Life often functions on the principle of exclusion. While the world has overwhelmingly responded to the Tsunami tragedy, many causes don’t attract such attention. Hierarchy is an inevitable part of life. One NGO actually remarked that the problem with such tragedies is that they gobble up other causes which suddenly acquire an ‘everyday’ dimension and hence cease to be able, at least for a while, to get people to give. Several bodies have been vying with each other to persuade others to part with a little of their assets, with or without the support of some media groups, for the cause of Tsunami. Competition never leaves us, does it?
Yes, the corporate sector has risen above narrow considerations of profit, but that cannot be the complete story, can it? Readers may recall the faux pas on BBC news a few weeks ago, when the venerable channel got taken for a ride by people masquerading as Union Carbide executives, owning responsibility for the Bhopal gas tragedy a decade ago. Immediately, the company rushed to clarify that it had said nothing of the sort. During the coverage of the decade of struggle, the fact that the compensation to all those affected hasn’t been fully disbursed once again came to light.
Two contrasting instances of corporate behaviour. A study in 2002 came to the conclusion that corporate behaviour could turn out to be the brand of a company. Very ironic indeed as the last few years have been full of stories in the global media about one corporate scandal after another. One stock analyst in the US estimated that the top 100 companies in NASDAQ overstated their actual audited profits by more than $100 billion in 2001 alone.
Going by the stunning evidence of the last few years, it is difficult to believe that the corporate response to the Tsunami tragedy is an indication of anything other than a response to a tragic event. Only the most callous will stand indifferent amidst a tragedy. But there is a question waiting to asked.
Can a company be irresponsible in its business and wash away its sins by donating to charity? Would that count as corporate social responsibility? Surely, corporate social responsibility is meaningless without corporate governance. While responses to tragic events like the Tsunami furnish plenty of photo opportunities and some (cheap) publicity, it will not generate long term goodwill. In fact, many companies may spend more money on advertising their charity than the amount of charity itself.
It is perhaps time to go beyond corporate social responsibility. There is a deeper point, hidden under the fervent pleas by global bodies such as the UN to all to contribute generously.
Governments of countries are trying to reduce what they have historically been doing. We don’t need to go into the merits of the shift. That it is happening is all that matters. In the Scandinavian countries for example, there has been a serious debate over who will foot the bill for social insurance (day care centres), with governments indicating they cannot fund it any more.
But we need to draw out what is now an undercurrent in the debate. Governments have always served a basic purpose in addition to performing a variety of functions: they are the arbiters, providers, protectors or what have you.
That space is now becoming open. Not fully, but there is more than a crack. Here is a great opportunity for companies to step into their (governments) shoes and occupy a new position in the new civil society that is emerging. Someone is going to have to play that role; because, people will look for it.
In an article in the December 2002 issue of Harvard Business Review, Michael Porter and Mark Kramer debated the competitive advantage of corporate philanthropy. They distinguish between cause related marketing, which was one of the earliest attempts to go beyond the business, and what is truly philanthropy. Typically, cause related marketing focuses on enhancing a company’s ability to compete, and not create social impact. A leading FMCG, which also makes personal care dental products used to sponsor mobile dental vans which would visit villages where they would exhibit short films that communicated the benefits of brushing teeth with toothpaste or toothpowder.
There is nothing wrong with that. So, what’s the point? As we said a while ago, societies are in transition and governments are cutting down, except where they pursue an agenda which has nothing to do with common folk. Equally important, we realize today that social and economic objectives are not necessarily separate and distinct. Given these twin observations, there is great potential for companies to build themselves a position in society (much more than brand power) that will make people look up to them.
An intelligent company will recognize the shift and seize the initiative. The shift is from a focus on competitive ability to competitive context. Porter and Kramer argue that, “Corporations can use their charitable efforts to improve their competitive context – the quality of the business environment in the location or locations where they operate.” Cisco has actively practised contextual giving. So has Microsoft, with its work on education with governments. The thrust of the point is that companies can create long term value as against short term publicity.
Porter and Kramer in fact make a strong comment: “As long as a company remained focused on the public relations benefit of their contribution, they will sacrifice opportunities to create social value.” For all their desire to look up to someone, people can see through sham, unless it is very well camouflaged. That’s not becoming easier. It is tough to cloak.
If you focus on publicity stunts, your own employees more than outsiders, will see through this. And it can damage your credibility with them. You certainly don’t want that. As one of the grand old men of management, Charles Handy, said, in a knowledge economy, sustainability must extend to the human as well as the environmental level. He goes on to make a telling comment, after talking of the stress of executive lives: “We are in danger of populating companies with the modern equivalent of monks, people who forgo all else for the sake of their calling.” You do not come across as caring if you drive your own people to the depths of despair.
The truly visionary companies will see the opening, vacant space and seize the initiative to occupy the emerging role. To be sure, there is a risk to society of corporations extending their sphere of influence. The risk is real but unavoidable. Not with governments cutting back. You will see in the next few years an intriguing tussle between corporations, NGOs and civil society.
USP Age magazine 2004
