the day and where a culture of democracy has been absent and if present is under the will of a few elites. Even the smallest democratic opportunities are economically conditioned especially during elections because of poverty, corruption, illiteracy, unemployment and not least a playing field which has been all but level.

As we have celebrated the Arab spring there is no evidence that these old structures are so easily dismantled. We hoped for free-elections and a greater degree of transparency would be present, but it has done little in terms of growing a culture of democratic thinking in the region. For example, the political move by Mohammed Morsi to centralize power around the president in Egypt or the lack of security and move towards radical Islamism in Tunisia. The lesson is that democracy is fragile and needs to be supported by strong institutions that can balance the pursuit for power by individuals with the principles of democracy.  

The Social Democratic concept of democracy views political institutions as a means to offset the natural power of concentrated wealth that accrues in capitalist economies. However, during the economic crisis it has become apparent that individual states can’t handle the burden that they have been put under alone and have to seek assistance from others. In Africa for example there is no strong institution that can rescue countries in need so there are basically left to their own devisees, while we in the western world can draw on intergovernmental institutions like the EBC or others. In essence this means that the developing world is left with institutions like the IMF, EU, EBRD and the World Bank that impose strict guidelines for economic behavior and limits the ability for democratic processes. This again leads to a greater gap between the ones that have and the ones that don’t both on a region by region level but also between individual states creating tensions and eventually conflict.

For companies a democratic deficit means an uncertain future business environment. It means increased risk of catastrophic collapse and it means that what you might think is yours today might not be so tomorrow because there is no state to guarantee tour basic rights.

Links

http://www.economist.com/node/21555927

http://www.africanexecutive.com/modules/magazine/articles.php?article=5441

http://www.princeton.edu/~amoravcs/library/framework.pdf

IMF – Why the spike in food/oil price is different from 2008

Wondering if history is repeating? IMF thinks that there are significant difference between the 2008 food/oil price spike and the one we are experiencing now in 2012. Main argument is that volatility is not the same as then and there is no uniform development across crops.

The analysis is sound in my mind. While I do not believe that the “IMF cure” is what we need with its focus on inflation as the only remedy. IMF acts like the surgeon who said “The operation was a success but the patient died”

However, one good point is that governments should reduce tax on food as a way to reduce the impact of a volatile food market.

Judge for your self:

http://www.imf.org/external/podcast/2012/Foodprices.mp3

China in for a soft landing

After years of two digit growth figures in China the economy is about to slow a bit down for what IMF believes will be a soft landing. The main drive for this change is the situation in Europe, which does not seem to improve anytime soon. However, the domestic Chinese market seems to be a driver.

Apple story – Understanding your consumption

The apple story seem to continue to fascinate people and professionals. Even though that Foxconn is not only producing products for Apple that have become the all-time favorite when it comes to poor ethics management and lack of efficient control systems.

It is quite interesting that people can disregard corporate behavior if the brand of a company is strong enough. Most of my own students use Apple products and they are never surprised when I talk about the ethics record of the company. However, this knowledge does not seem to change their willingness to buy their products. Maybe because there is a wide consensus that most of the production facilities making hardware products in China are more or less branded as being in violation of Labour and Human Rights it does not hit Apple as hard. So while we know that Apple is in violation of these Rights at least we know what they are doing and at least it gives us some idea about their actions.

I received this quite informative infographic from Tony Shin, which I think highlight the case quite good. I know that some of my friends that specialize in Chines working conditions would regards some of theses issues as being quite “normal” and not really seen as a big issue inside China. However, the infrographic from Tony does give a opportunity for customers to gain knowledge about how their consumer goods are produced.

iKill
Created by: Tony Shin

Tide is turning for China

China Insurance Building (中国保险大厦), Shanghai

Image by thewamphyri via Flickr

I have touched on the subject of China many times in this blog and have warned about what can be perceived as a growing bubble. The speculation in housing has had many similarities to what we saw in Ireland, Spain and Portugal just on a much much large scale. Driven by large scale growth in the area of 10 % the Chinese economy have been a steam train without breaks or at least nobody was willing to scout for all the dangers that lay on the tracks. But now are the first signs that things are about to change and that we are after all interconnected even if we would like to think it is not the case.

Chinese has the second largest economy the world after the U.S. and in 2011 it expanded by 9.2% a figure that European governments can only dream about, but for China these represent the first figures that points in the direction of a slowdown. The economic growth in 2011 was thus lower than in 2010 and country’s statistical authorities expect a even further slowdown in economic activity.

Economic growth was in the fourth quarter, less intense than in the previous quarter but still a bit higher than economists had predicted. Production from China’s millions of factories rose in 2011 by 13.9 percent compared to 2010 but also the improvement was less than the year before. Retail sales, an important indicator of citizens’ private consumption expanded by 17.1 percent. Again also a bit slower than in 2010.

And despite the general slowdown economists do not expect a catastrophic slowdown as we saw in the US and Europe, But then again so did economists in US and Europe in 2007. As one Li Hiyong from the finance house Shenyin Wanguo in Shangha said “The actual growth in the quarter of 8.9 percent indicates that our economy remains in good condition and stable. The risk of an abrupt slowdown in economic growth is thereby diminished.”

While these figures are quite impressive they are indications that things are changing in the Chinese economy. First of all, China is still heavily relying on exports for their growth and with the slowdown in the economies in general they are vulnerable to changes in consumer behavior. Secondly, a lot of companies are taking production home or closer to their markets reversing the outsourcing flow that we have seen. One of the main reason why is because of the recession and the advantages of mass production in Asia is becoming less attractive. Third, wages in China are rising at an alarming rate some estimates puts the figures at above 20%, which have fueled the housing bubble and will eat up the advantage of producing in china. This should be compared with the 0-2% wage raise that we see in most European countries.

I will not say that the Chinese bubble will burst tomorrow but in my mind there is structural issues in the economy that will lead to a sharp corner and it is closing fast. China has a lot of money in the bank and they just might be able to pull through using their reserves to counter the downturn. However, it is imperative that the country starts to have a more conservative outlook in their economic and development of their social systems if they are not going to end up driving into a very big brick wall.

Storytelling at the core of corporate CSR branding

Miami Beach, Florida Hand made sign advocating...

Image via Wikipedia

The story corporate story should be at the core of any CSR effort. It is what I would call the cement that holds everything together inside the organisation and makes it possible to communicate with a degree of persuasion with its audience.

If one looks at storytelling as elements of branding one can distinguish three elements Culture, Identity and Image.

Culture being the stories that employees tell each other from the old t the new guy or among the old-timers or is the ones told in the employee magazine as examples of good cultural behaviour. It is also the informal stories that circulate among employees or close associates about how we saved the day by some act of heroism or how we beat the people from accounting at the annual summer go-card trip.  All these stories being told everyday at all levels of the organisations is building, reshaping and reinforcing corporate culture.

The Identity is what employees belie to be unique to being in just this organisation. One can call the corporate identity the reflection of the stories that is being told. One could say that they are the collective way of interpreting the stories we call our own which outsiders might not understand the fine details of. One cannot totally distinguish culture and identity from each other, as they are interlinked and always evolving. However, one can project or at least try to project ones identity on the surroundings as explicit examples of corporate culture.

This leads to Image, which are the pictures outsiders get of the organisation when it hears the corporate story being told. Stakeholders listen to the stories being told but are also taking part in its reproduction creating a mirror of the corporate image that the organisations identity can use as tool for affirming or renegotiating its culture and its feeling of being one.

In order to analyse and understand corporate storytelling one can use the actantial model developed by Greimas, which basically breaks down the story into six different but essential components.

The axis of desire, which refers to the subject or hero (who can be both good or bad) and the object, which is the thing he/she/it, desires. The axis of power that can be broken down into a helper or the person or thing that helps our hero and the opponent that is the person/thing trying to stop our hero from achieving his goal. The helper assists in achieving the desired junction between the subject and object; the opponent hinders the same.

Finally we have the axis of knowledge that is composed of the sender and the receiver. The sender is the person or thing that is requesting the establishment of the junction between our hero and the object he desires. The receiver is the element for which the quest is being undertaken.

Using this framework of understanding one could for example look at the most prominent CSR stories of 2010 the BP oil spill or the Google battle for free speech.

BP‘s oil spill in the Gulf of Mexico

Deepwater Horizon was one of the world’s largest ever oil spills, and understandably this story absolutely dominated 2010. Not only did it put a final nail in the coffin for BP’s once vaunted sustainability reputation, but it heralded a major rethink about the viability of deep sea drilling. BP didn’t cover itself in glory by failing to come up with a realistic remedy until far too late – and ended up picking up most of the tab, thereby putting paid to the usual assumption that pollution is simply an ‘externality’ of business.

Here the CSR policy of BP could be seen as a helper in telling the story that the company was trying to communicate. However, the hero or BP executive management was not able to use the help they were getting and ultimately failed to keep the BP CSR brand intact. That the power to decide if BP was allowed to win or fail in the efforts was given to the local fishermen by a combination the statements in the CSR policy and the medias efforts to find a compelling case to write about.

Google’s battle for free speech

Google’s withdrawal from China at the beginning of the year was a landmark decision in the battle for free speech on the web. A real clash of titans, no other story this year illustrated better the clash between government and big business around human rights issues.

In the Google example we have a case were the CSR policy was used successful even though the case did not come out as a commercial success for the company. When the company was challenged on its policy it stood by its values and identity and ultimately was able to prevail as a ethical brand taking a decision to withdraw from china rather than compromise its ethical standpoint. The winner becomes the Google identity and brand which is viewed its stakeholders as a company who puts people before profit.

These stories and many more show that CSR is an essential part of the corporate brand and that it is central in the story that we tell. Also that the policy is not something that corporate executive should take lightly but that it is actually a document which quite literally can help or break a company brand.