It's hard to resist profit

Corporate social responsibility issues were once considered to be a phenomenon outside business, but this is no longer the case. What, as a company CEO, would you do if incorporating sustainable development into your core business would triple one day’s sales as a consequence of you agreeing to spend a part of the profit on combating climate change while lowering your costs? It is hard to resist the profit.

This concept underlies the new consumer movement Carrotmob, which with the aid of Facebook, MySpace, Twitter and other social online networks is encouraging people to target purchases on one particular day to a chosen company that operates responsibly. Whereas previously consumer and non-governmental organisations have resorted to the stick, responsibility is now being encouraged with the carrot.

The social networks favoured by young people are particularly suitable as global platforms for spreading new ideas. And why shouldn’t we middle-aged women join in, since someone has come up with such a brilliant idea? Shouldn’t the same idea also be introduced into sprightly pensioners’ own networks? And all of us, I’m sure, have a family member, friend or hobby group who might be interested in this.

If Carrotmob or some other corresponding movement really takes off, we as consumers can realise our power and exercise it. By favouring socially responsible companies, together we can deliver a strong push in the direction that we want the future to take.

This way of acting may not solve the global challenges of sustainable development, but it sends a fascinating signal nevertheless. Its important elements are online networks, rapid flow of information, global mobilisation if necessary, and rewarding positive actions. The outcome for companies is good cash flow and a positive image for their brand.

So that cash flow doesn’t dry up after one good act, companies need to continually sense weak signals of change in customers’ and their interest groups’ expectations. If companies continue to connect with the strategy in the right way, and to innovate new products and services to answer needs, they show themselves to be agile and on a good path to the future.

An ability to see the future is a prerequisite for success in the management of any company. Few people, however, possess a crystal ball, so outlining the future is dependent on visions. This can succeed when, with an open mind, issues and phenomena are also utilised from outside one’s own traditional operating models.

In this way, it may be possible to identify a host of possible futures, one of which, perhaps, may come to pass. Visions are presentiments and notions put into words, giving form and outline to intuitions. It is the filtering out of possibilities and testing them against facts, whereupon some of the weak signals begin to strengthen as possible outcomes wither away.

Only a few of us can be proud of our ability to recognise weak signals, even though we might wish this were otherwise. More often we are just part of the mass that falls for a fad in a rising trend: when a novelty is still in its early days, if seems quite strange, and it is easy to come up with counter arguments. All present-day trends were once weak signals. That is why these signals have to be actively pursued today. Only in this way can advance warnings be obtained of tomorrow’s changes.

Recognising and authenticating weak signals is difficult because only a fraction of them become trends that will change company strategies. Recognition is helped by various think tanks as well as by monitoring and listening to various growing trends on social online networks.

It may be that fairly soon an essential part of companies’ strategic processes will be excursions to see and hear the new issues arising among small groups, issues that will then be complemented by the cogitations of think tanks. If a company is able and willing to listen to small special interest groups, it may find the seeds of future changes. All of this can be shaped into a predictive strategy from which the company will profit in future.

Of those companies that report on corporate social responsibility, most use the Global Reporting Initiative guidelines, in which the surveying of interest groups and the recognition of their expectations play a key role. The intention is for these expectations to be reflected in current strategy and management views.

A considerable resource is being neglected if a company is satisfied only with the small group of specialists that prepare the corporate social responsibility report. Only by utilising information on the expectations and messages of various interest groups as part of the strategy process can a sensible level of corporate social responsibility be reached, and only then will it also begin to pay itself back. In any case, the reporting of corporate social responsibility also puts a company on the right track in terms of its core business.

Predictive understanding of market changes is, of course, the recipe for every successful company; and this does not particularly have to be called corporate social responsibility or does it have to include the pursuit of weak signals described above. Pure statistics and key figures from the past are now not deemed to be the only background material needed in the strategy process in the business world. Why then, shouldn’t we also listen to interest groups of different kinds, and take into account the views of extreme movements and so-called single-issue organisations?

If this takes place, then soon corporate social responsibility will be so deeply engrained in the heart of companies that it no longer needs to be mentioned. Then, the term corporate social responsibility might even become unnecessary.

Would investors then also be interested in other issues besides sales and costs? Perhaps we will then develop assessment methods that can combine a company’s corporate social responsibility actions with the usual key figures describing a company’s success.

Perhaps alongside EBIT, ROCE and WACC, investors will demand from company management at financial road shows ROCR (return on corporate responsibility). It may be that the future development of the price of capital will also be assessed from the perspective of how a company manages risk in the subject area: whether it takes into account with the correct degree of seriousness health and safety issues, demographic changes in the company’s personnel, the impact of socio-political risks in different operating countries or the rise and fall of global movements.

Perhaps reporting will be handled in future so that parties interested in the state of corporate social responsibility can access company data in real time and classify it into information it considers to be interesting using XBRL (eXtensible Business Reporting Language) taxonomies.

From each company this will require highly refined and reliable reporting data. It would also require the commitment of the whole company and a serious approach to the gathering and production of data in real time. In this way it may be possible to fulfil better than at present interest groups’ expectations for the company’s reporting. Perhaps movements like Carrotmob should be utilised to find the next subjects that deserve to be rewarded with a carrot.

Carrotmob, perhaps you can do us a great service by helping us put corporate social responsibility right at the core of business activity to such a degree that the whole term corporate social responsibility is no longer needed. It is only agile companies who are able to predict at the right time changes in human values and attitudes and thereby market changes. That is how successful companies have always operated, and that is how they will operate in the future, too. 

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