September 21, 2014

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Catalyzing Real Change: Building a Corporate Social Identity

Corporations must rethink the premises of corporate identity in order to make real social change.

Ron_schultz_2014

By Ron Schultz

Part of the Creating Good Work series

With the recent unleashing of a new spate of Super Bowl commercials, there was one commercial that ran during the Super Bowl 30 years ago, that is still reverberating throughout the airwaves: Apple’s introduction of the Mac. Running that commercial was the decision of Apple’s then recently hired CEO, John Sculley. It was the kind of decision Sculley had taken the job to make.

As he told me a few years after his hiring, Jobs had offered him the CEO position of Apple while he was still CEO of Pepsi by asking him, “Do you want to spend your life making sugar water, or do you want to change the world?”

For those of us who identify with the latter choice, Job’s offer was a no-brainer. In making his decision to leave Pepsi, Sculley John Sculley-Appleobviously concurred. However, what made Sculley’s choice to join Apple so obvious wasn’t the money, it was the corporate identity with which he was aligning.

Jobs knew this in the early 1980s, and it’s even more important today: building a healthy corporate social identity that not only addresses how the corporation operates internally, but how it truly meets the world in which it operates, is a critical competitive component in the marketplace.

The Proof is in Performance, Not PR

Some companies, like Patagonia, get it from the onset and live their social identity from Day One. Others, like Exxon, think they can buy their way in by continually telling us how “green” they are. But corporations whose performance lags behind the pack in this emerging socially-conscious marketplace run the risk of marginalizing themselves for the long run.

As companies like Exxon often discover, it takes more than talk and ardent commercials to demonstrate an identity the public trusts. It takes performance. It also takes more than just token social efforts to transform a corporate social identity into a corporate culture the world admires.

This blog has, on numerous occasions, pointed out the business case for corporations to step-up and assume a positive corporate social identity. We’ve sited studies from Harvard, MIT, McKinsey and others that show how companies that live their positive social identity outperform the market by up to 5%.

Assets or Expenses?

This corporate performance is a result of how a company shows-up and how it models the behavior it wants others to emulate. But even those companies who are trying to establish a good social identity by performing well within their boundaries as well as without have room to grow.

One great example of this is a question Paul Herman (CEO of the HIP Investor) likes to ask that really tests this idea of social performance. It has to do with the often repeated phrase, “Our people are our most important asset.” It is a statement made as a demonstration of the healthy culture of an organization and usually repeated with great pride. Whenever Paul hears this, man-versus-money-scalehowever, he asks:

“If your people are your most important asset, on which side of the financial ledger do they show up, assets or expenses?”

I have asked this question many times and have gotten a number of not-so-approving responses. One is, invariably, a mumbled “expenses” as the proud CEO is suddenly looking at his or her feet. The other is embarrassment and anger at being exposed for not being the most conscientious company doing business.

The reality is, accepted accounting practices are not set up to account for people as an asset. Nonetheless, it is an inconsistency within even the best-run companies that points out the fragility of a corporate social identity.

A Positive Corporate Identity Means Making Real Social Change

Becoming a healthy, adaptive, corporate social organization, one that understands its relationship to those both within its walls and those it wants to benefit on the outside, is not a prescriptive endeavor. It is highly situational. One size does not fit all. So what works for a UPS, will not necessarily fit in a box for Boeing.

But it should also be clear; we’re not talking about doing CSR writ small.

Building a positive corporate social identity is not about making a token social impact. It’s about making real and significant social transformation. To accomplish this depth of societal shift requires a level of social innovation that needs to be designed directly into our corporations.

If all business is social business, then we must be willing to rethink and reconstruct the societal premises on which our corporate missions have been built. And there is good reason for doing so.

Rethinking the Premise of Business

Traditionally, business is undertaken to serve the needs of a customer as a means to generate wealth. The success and, in some cases, the exploitation of that model has indeed returned vast fortunes to those at the top. But the failure of this model has been that the source of that treasure has come at the expense of the system as a whole.

Any real corporate social identity shift that fails to recognize its interdependence on the health of the societal system as a whole is a wasted effort. This does not mean to imply it is the responsibility of corporate social efforts to address every problem within the whole. It does mean token efforts, while helpful in the short run, are neither sustainable nor lasting, nor do they deliver the value to either society or the business they could.

Applying social innovative efforts, both within our corporate organizations and in society as a whole, is a cultural change that may feel daunting. But it can be done by first being willing to shift the principles under which we operate our businesses and then building new models to emulate those principles.

Creating New Rules, Becoming the Top Choice

While that is being built, not after, we begin creating new rules that guide both the model and the behaviors required to deliver on that model. Sustainability of those principles comes in our continually redefining the models and adjusting the rules and behaviors accordingly. It is a demanding process, but not unprecedented.

Adapting the culture to meet these challenges requires leadership and a clear vision. It requires an organizational fabric resilient enough to accommodate the continual and constant change-ahead-signmodification process.

But why do it?

In a highly competitive marketplace, the customer is still the source of wealth. Building a corporate social identity that is based on real transformation elevates the brand and the perception of the business. It makes the business the company of choice, the employer of choice, the partner of choice and equally importantly, the investment of choice.

The power of bringing social innovation into the sinews of our corporations, while at the same time reaching directly into our societal lives, is about a corporate decision to become the top choice in the market.

We don’t get that elevation with symbolic efforts. We get there by having the courage to recognize our interdependent responsibility to the sustainability of the system as a whole, and then performing as the best example available to meet our internal, customer and societal needs.

Corporations willing to do that benefit themselves, their employees, customers and, ultimately, the world in which they operate. It’s a win-win-win-win opportunity, and well worth the effort for all of us.

Join Ron and other special guests in conversation with CSRwire's Editorial Director Aman Singh on February 12, 2014 at 12pm ET to discuss the headlining CSR and sustainability trends for 2014.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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