When Colgate changed leadership in the new South Africa, it found creative solutions to a potential CSR nightmare
By Carol Sanford
When I was a child behaving badly, my grandmother would ask, “Are you thinking about how you’re affecting anyone other than yourself?” Answering this question is a simple, straightforward and particularly compelling way to image whether or not any particular action we take is a responsible one. It is also a good guideline for businesses that wish to know if they are being responsible in their choices.
For example, when The New Republic of South Africa was forming, Stelios Tsesos, the new general manager of Colgate Palmolive, Africa, was asked to determine how to minimize the damage of escalating political violence. Strikes were beginning to spread across all industries and coming to work could be life-threatening. There were compelling reasons to close down the South African business entirely.
Stelios meet with his management team, as well as with leaders from the factory floor who lived in the townships of Soweto and Alexandria. Using a thorough, systemic approach, they explored the upstream and downstream effects of their possible choices in terms of vitality, viability and the ability to grow the business. They included effects on all of their stakeholders, from customers and co-creators (employees, contractors, suppliers) to Earth, communities and investors. Their dialogue was painful and in some cases rancorous. But it led to doing more than minimizing the damage and changed thousands of lives for the better.
It quickly became obvious closing the business would affect more than 6,000 jobs in the Jo-berg metropolis, including those of their suppliers and distributors. But if they did not close, the cost in terms of lives and financial loss could be even bigger. So Colgate turned the question around. Instead of “How can we avoid the harm?” they asked, What can we do to increase the vitality and viability of these stakeholders? And Stelios is now often quoted as asking, How can we help build a great country as we build a great company?
Three extraordinary outcomes resulted.
- Colgate quickly met the constitutional requirement that management reflect the racial and ethnic character of South Africa’s total population. In six months they went from 95 percent white managers to 95 percent black. This provided the country with a powerful example, often cited by President Nelson Mandela, of how it was indeed possible to meet the requirement—even as other companies complained of the lack of formal education among the black workforce. As Stelios said, “Lack of education does not correlate with intelligence; these are very smart people.”
- Long before it became popular, Colgate helped set up microbusinesses in townships, creating an unorthodox distribution channel through which women and youths sold toothpaste and other oral health products in small quantities. This was accomplished in conjunction with local dentists, who monitored the improvement in oral health of children. As they sold their products, microbusinesses also helped educate consumers and improve the practice of dental hygiene throughout their communities. Starting from abysmal, oral health improved 30 percent each year for the next two years. The microbusinesses grew steadily and eventually increased their offerings to include other Colgate personal and homecare products.
- Across the business, Colgate built capability in critical thinking skills, personal self-management and decision making, which created a foundation for new, self-organizing work systems. This capability was carried into the townships, and Colgate operators and professionals were appointed in large numbers to the new township councils established by Mandela. The ability to work across tribes was strengthened in these new forums, and throughout the violent period of national reorganization, there were no strikes at Colgate, the only South African company able to make such a claim.
In the two years leading up to the first free elections in South Africa and in the year afterward, Colgate’s revenues grew an average of 40 percent every three months. By acting responsibly in the interest of all stakeholders, Colgate provided an excellent return to investors while enriching the lives and health of new customers and consumers and building vital economic structures in struggling townships. It also helped create a stronger society with a powerful leadership intelligence, developed to grow a great business and a great country simultaneously. This was a wholly different image of responsibility than usual—a reimagined one.
Exactly what my Grandmother had in mind.
About Carol Sanford
Carol Sanford is CEO of InterOctave, Inc., a global consultancy and author of The Responsible Business: Reimagining Sustainability and Success (Jossey Bass). Carol has been leading major consulting change efforts in both Fortune 500 and new-economy businesses for more than 30 years. Her client list includes Colgate Europe and Africa and DuPont Canada, US, Asia and Europe. She also works with new-economy companies like Intel, Agilent and leaders of corporate responsibility such as Seventh Generation.
Readers: What lessons do you draw from Colgate’s example in South Africa? Do you have a similar story to tell? Share it on Talkback!