‘Shared Value’ has got to be better than ‘Corporate Social Responsibility’

I’ve read Andrew Hill’s column in today’s FT three times now and I’m still not sure whether he thinks this new thing called ‘shared value’ is good or bad. 

I had not heard the term before this morning and I’m naturally sceptical about anything which sounds like another new gimmick, but if you read beyond the label I do think this has merit.

In fact, it gives greater meaning to the point I tried to make in an earlier post (‘make yourself useful’) about a TLG pamphlet covering the same topic.

Basically, what the main protagonists of this approach argue is this: ‘shared value’ means finding ways to run your business which will ensure you achieve your core purpose, make a profit and contribute to society all at the same time.

The reason why I think it has merit is because it is not a ‘bolt-on’ do-good kind of thing; it’s about using the central purpose and goal of the organisation to drive change.  And, as the TLG pamphlet and associated Populus research showed, doing this improves an organisation’s corporate reputation and all other associated benefits because it is action which is authentic.       

Andrew Hill refers to a Harvard Business Review article by Michael Porter and Mark Kramer (authors of this neologism [am adding link to Wikipedia on neologism only because I don't mind admitting I had to look it up myself…].   I’m not a subscriber to HBR, but the short intro available for free gives enough of a gist of what follows.  I particularly like this quote:

“Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center.”

Of course any effort to get involved in local communities or to improve the environment is a good thing and shouldn’t be discouraged.  But I’ve never been convinced about the long-term benefits of corporate activity carried out under the heading ‘corporate social responsibility’ because too often it lacks meaning and feels like a PR stunt (and at it’s worse, something to make companies and/or their execs feel better rather than to actually achieve anything useful). 

Far better if that contribution to society is hard-wired into corporate strategy and is central to delivering the purpose of the organisation:  that’s what makes it real.

I agree with Andrew Hill’s conclusion:  “More companies are learning to reap commercial benefits from strategies that have a wider social value. That’s great. But the basic job of coaxing capitalism in the right direction is the same as it always has been: find ways to harness society’s needs to companies’ self-interest and hope the two stay together.”

But the ‘shared value’ approach has got to be better than corporate social responsibility for everyone’s benefit, surely? 

Wrong to give people a chance to decide, but to not really mean it…

This morning in the House of Lords we have been considering ‘Commons amendments and reasons’ on our amendments to the Parliamentary Voting System and Constituencies Bill (aka the AV Bill). (Stick with me on this….)

There were three amendments for our consideration, other Lords amendments having been accepted by the Commons.  (Fyi – I’ve been a member now for a whole 5 weeks and if one of my Noble Friends happens to read this post, forgive me if at any point I haven't used the right lingo, but I’m still learning…)

The Government was defeated by a majority of 62 votes on one of those amendments and the Bill has now gone back to the Commons.  This is what is called ping-pong (or wiff-waff maybe?!)

I won’t go into all the detail (check out the BBC website if you need more info), but basically Lord Rooker won an amendment which introduces a 40% threshold on turnout for the referendum on AV. In other words, if less than 40% of the electorate turn out to vote, their decision (yes or no) is not binding, but becomes indicative and then Parliament gets to decide whether or not to change the voting system used to elect MPs.

The debate on this one amendment alone lasted over an hour and all the speeches were very compelling.  Even so, I voted against the amendment. 

As I’m not yet confident enough to wade in to debates in the Chamber when the likes of Lords Lamont, Lawson and Forsyth are in full flow (God, they were good), never mind those on the other side, I thought I’d do a post here instead to explain why.

So here goes:

The principle behind my objection to Lord Rooker’s amendment is that I believe it is wrong to give people a chance to decide something, but to not really mean it… 

Let me be clear:  I am not in favour of changing our electoral voting system.  Furthermore, I do not believe that changing our voting system per se will restore the public’s confidence in our system of politics; which is what some politicians (Labour as well as LibDems) have argued.

But I nonetheless accept the Coalition’s decision to put this to a referendum. 

And, having done so, I believe the way in which this matter is put to the public is very important if we are not to reinforce their negative view of our political system.  Indeed a genuine referendum, where we give people the chance to decide whether to retain our tried-and-tested electoral system or to change it, might even be a first step to restoring public confidence: a goal which unites us all. 

I believe acheiving that goal - by whichever means different parties or politicians might believe best - is only possible if we keep in mind that public opinion is influenced not just by what we say, but by what we do and how we do it.  Or to be blunt, for us to be taken seriously and for confidence to be restored, we must not say one thing and do another. 

Therefore, and quite simply in my mind, if we are to offer a referendum on the voting system we must be genuine in providing the public the opportunity to decide. 

Introducing a threshold so Parliament has a ‘get-out card' and can reject the will of those who bother to turn out and vote is not a genuine offer. 

A genuine offer is politicians accepting responsibility – whether in the No or Yes camps – for making a compelling case, for encouraging people to vote and to making sure they understand it really is up to the public to decide.  And then providing them the opportunity to do so.

As I write, the amendment has gone back to the Commons and – if they reject it – it will be back with us again in the Lords sometime after 10pm tonight. 

If the the same amendment is put to another vote, my position will remain unchanged.

A press secretary isn’t much use if he’s only a messenger

The Times concludes that Alan Johnson’s departure as Shadow Chancellor (and the consequent arrival of Ed Balls in that post) is more significant politically than Andy Coulson’s departure from Number 10.  I agree.  However, I do not agree with the Times’ view of the limited influence of a press secretary, expressed in the penultimate paragraph of their leader:

The Conservatives will struggle to find someone to replace Mr Coulson, but ultimately this will determine the way that they convey their message rather than the choice of message itself. By contrast, the arrival of Ed Balls in the post of Shadow Chancellor is an important statement about Labour’s economic policy and its offer to voters at the next election will be shaped by it.

Any communications chief – wherever they work and for whomever they speak – is only any good if they (and their boss) understand they have a responsibility to influence the strategy/policy which informs the message they are responsible for delivering. 

And that’s because we – the people the organisation wants to influence – are more likely to base our views on what that organisation does than on what it says and we can spot when an organisation says and does different things.   

The comms director of any organisation is an incredibly important post with massive responsibilities for corporate reputation.  He/she must be part of the team developing the strategy which they and their team will be ultimately responsible for communicating. And quite frankly, if they are not, they're not much use to anyone.

Brian Hanrahan and what made his report from the Falklands stick

Jon Rentoul on Twitter led me to Max Atkinson’s blog post about what made Brian Hanrahan’s famous phrase so memorable: "I counted them all out and I counted them all back."  Max’s main argument is this:

“Indirectness v. Directness

I still think, however, that part of the answer to why rhetorically formatted lines are so effective at grabbing the attention of audiences is that they tend to be less direct ways of saying things that, if said directly, would hardly have been noticed.

Consider, for example, whether Hanrahan's line would have been so widely reported and remembered if he'd selected a more direct way of reporting the same thing, such as "All the planes returned safely"?”

I’d argue a different explanation.  I believe Brian Hanrahan was very direct that day.  I don’t know what made him say it in the way he did, but he didn’t make us work harder he made it easier for us to remember: he illustrated his message with something concrete (the counting) and he made it emotional (by making it human). 

I’ve explained in more detail below what I mean, but I should say first that I’ve just finished reading a fantastic book, “Made to Stick” by Chip & Dan Heath, and my view is based on their theory.  The Heath brothers offer six principles to help communicate ideas and messages so they become memorable: simplicity, unexpectedness, concreteness, credibility, emotions, stories.  Check out their website for more info.  It includes excerpts of their book, and I’ve pulled out a few quotes to support my own assertions about this brilliant phrase by Brian Hanrahan:  

“I'm not allowed to say how many planes joined the raid, but I counted them all out and I counted them all back. Their pilots were unhurt, cheerful and jubilant, giving thumbs-up signs.”

            PRINCIPLE 1: SIMPLICITY

“How do we find the essential core of our ideas? A successful defense lawyer says, ‘If you argue ten points, even if each is a good point, when they get back to the jury room they won't remember any.’ To strip an idea down to its core, we must be masters of exclusion….”

Brian was clear what he wanted to communicate: all aircraft had returned safely

PRINCIPLE 3: CONCRETENESS

“How do we make our ideas clear? We must explain our ideas in terms of human actions, in terms of sensory information. This is where so much business communication goes awry. Mission statements, synergies, strategies, visions — they are often ambiguous to the point of being meaningless. Naturally sticky ideas are full of concrete images — ice-filled bathtubs, apples with razors — because our brains are wired to remember concrete data. In proverbs, abstract truths are often encoded in concrete language: "A bird in hand is worth two in the bush." Speaking concretely is the only way to ensure that our idea will mean the same thing to everyone in our audience.”

Brian then translated that simplicity into something we could relate to: he made the safe return of all aircraft concrete by telling us he counted them out and counted them all back.

PRINCIPLE 5: EMOTIONS

“How do we get people to care about our ideas? We make them feel something….. Research shows that people are more likely to make a charitable gift to a single needy individual than to an entire impoverished region. We are wired to feel things for people, not for abstractions. Sometimes the hard part is finding the right emotion to harness. For instance, it's difficult to get teenagers to quit smoking by instilling in them a fear of the consequences, but it's easier to get them to quit by tapping into their resentment of the duplicity of Big Tobacco.”

And he made us feel, when he made it human: “Their pilots were unhurt, cheerful and jubilant, giving thumbs-up signs.”

I didn’t know Brian Hanrahan, but I met him a few times when I was a junior member of the Number 10 Press Office team usually when on overseas trips.  He was always a pleasure to deal with (and I wouldn’t say that about all BBC foreign correspondents I can tell you). 

Iain Dale tweeted earlier today that Brian Hanrahan should be remembered for more than just one phrase and of course that’s right.  But what his famous phrase illustrates is his effectiveness as a communicator and that surely is a fitting tribute for a journalist.

My sincere condolences to his family and friends at this very sad time.

You need to give love to receive love…. (aka 'make yourself useful')

An article by Chris Blackhurst in Monday’s Evening Standard caught my attention because the headline really annoyed me.  I saw it first online via a tweet from @populuspolls (it refers to research they carried out) and it said: “Customers must love you – it’s key to company success”.

It’s such a lazy and meaningless thing to say – and it doesn’t do justice to what Chris Blackhurst actually wrote (I read the article properly when I picked up the paper later), the original Populus research, or the pamphlet published by TLG Ltd (the agency who commissioned the work).

The pamphlet is worth a proper read (only four pithy pages).  It’s a bit ‘jargonistic’ in parts, but the basic message is that, organisations which show leadership by changing how they operate to deliver something important for customers (often at the expense of some profit) will generate public trust which in turn leads to more business, greater market share and a stronger reputation amongst stakeholders and customers.  Or as my Mum might say (and often does): 'make yourself useful'.

I really buy into this (check out my own theory on my website) because it is simple and so obviously true.  However, let’s be absolutely clear, delivery requires discipline, commitment and a genuine belief in what a company says it is trying to achieve.  In other words, it’s hard work.  Which is why the Evening Standard headline irritated me: that suggests the benefits of applying this discipline (ie, love and money) is what should motivate companies.  This is completely wrong and misses the point entirely.  The point of this kind of approach is that it is not motivated by self-interest.  It has to be authentic and that means it must be driven by an organisation's genuine commitment to achieving 'the something important'.  Indeed, so much so, it is willing to do so at some cost to itself. 

I noticed in yesterday’s FT that Michael Skapinker had written sceptically about Unilever’s recent decision to launch a ‘sustainable living plan’.  I don't blame him (we've heard it all before).  But because we have heard it all before and not been convinced by what we've heard, I was a little surprised that Paul Polman of Unilever was criticised for not talking like other CEOs.  It was noted he didn’t point to bottom line benefits of sustainability like everyone usually does, and indeed, when asked what investors would make of his plan he said:  “Unilever has been around for 100-plus years. We want to be around for several hundred more years. So if you buy into this long-term value-creation model, which is equitable, which is shared, which is sustainable, then come and invest with us. If you don’t buy into this, I respect you as a human being, but don’t put your money in our company.”

I’ve not studied Unilever’s plan in detail and have no idea if they followed the TLG model, but Skapinker’s article alone includes lots of evidence which suggests to me Mr Polman really means what he says and – because of that – his strategy could be a real winner. 

Now, some might argue that Michael Skapinker’s article is proof that it’s impossible for this kind of strategy to be a winner amongst opinion-formers.  I disagree.  Don’t forget this kind of approach is hard work because it is based on what an organsation does and not what it says.  No-one will be won over immediately; everyone needs on-going evidence which is why success relies on consistency and commitment.    Even though Michael Skapinker is sceptical, his article has highlighted that Unilever is different and willing to show leadership.  For me at least, the CEO’s confidence in playing a longer game is very refreshing.  If he and his team stick at their strategy, keep finding ways to show everyone they are doing just that and provide on-going evidence of the benefits it is realising for customers and the public at large, I am as certain as I can be that their trust rating will increase and their reputation with it.  Who knows, in a few years’ time Unilever might enter the UK league of top 10 trusted companies.

Why we’re discussing ‘reputation Rolls Royce’ and not Qantas

Calling all chief executives: Alan Joyce, the chief executive of Qantas, is a canny communicator.  Watch him and weep.  Not only has he seized control of his own company’s narrative since an engine in one of his aeroplanes broke apart on Thursday, he’s been controlling the Rolls Royce narrative too. 

For example, on Monday he said: “there was oil where oil shouldn’t be on the engines”.  Now, this is killer evidence of nothing, but his plain-speaking is helping Qantas achieve two important things: make us believe the man in charge has got the situation gripped; and gently nod us in the direction of Rolls Royce.  (I’ll come back to Rolls Royce in a minute).      
So where does Mr Joyce get the confidence to be so sure of himself - and of us in believing him?  Well, he’s certainly got clear evidence the problem is engine-related so he’s on firm ground in making sure Rolls Royce doesn’t escape attention.  (NB: deflection doesn’t work without relevant evidence and if you want to know what I mean, just check out the FIFA chap who’s trying to blame the media’s inquiries rather than the corruption they uncovered for the chaos affecting the 2018 hosting competition.)  

But Mr Joyce has done something far more important than just provide us evidence that someone else might have messed up.  He’s provided evidence that he and Qantas are on their game.  In other words, Qantas has shown us it really is all about what it says is its first priority: passenger safety.  And they have shown us how they use the clarity of passenger safety to drive all decisions, including the way the airline reacts when something goes wrong.  And furthermore, that clarity of purpose has given Alan Joyce confidence to speak with authority about his airline's performance over the past few days. 

Of course, our belief in Qantas' commitment to passenger safety is helped because Dustin Hoffman told us in Rain Man that the airline has never had a fatal crash.  But that statement would hold little currency if Qantas didn’t keep showing us that it does everything possible to avoid a crash.  Because one day (God forbid), Dustin’s one-liner may become redundant.  And, reassuringly, Qantas goes out of its way to show us it understands that.   Indeed, Qantas understands that its reputation is not built on Rain Man, it’s built and will be maintained on showing us real evidence of the lengths it goes to keeping its passengers safe.    

And over the past week, that is what Alan Joyce has done.  And that is why all the media talk about corporate reputation is not about Qantas, it’s about Rolls Royce. 

So what about Rolls Royce?  And isn’t Alan Joyce playing with fire by nodding in their direction as the people mainly responsible (their engines are in his aircraft after all)?  Well the answer to the second question is probably no, because I’m guessing someone like Mr Joyce would expect a company as brilliant as Rolls Royce to be as confident in showing how it operates as he is in showing us Qantas.  And that’s where Rolls Royce has shown itself to be weak.

Rolls Royce is all about quality and excellence.  Top of the range.  Nothing better.  It is a remarkable British brand.  And it doesn’t even need Dustin Hoffman to tell us it’s great. We use the brand to define ‘the best’.  When people say “I want Rolls Royce service”, no explanation is needed. 

Of course there are a number of reasons why serious people might advise Rolls Royce to keep its head down (the real threat of legal action from a competitor being the biggest I’m sure).  Personally, I wouldn’t accept any of them.  (And that its customers are airlines and not people is irrelevant in my book.  It employs people and it is an important British engineering company.)

For me, there is absolutely no excuse for Rolls Royce not to show us - just like Qantas has - how committed to excellence it is by the way it is responding to this current crisis.  Now, I accept it's harder for Rolls Royce because their actions are not as obvious as landing a plane with a missing engine or grounding a fleet for a few days.  But it's got to find a way of showing us that it cares about getting it right. 
Being in danger of taking the rap for what happened to QF32 is certainly not an excuse not to try.  Indeed, not only is that a reason to get out there (the share price was nose-diving for goodness sake), handling this crisis is an opportunity to show everyone what kind of company it is and to strengthen its reputation.  The world is looking at Rolls Royce right now and it doesn’t do that very often.  Just like Dustin Hoffman’s one-liner about Qantas’ crash record, “I want Rolls Royce service” is meaningless unless Rolls Royce itself keeps showing us why we say that. 

On Monday Rolls Royce made a statement that it is ‘making progress’ in establishing the cause of the problem.  Hallelujah.  And the share price rose as a result.  But that statement didn’t go far enough for Rolls Royce to wrestle back control of its own narrative.  It has promised a further statement on Friday.  When that is issued (if not before), it would be great if – alongside some facts and figures – the CEO could find his own way of reminding us what Rolls Royce is all about, and showing us how it has used that clarity to correct this operating failure. This extract from the Rolls Royce website might be useful inspiration. 

'To be Trusted to Deliver Excellence’ is our central organising thought. It is what we aspire to become. It is the embodiment of the promise we make to our customers. In today’s competitive environment, it is not enough to build great products: our customers are looking to us to deliver the best in service solutions. When we do, we build enduring relationships with our customers, partners and other stakeholders.

P.S. I've just heard this morning that Singapore Airlines has announced it too has some problems with Rolls Royce engines in their A380s.  So c'mon Rolls Royce - this is absolutely the time to tell us why you care and show us how.

The lessons from BP are quite simple

Yesterday (Tuesday 2nd November) I read an article by Michael Skapinker on FT.com about how companies can learn from this year's BP disaster.  I felt Mr Skapinker had missed some important points, so I posted a reply.  I've pasted a copy of what I said below.  However, it made me realise I really should have a blog of my own - so this is why I've set this up. 

Comment on Michael Skapinker's 2 Nov article: 'Memo to board: we need to talk about BP'

"Tina Stowell | November 2 5:15pm | Permalink

 

Interesting article, but in learning lessons from the BP disaster, I think companies need to reflect more deeply than just on their reactive processes.

I have not studied the examples you cite in any detail, but in my view what distinguishes successful crisis management – in this case J&J’s Tylenol from Lehman, BP, Toyota etc – is whether an organisation is clear about the fundamental point of its business and understands how that is essential to its reputation.

J&J clearly understood that any suggestion (indeed, evidence) that Tylenol kills rather than cures would be ruinous and withdrawal of the product was a no-brainer. Toyota, however, which has built its reputation on building safe cars, didn’t understand it was irrelevant whether the faulty brake lay with the manufacturer or the driver – the impact of the failure was to undermine what it exists to do: provide safe cars. Enron, Arthur Andersen and Lehmans seem to have lost the plot entirely in terms of what they were about. As for BP, its website (I've just looked at it) is very clear about what it does: extracting oil from hard to reach places and using it to make products to sell to people like me as safely as possible. If it had properly understood that the impact of what went wrong off the Florida coast totally undermined what it tells us it’s here to do, it would – in my view – have not doubted for a moment the scale of the disaster and the need for it to accept full responsibility for gripping the situation.

I agree with Messrs Hayward and Dudley that an organisation should be judged on what it does. But, the reason Mr Hayward’s words were so damaging was not because they were an “attention lapse”, because he was unrehearsed (though evidently he was), or even because they were heartless (as they were). They were damaging because they illustrated what was wrong: BP was out of touch in recognising the impact of the disaster on its own reputation and therefore lacked the will for accepting responsibility and sorting it out.

I agree that company executives need to communicate quickly and clearly in the event of a disaster and getting the content and tone right is essential. But the audience doesn’t want ill-informed guesses just because we live in a world of 24 hours news. They expect – quite rightly – those in charge to be able to tell them: what kind of problem it is; why it’s essential to the organisation and its customers that they fix it; and an outline plan for fixing it.

But delivering those messages needs confidence. And the confidence comes from those in charge knowing exactly what their organisation is there to do and recognising that its reputation is built on providing the evidence of it delivering that purpose.
It is of course right – as you advise – that all organisations carry out risk analysis, have registers and rehearse their processes and procedures for when something bad happens (as it always does). But they also need to know how policy decisions to introduce new products or to embark on new ventures relate to delivery of the organisation’s purpose. This is essential because it’s that which will allow executives to determine whether the fault if it goes wrong lies in the execution or in the policy. The understanding is what gives executives the confidence to explain themselves on the media.

If you’re about safe cars, drugs to relieve pain, auditing to protect against fraud, or an oil company extracting the stuff safely: the next time something happens that jeopardises your ability to deliver that (and therefore people’s belief in you being able to do so) make sure you can do this: acknowledge the problem immediately as something which goes to the heart of why you exist because that will give your stakeholders, shareholders and customers confidence that you are taking it seriously and will take responsibility for fixing it swiftly. Once everything has been properly analysed, then come back and explain the root of the problem and the steps taken to prevent a recurrence."