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Defining Responsibility in CSR

People tend to make business cases for Corporate Social Responsibility or debate the validity of CSR without realizing that each individual probably puts a different meaning behind the words, especially when it comes to defining what this responsibility actually is, and which values it proceeds from… 

One of my respondents on another forum suggested that there was no actual shared and universal definition. He quoted a 2006 white paper by Norwegian academic Dahlsrud who analyzed a total of 37 definitions and found out that none of those actually defined the social responsibility of businesses, but rather described its operational dimensions. While trying to find this paper, I came across the following fundamental principle:

“that a company is responsible for providing more benefits than just profits for shareholders. It has a role to play in treating its employees well, preserving the environment, developing sound corporate governance, supporting philanthropy, fostering human rights, respecting cultural differences and helping to promote fair trade, among others. All are meant to have a positive impact on the communities, cultures, societies and environments in which companies operate.”

Such a loose definition does not serve CSR in my opinion, as it enables its detractors to benefit from the confusion and concentrate their attacks on the elements that are the easiest to dispute. I think in particular of Milton Friedman and his followers who associate CSR initiatives to philanthropy, and restrict responsibility to compliance. By doing so, they obliterate from the discussion what I believe is at the core of CSR: accountability for the impacts corporations may have on societies and environments. 

In my personal view, CSR has a lot more to do with the consequences of doing business freely, and the duties that come with this freedom than with charity and philanthropy…

Wikipedia defines CSR as:

"A concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment. This obligation is seen to extend beyond the statutory obligation to comply with legislation and sees organizations voluntarily taking further steps to improve the quality of life for employees and their families as well as for the local community and society at large."

The real challenge is how to get from a compliance approach (compliance to law or pressures) to a voluntary approach (self imposed code of conduct).
Some cultures -I think of Scandinavia that I know quite well- rely as much on the "collective" sense of responsibility and "conscience" as they do on the strict application of the law, and they are already close. Others, where a belief that anything that is not forbidden by law -or subject to risk of litigation and rising insurance premiums- can be done is ingrained, have a longer way to go. The response to external stakeholders' pressure is a step in the voluntary direction. I believe education -from kindergarten to university- has a tremendous role to play, but this is another topic...

What other definitions and views do we have out there?

Internal Entrepreneurs as drivers of change?

I've been focusing a lot on entrepreneurship lately, while reflecting on my own experience as a hired entrepreneur and the consulting practice I have set up, and came across Gurprriet Siingh's answer to a LinkedIn question on the matter. Gurprriet is a consultant in Organizational Development. He describes the gap between the entrepreneurial culture and a traditional organization's culture and outlines the difficulties the Internal Entrepreneur has to face to survive in a large organizations. Gurprriet's analysis is totally in phase with my own observations, this is why I took the liberty to reproduce it in whole, something I don't usually do.

To my experience, it is a question of balance. Every organization I consulted with, wanted their people to be entrepreneurial, unable to realize that doing this would involve certain changes to the fabric of the organization itself.

The challenge of course, is that organizations (or their leaders) do not understand what it takes to be an entrepreneur.

Entrepreneurs are fundamentally rule-breakers or challengers. Organizations survive on conformism.

Entrepreneurs are focussed on finding new ways of doing the same things, most large organizations say, follow my way!

Some organizations I worked with experimented with hiring Entrepreneurs and getting them on board as full time employees. That didn't work either.

Over a period of time, after having tried to inculcate entrepreneurism and having experienced some Internal Entrepreneurs, I realized that to be a successful an entrepreneur INSIDE an organization, requires some competencies that are different from a stand-alone entrepreneur. So I am going to respond from the perspective of the Internal Entrepreneur.

Here's a brief note on what I have learned so far:

1. Internal Entrepreneurs (IE for short) need to be more flexible than their standalone counterparts in their ability to work within constraints and systems. They tell themselves that this is a necessary evil and learn to deal with it. Their standalone counterparts reject this reality and either try to change it (which usually fails because the organization culture is stronger than an individual) or quit the system.

2. They have an ability to leverage the system against the system.

3. They have an acute sensitivity to how much stretch the system they work within can take. And they stretch the system to near-breaking point and then pause there.

4. Networking/Relationships play a critical role in an IE's success. Specifically, their ability to build Allies, to find Executive Sponsors, who in a sense "protect" them while they do some "wild" things, or who give them the legitimacy to do so.

5. IEs have an ability to clearly demonstrate that while their methods may appear to be "illicit" their hearts are in the right place and that they're aligned to the same larger goal of organizational success as everyone else. This is a very powerful process and it leads to a dynamic where most of their detractors begin to see them as necessary allies in getting some things done which would normally not be possible. Kind of like old western towns hiring gunslingers to clean up the town –they didn’t like it, but they knew these guys were needed.

6. They ensure that when they do something outrageous, they have someone "watching their back".

7. They have an acute sense of corporate politics and while they don't get ensnared in it themselves, they understand the minefield and are able to navigate it well.

8. Unlike their standalone counterparts, IEs have more patience. They realize that in order to work within the system, radical things might take a little more time. They have a high emotional resilience and an ability to articulate, communicate and market their strategies and ideas - to the appropriate audience! And that's another key differentiator.

I attended a 3 hours session by Prof. Bala Chakravarty of IMD, Laussane, who gave us this awesome example of an IE. He said James Bond represents all the qualities that are needed. The man is part of the British Civil Service – probably one of the most bureaucratic organizations of all time – and yet continues to defy systems, processes and rules, but survives because his commitment to cause and country is unquestionable. And delivers consistent results. I loved the example!

I also think that in today’s day and age when competition is at warp-speed, we need to cultivate IEs and build the necessary culture to enable them to thrive and not just survive!

Thank you Gurprriet! This sounds all very familiar!

We need entrepreneurial organizations!

This post is my answer to a question asked by Liz cassidy on LinkedIn: "What is your experience of developing / or dealing with an entrepreneur inside an organisation?" and refers to some of the answers posted by other members.

As an entrepreneur I had the opportunity to experience many configurations, and I must say I especially thrive in entrepreneurial environments or environments that value entrepreneurship. Organizations that don’t value entrepreneurship tend to expect people to fit the mold and follow behavioral patterns where rules and processes prevail and where the system cannot be questioned for improvement. As a consequence they tend to misuse the skills of the entrepreneur and tame his entrepreneurial qualities, or worse let him tilt at windmills like Don Quixotte...

Entrepreneurs are probably the best positioned to bring innovation about because they positively challenge status quo and roll up their sleeves to get things done. I am totally with Gurprriet and Anne here: to keep on top in an increasingly competitive and changing world, organizations need to foster internal entrepreneurship and provide a culture where they will thrive.

Here are some examples to illustrate what entrepreneurs deal with in various kinds of organizations.

Working for an entrepreneur in the packaging industry who hired young entrepreneurs to manage and grow the business was a fulfilling experience. I was in charge of marketing, and two other 25 to 30 year-old entrepreneurs were managing sales and operations. When we started, there was no marketing department, and a first production facility had just been acquired. As a team, we learnt by doing, moved the company forward and accomplished great results with limited resources and time. The founder eventually brought in an OD consultancy to assess the structure in view of future growth. Part of their conclusion: too many young and impetuous managers that needed senior managers above them. Needless to say nobody was hired to create an additional echelon of hierarchy between the boss and his entrepreneurial team. This of course didn’t prevent a five fold increase of sales in ten years, attainment of leadership position, and the strongest profitability in the sector, as well as the recruitment of more young entrepreneurs… The OD consultants had missed something of the company’s culture based on lean, flat and agile organization ahead of time. They perceived the strong personalities and the somewhat “loose” or flexible structure where people were taking and given initiative to improve things as a liability. It was indeed difficult to follow at times, but this was also our strength, and quite unusual in the industrial world. This type of organization however can only function if the leader fully backs the internal entrepreneurs and is fully supported by his shareholders. Something relatively easy when the leader is the owner as in the present case, or when you call yourself Google and base your strategy on an entrepreneurial model.

Leaders of entrepreneurial companies also need to state a clear vision and strategy to point their entrepreneurial teams in the right direction. Many entrepreneurs usually “see” where they want to go in a very pragmatic way, and concentrate on the doing. They imagine everyone understands the strategy and its inflections even without a thorough formulation or reformulation. This was a common trait I noticed in startups during the internet/technology boom. Very often too fast a growth would blur the vision and strategy or make it obsolete. I consulted a few startups were each member of the management team had a different idea of where the business should go, and what the competitive advantage was. The entrepreneurial culture was there, but the “power of entrepreneurs” was not channeled. There has to be a beacon, set by the founding visionary or collectively by the management team.

On another occasion I was hunted by a large pharmaceutical company who wanted to launch an OTC product range, a possibility just opened by new legislation. I went quite far in the interview process as my entrepreneurial profile appealed to the people in place.  My potential boss got promoted abroad during that time, and his replacement did not see things the same way... From the foreseen best “enabler” of this diversification, I became the candidate who would the least know how to “correctly” draft a recommendation and follow the processes because I was not trained the proper way in an entrepreneurial company -I quote-. I must say I wasn’t quite motivated to work for this type of boss either… so we both left it there. Going back to Gurprriet’s and Anne’s points, it is indeed essential as an internal entrepreneur to have allies and protection, but this remains a precarious situation if the whole culture is not entrepreneur friendly.

I had the opportunity to volunteer and spearhead some change initiatives in several non profit settings and collaborate with a versatile group of volunteers. And I encountered very efficient outcomes and fulfilling experiences, as well as situations marred with politics and spanners in the works. Volunteers show different degrees of involvement, they pursue different personal goals and have different ideas of their mission and role or power within the organization. In the absence of actual role descriptions, processes, and decision structures, those who actually fill the void and get things done and moving forward are generally entrepreneurs. Their longevity at the task is often proportional to the room for maneuver they obtain from members of the group who are less involved.

Yes ! No ! Because!

Cognitive science is increasingly interested in the ability people have to dialog and cooperate. Why can’t people understand each other? Why do we favor status quo instead of moving forward? Most of the time, it is because we think along different lines or patterns, and because beyond our differences in opinions, we have different representations of a same reality. The example below is a good illustration: what would you have seen in the following figure?

To effectively establish a dialog and understand each other, we need to realize that each of us uses a different frame of reference and representation system. We need to try and define a shared frame or representation, or at least try and temporarily adopt the other person’s frame of reference in order to understand the reasoning behind her thinking.

Ideologies and dogma are made to prevent any incursion in a different vision of the world. Prejudice has the same effect: they rigidify the frame and representation system. As a consequence, even the idea of difference or change becomes threatening and has a paralyzing effect.

Several techniques have been developed in organizations to facilitate mutual understanding and cooperative problem solving through a dialog intended to free expression and vent out concerns and fears, and where each one tries by “informing” the other to understand the blocking factors and to overcome them. This process contributes to reduce threats and worries. The half empty glass has a chance to become half full.

One particular example of these techniques: the proscription of questions that can be answered by yes or no. These questions indeed offer the possibility for the one who replies to hide behind a small word without a slight incursion in the reasoning. By the same token, why-questions are prohibited as well, because even when they try to get to the causes, they often generate responses that are mere justifications, fruitless to move a debate forward.

To progress not only in the corporate world but also in our societies and the world as well, I would be favorable to teach dialog as a “civic skill” at school! 

References:
Many thanks to my friend Gerald O D'wyer and the Fuzen group, with whom I have shared a few workshop experiences as a participant and as a consultant.
Action Science - Chris Argyris

Let's think ahead of tomorrow's Dow Jones

We live in a world driven by short term goals and rewards, at the expense of future generations. Do we really want to continue encouraging bad management practices and behaviors?

Day to day variations vs. yield or patrimonial perspective
The fact that capital gain has taken predominance over yield and long term revenue has affected mentalities and changed the relationship between the stockholder and the corporation in quite a cynical way. With a focus on next quarter's bottom line and the share value tomorrow, who sees the overall wealth creation over 5 years? Who is the guardian of a company's perspectives, reputation, liability and potential profits and wealth at say, 10, 20, 50, 100 years?

Short term money in emerging sectors
Ages ago, I learned that long term investments shouldn't be financed by short term money. Huge capital is available in western countries waiting to be invested: short term/volatile capital rushes to finance “hit hot” markets -i.e. most of the time growing markets that require long term investments to consolidate. Of course, everyone wants a share of the same cake, that’s how bubbles build up, making these markets riskier than they should be -see Businessweek Too Much Money-. At the first blip, the rush is to pull back and the whole thing collapses, throwing the baby out with the bath water. I saw this first hand in South-East Asia in 1997, with all its implications on local people's lives. When the IMF stepped in, conditioning its loans to a total and immediate deregulation of what was locally perceived as a social aid -i.e. subsidies on household energy, you got riots and unrest... Joseph Stieglitz explained this very well. Then came the internet... a perfect opportunity to place the cash divested from Asia...

No more investments in infrastructures
The maximization of short term profit is detrimental to long term investment and infrastructure: rare are those who invest in the US railroad or electrical distribution network, ROI is too far away, as a result, the power grid is in a terrible condition -and probably also a cause of energy waste- and the prospects of a Chicago New-York high speed train connection in 3hrs is not for tomorrow. What about the internet, could it have been created by the private sector today? Who will finance the infrastructures needed for its growth tomorrow.

Dilapidating assets and increasing liability
Last, and to put this issue in a financial perspective: our generation happily jeopardizes at no cost the assets of future generations. No "provisions" whatsoever are made today for the risk and cost our children will incur tomorrow -health, environment, natural resources...-. In addition our states live off “leveraged” deficits that future generations will have to finance…

Win/win has to be put into perspective, it's not just here and now...