Sunday, February 28, 2010

What kind of corporate sustainability change agent are you?

There's a lot of people out there looking to make sustainability happen in their companies. These are the corporate sustainability 'change agents'. But what drives someone to be a change agent, and if you are one, what type are you?

Well, now you can find out. A new working paper, written by Andy with Wayne Visser, explores the motivations of sustainability managers that drive them to devote their time and energies to addressing social, environmental and ethical issues. It presents in-depth research among sustainability managers – and uncovers the pivotal role of values, inspiration, expertise, empowerment, strategic thinking and social contribution as sources of meaning for these purpose-inspired managers.

Check it out here at SSRN, where you can download it for free and work out for yourself which of the four types of change agent you are - expert, facilitator, catalyst, or activist.

Let us know what you think...after all, it is still a work in progress (but remember it is an academic paper, so you know, it has to fit into a few scholarly conventions..)

Photo by Adam Foster. Reproduced under creative commons license.

Wednesday, February 24, 2010

Toyota – or: Why acceleration is not always a good thing

Seeing executives of car companies testifying before congress is not too much of a novel picture. It has happened before. But the context of today’s and yesterday’s appearance of Toyota’s top brass in Washington provides a lot of food for thought.

We have followed the news for a while and it took things to unfold to convince us that this is actually a very interesting issue not just for business, but yes, for business ethics. It is indeed – and even more so, as one of the seminal cases for the business ethics literature has been a rather similar problem. Remember the Ford Pinto, in the 1970s, where Ford had installed a gas tank which exploded at the slightest collisions and allegedly killed more than 500 people? That case though was clear cut in some ways: Ford decided not to deal with this problem for six years because the cost difference between fixing the car versus compensating the victims amounted to $7.04 per car – too much to ask for a company whose only goal at the time was maximizing returns for shareholders.

Superficially, Toyota has ignored the problem with the gas pedals of their cars for a couple of years in the same way. But it is inspiring to ponder the reasons. We would suggest that putting the usual lens of Anglo-American capitalism on the issue is not very helpful. Though many do exactly this: The Economist, applying its mantra ‘Ketchup’ of neo-liberal economics on the issue – which btw. is complimentary with any news item they report on, - just see the scandal as a failure of Japanese corporate governance. As if the Anglo-American model of corporate governance has given us those much more efficient and healthy car companies, such as Chrysler, General Motors, Jaguar, Rover, and… - you get the picture.

We would argue that the Toyota case provides some more subtle and deeper lessons. First, there is the fact that all these deficient gas pedals were manufactured by suppliers Toyota worked with only recently. Following their ambitious goal of gaining 15% of global market share in the car market, the company had to engage with suppliers all over the world beyond their traditional network of ‘Keiretsu’ suppliers in Japan. This poses risks and needs more attention in order to integrate them into the high quality processes the company is known for. So, ethical issues are just a result of bad management. Not because evil people devise evil plots.

At this stage, though, you might ask questions regarding why Toyota did not deal with the problem earlier. Fair point. And again, its not that evil, profit crazed nerds in suits did not care about people dying. A first point one of the executives made in the Congress hearing was that while the problem was know, it was just not communicated between the different units of Toyota globally. While the problem was known in Europe in 2008, it was not ‘shared’ properly with the US unit. This points to the traditional organizational pattern of Japanese MNCs: to keep all core competencies at home and deal with the subsidiaries in the different countries just as delivery units of what was decided in the headquarters. Of course, this does not work for a global actor like Toyota, who needs to take into account that local differences and problems need to feed back into the global organization. So what results in a huge ethical issue is just the result of bad management: not adapting to the global growth of the organization.

Finally, there is another point worth considering. Brought up, we concede in all fairness, by The Economist. Japan is a rather hierarchical culture where criticism of superiors is not socially accepted. In such a culture, raising issues of insufficient vetting of suppliers, criticizing strategic decisions etc. is just not happening. No wonder then that an upfront confrontation of the issues took so much time within the Toyota organization. But again, this is more a cultural issue than a result of evil profit-maximizing apparatchiks.

What it boils down to, in our view, then is that issues of business ethics are not just an add-on, the icing on the cake – but they are rather deeply embedded in core business strategy and an integral part of good management. After all, think of the dosh Toyota has to put up for fixing this issue. Not to talk about the dent on the image of a company whose motto is ‘moving forward’.

Photo reproduced by the Creative Commons License.

Saturday, February 20, 2010

Ratan Tata: corporations in the developing world have to be more paternalistic

In the last decade, the business case for CSR (i.e. that attention to social issues needs to make sound business sense) has become something of a mantra for corporate responsibility advocates. Deviation from this script is rare. So it was refreshing to hear Ratan N. Tata, the leader of India's largest conglomerate, Tata Sons Ltd, mark his first public engagement in Canada by speaking eloquently last night of his commitment to a different approach to responsible business.

Speaking as the guest of honour at the inaugural event of the Thomas J. Bata Lecture Series in Responsible Capitalism , hosted by our own Schulich School of Business here in downtown Toronto, Tata make it clear that in his view, the developing world presented a different type of challenge for corporate responsibility. "Building schools and hospitals," he argued, "is something you have to do" in countries like India that lack basic government provisions. For corporations, he suggested, this meant that they have had to adopt a "more paternalistic" approach than that required in the developed world.

His own company, the Tata group, has become something of an icon in the responsible business world. Sure, they've had their run-ins with environmentalists, unions, and community groups over the years, most recently with the launch of the Tata Nano. But few could deny the contribution the company has made to social and economic development in India. And despite a rapid global expansion over the past two decades that Ratan Tata has been at the helm, the company has managed to combine its business success with an impressive commitment to business integrity and community service. Last night, as he reeled off a string of successful community engagement projects pioneered by the company, Tata claimed that, "with all of this, there's been no business gain for us. Yes, it creates goodwill that no advertising campaign will ever achieve, but it's not why we do it".

Tata's emphasis on the moral case for CSR perhaps makes sense when considered in the context of his particular company, which is 66% owned by philanthropic trusts. However, his comments were also echoed by his fellow business leaders on the responsible capitalism panel, Ed Clark the CEO of TD Bank and Jacques Lamarre, the former CEO of the global engineering firm SNC Lavalin. Clark, for instance, was keen to emphasise the importance of a values-based approach to responsibility. Citing his company's sponsorship of Toronto Pride, the annual gay and lesbian festival, Clark suggested the bank had lost business from customers upset about the advocacy of LGBT issues. But, he insisted, the bank was committed to diversity and "had to stick to its values".

Of course, all this talk of corporate responsibility beyond the business case could just be only so much hot air from corporate leaders keen to spin the image of capitalism away from its "greed is good" reputation. But in a world where, as Doug Miller, the chair of Globescan commented from the audience, the public had increasingly lost faith in capitalism, it was good to see that a new way of talking about "responsible capitalism" might at least be possible.

Thursday, February 11, 2010

CSR quest: Wayne Visser in the hot seat

In January, our sometime collaborator and co-editor of the A-Z of CSR, Wayne Visser set off on a 12 month, 22 country ‘CSR quest’ to talk and learn about how companies can help tackle the world’s most pressing social and environmental problems. Crane & Matten talked to him about what he hopes to achieve and what’s in his luggage.

C&M: So, what is the CSR quest and why are you doing it?

WV: In my mind it’s a bit like the Holy Grail. Is CSR (corporate social responsibility) something that we should be chasing after, and what actually is a company’s social responsibility? My experience so far is that it means completely different things in different countries. So I want to explore this variety and then capture and share some of the innovative CSR practices that are going on out there.

But why pack up all your stuff and go on the road for a year? Couldn’t you have just sent some emails?

You can only do so much with email and internet forums. Unless you meet and engage face-to-face, you don’t really capture the learning. Also, companies are just not achieving the transformative change that we need to solve the world’s problems. This is my attempt to help turn the tide.

But is flying all over the world the most responsible way of promoting social responsibility?

There’s merit to that criticism. I’m trying to make the trip neutral through carbon offsets. But I wouldn’t be doing the trip if I didn’t think the benefits outweighed the costs – and that includes the environmental costs. I’m hoping it has a multiplying effect. If you look at the impact Al Gore had on climate change awareness, it wouldn’t have happened if he’d just stayed home.

How much difference do you expect to see in terms of how companies practice CSR in different countries?

I’m learning about the various cultures and how cultural context affects CSR – in terms of religion, history, etc. And I’m particularly targeting developing countries, where the need for CSR is greatest. Often it’s where the need is greatest that the real innovation happens. So I’m looking out for some of those kinds of differences too.

Do you think you’ll be anywhere long enough to see any real differences?

I’m under no illusions that it’s anything other than a snapshot. It’s my personal wandering adventure, so it will inevitably be ad hoc. But just by interacting on the ground and meeting people face to face you do get a good sense of what’s going on.

You’ve just been to Turkey and Kenya – was there anything that struck you in those countries?

In Kenya, what was really exciting was M-Pesa, which is an initiative that has now empowered a whole country (where 80% of people don’t even have a bank account) to access financial services through mobile phones. That’s an example of where need can drive innovation. Turkey was still surprisingly immature with respect to CSR. But it has got hold of the corporate governance agenda and is promoting itself as a bit of a hub for corporate governance in the region, especially in the Middle East.

How are you going to go about sharing all the things that you pick up along the way?

I’m conducting workshops for various host institutions (universities, CSR associations and the like) and sharing what I’ve found. I’m also posting blogs and short videos of interviews that I conduct in each country. And I’m keeping a diary, so a CSR Quest book is a possibility some time in the future.

What if no one tunes in?

It will probably grow in momentum as it goes on. I have existing networks and outlets through Facebook, Twitter, Ning, so you never know what the impact of these things will be. Besides, I would do it even if only 1 person was listening; it’s a personal journey as much as anything.

You’re putting everything on the internet for free and you’re giving free talks – so how exactly are you financing the trip?

With difficulty! It’s all self-funded. I’m organizing more substantial workshops for some of the host institutions, and those are paid-for. But it’s very uncertain. I’ve got the tickets booked but its not all set-up – I’m relying on the power of the web and the networks to keep it going. So all offers to help are welcome!

You’re one month in now – how are you liking being on the road?

I gave up my flat, so I’m essentially homeless now, living out of a suitcase. It’s a mixture of tiring and unsettling, and invigorating and stimulating. As soon as I’m interacting with people on the ground it’s extremely rewarding. It’s already been worthwhile, so even if the rest of the tour would falter, I’d still feel it had been a success.

How big is that suitcase?

Just one quite large suitcase and the bag for the computer and the camera. So two bags. It’s not quite hand luggage but it’s not much.

Is there anything that you’re sorry that you had to leave behind?

Not yet. But I may regret going light on the clothes. I’ve just got one suit and 3 shirts. And I’m having to do a lot of underwear washing in the shower!

Crane and Matten are currently based in Amsterdam and Toronto respectively. Any plans on dropping in on us?

I hope so. I plan to finish the tour with a North American leg, but I’m not planning on coming to Amsterdam at the moment. If after 10 or 12 months I get an invitation and I’m up for more, who knows? By then, though, I may well need to put my feet in concrete for a while.

You can follow Wayne’s CSR Quest on the CSR International blog at or or contact him directly on

Airport photo copyright Idle Type. Reproduced under Creative Commons Licence. Wayne Visser photo courtesy of Wayne.

Wednesday, February 3, 2010

More on Google's growing political influence

When we reported yesterday on Google's recent spat with China we pointed to the growing political influence and power that the company was wielding. Anyone that takes on the Chinese Government must be pretty sure their political muscle.

One of our readers helpfully pointed us to a story by Chris O'Brien that ran in the Mercury News over the weekend, which throws more light on this trend, indicating how Google's spend on lobbying in Washington DC had mushroomed in recent years. O'Brien writes:

"In just five years, the search engine giant has gone from almost no presence in Washington to spending more money on lobbying than all but one other Silicon Valley company in 2009. And in the past three months, Google topped all other valley spenders."
The charts produced by the Mercury News show just how steep this curve has been, and how its lobbying expenditures are even starting to catch up with its fellow technology giants Microsoft and IBM:

The fact of Google's activities in DC is hardly surprising, but it is nice to get some detail behind the company's changing political status .... and to see just how much the company now sees policy makers as a key stakeholder. In a companion piece, O'Brien also takes a look at the changing face of the types of issues Google is lobbying on, and at some of the revolving doors between Google and the US government in terms of staffing. As he makes clear though, this is pretty much par for the course for a major multinational corporation - the point is not that Google is different (as it often likes to claim) but that it is essentially much the same. The big difference though is the speed of change, and the readiness with which Google has equipped itself for dealing with its political context - or as economists like to call it, the 'non-market environment'.

When we looked into our crystal ball at the beginning year, it looked likely that 2010 would be a pivotal year for Google in terms of corporate responsibility issues. There is every chance that with its growing power and the major impact it is having on industries such as media and publishing, a backlash could easily start to take off. However, the behind the scenes lobbying and the putative game-changing in China suggest that Google is reading the signs and seeking to head-off the critics before they can build up momentum. Getting this one right could be critical.

Figure copyright Mercury News

Tuesday, February 2, 2010

Google vs China: upping the ante on industrial espionage

One of the big business ethics stories of the last month has been Google's announcement in mid January of a 'new approach to China' following reported attacks on the company's IT infrastructure from inside the country. Google's announcement spoke of targeted attacks on the email accounts of known human rights activists, both within and outside China, as well as other security breaches of Google and 'at least 20 other large companies'. Whilst the announcement of this degree of hacking would have been cause for concern, the explicit link to the surveillance of advocates of human rights in China was positively incendiary. Google was not just talking about regular industrial espionage here but about state-sponsored spying for political purposes. So suddenly the company had launched itself into a diplomatic row - albeit one between a company and a government - rather than its usual commercial scrapes.

The announcement didn't just make the headlines because of Google's allegations though. The company dropped another huge bomb by declaring that it would no longer continue to operate a censored version of its search engine in China - despite being required to by the Chinese authorities. 'Over the next few weeks' the company announced, 'we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down, and potentially our offices in China.'

Since the furor over Google's announcement blew up a couple of weeks ago, numerous commentators have offered their view on what's going on. Many have focused on Google's ongoing troubles in securing in market leadership in China, (suggesting that the human rights concerns have been used as a smokescreen behind which to withdraw gracefully from a commercial failure), while some have presented it as a belated switch to principled behavior. Some have even reckoned that Google is using the publicity around the announcement to build awareness and brand loyalty in China. Working out the motivations of the company in picking such a huge fight in one of the world's most important markets is never going to be easy.

Three things that have particularly stood out for us though in all this are these, and we think they offer some salutary lessons for the brave new world of business ethics that is starting to emerge.

1. Google the 'political corporation'. Google clearly feels big enough and powerful enough to pick a fight with one of the most powerful governments in the world.... over human rights. On the one hand, this is great in that it means that we don't have to just rely on the government to protect our human rights. Some big companies (whatever their motivations may be) may also be willing to do some of the heavy lifting from time to time (at least when when it suits them). In some of our writings, we've refereed to this as the corporate administration of citizenship rights (yes, not the catchiest phrase we'll admit, but it does the job). On the other hand, isn't this an issue that national governments - especially the US Government - should be leading on, rather than, as Hilary Clinton did, simply backing-up Google once it has broken cover. Still, whatever one thinks about this Google is clearly feeling big and important ... and perhaps also starting to feel the heat that comes with such size. It could just be getting in quick before the ethical backlash over its mammoth reach begins in earnest. With its fingers in all kinds of free speech, privacy and intellectual property issues, Google is fast becoming the essential political corporation of the 21st century.

2. One step forward, two steps back for the Global Network Initiative. The global what??! If you've not heard of it, well you're not alone. In the latest bout of Google vs China, the initiative hardly even scored a mention in the media storm. However, the GNI was launched back in 2008 to much fanfare, and was promoted as the new approach that internet companies were going to deal with censorship issues after getting their knuckles rapped by the US government for bowing to the Chinese government's demands. Well, the 'new approach' before the latest new approach of course. As a partnership between Google, Microsoft, Yahoo and a score of NGOs and academic institutions, the GNI held out considerable promise for delivering a more responsible approach to a tricky ethics problem that frankly, was not going to go away fast. Fast forward to January 2010 and GNI advocates could well point to Google's announcement as proof that the initiative is starting to have a significant effect. After all, one if its members is making a major song-and-dance about its commitments to internet freedoms. The trouble is though, no one at Google thought to mention the GNI, or suggested that it played a role in its decision. More worryingly, one of Google's main partners in the initiative, Microsoft, publicly criticized the company for it stand in China. Oops, hardly a hallmark of a strong partnership.

3. Industrial espionage goes up a level. First, spies worked for governments, just like in the old movies. Then they worked for companies ... in fact just like in the (new) movies, such as the 2009 Julia Roberts' release Duplicity. But some of the big news stories now in industrial espionage involve both companies and governments. It's a kind of semi-industrial espionage. The Google story was just the latest and best known incident of this government-business espionage, but clearly its becoming an increasingly prominent feature of the contemporary business landscape. Just this last weekend, the Sunday Times in the UK reported on a leaked British security service document accusing China of bugging, bribing, and blackmailing UK business executives in an attempt to secure commercial secrets. Notably though, here the warning came not from a multinational corporation, but from the national security service (the irony of MI5 warning against spying was not lost on many of the newspapers' readers who commented on the story). Either way though, as these incidents suggest, the stakes being played in industrial espionage have been significantly raised. The question, of course, is how best to respond ... and whether governments or companies should be leading the line.

Photo by Mykl Roventine. Reproduced under Creative Commons Licence