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Meet
the MasterMinds: Jeffrey Hollender on Corporate Social
Responsibility
 Jeffrey
Hollender is CEO of Seventh Generation and author of
How
to Make the World a Better Place. His most
recent book is What
Matters Most: How a Small Group of Pioneers Is Teaching
Social Responsibility to Big Business, and Why Big Business
Is Listening.
MCNews talked to Hollender about making the business
case for responsible corporate behavior.
* * * *
MCNews: How did you come up with the title for your
new book?
Hollender: Well, I wanted the title to reflect that
it's more an inspirational than a how-to book. I was
also trying to reach out to a broader audience than
the people who typically read business books. And, like
many people, I want to figure out what does matter most
in the context of the challenges the world faces, whether
it's relative to the environment, employment or human
rights.
My perspective is that business is the most powerful
force on earth, and that what matters most is harnessing
the power of business to make the world a better place.
I don't mean to neutralize or minimize its impact,
but to harness its power to make a positive difference.
MCNews: Do you think it's a myth that corporate social
responsibility and profitability cannot coexist?
Hollender: It is a myth. I think that today, more
so than ever, corporate responsibility is the best
strategic as well as financial path that most businesses
can follow. For most businesses there are both compelling
reasons to be responsible and compelling statistics
that validate that responsible businesses do better
according to traditional financial metrics. Of course,
how you define "responsible" is somewhat of
a conundrum.
MCNews: In the book, you talk about the transparency
of events--that consumers are no longer shielded from
disasters, and that the harmful or destructive policies
and practices of companies are more readily apparent.
Are more informed consumers fueling the movement toward
corporate social responsibility?
Hollender: The impetus is from multiple sources.
There is a growing and significant push from the business
community, primarily from sectors like the insurance
industry, which has learned how critical this kind of
transparency is to risk evaluation. Outside the United
States, especially in Europe, there is a push from governmental
and regulatory bodies, although that is certainly not
the case in the US.
The media has played an increasingly significant role
in covering this issue, and non-governmental organizations
(NGOs) and nonprofits are also playing a very active
role. The two sectors that are less active in the US
than they could be are consumers and government. In
a perverse way I take heart in the fact that so much
change is happening in spite of the lack of consumer
and governmental pressure.
MCNews: What do you think is the cause of consumer
indifference in the US?
Hollender: Again, it's a combination of factors,
including feelings of powerlessness and disconnectedness.
Most consumers don't believe they can make a difference
anyway. Also, information is not as readily available
as it could be, and it's not easy for consumers to take
action.
MCNews: Even twenty years ago, corporate responsibility
was part of the curriculum in business schools. Why
hasn't the notion caught on?
Hollender: Largely because of the myth we just
talked about--that corporate social responsibility is
nice if you can afford it, but it's not an essential
part of business and it's hard to justify.
When the financial and economic case is clear to the
business community that responsible companies do better,
from a purely competitive perspective everyone will
get dragged along to keep up with the leaders in their
industries.
I think that the moral and ethical case--society calling
businesses to task--is less likely to be effective.
There is pressure for continued access to corporate
charters on responsible behavior and, in theory, that's
absolutely the right approach. But in the short term,
I think it's going to be the financial case for corporate
responsibility that drives change.
MCNews: Don't most corporate mission statements
include some reference to social responsibility?
Hollender: Yes. And in Europe, there is widespread
acceptance at the senior management level of most big
companies that society won't grant a license to operate
if a business isn't a good corporate citizen. Some of
the more enlightened companies in the US understand
that.
But the notion has taken much greater hold in Europe,
where there's greater acceptance that business has to
play a positive role in society. Very few CEOs in Europe
say our primary objective is to maximize our return
to shareholders. You just don't hear that with the frequency
with which you hear it in the United States.
MCNews: This is a little off topic, but you may have
heard about the recent vote in a California community
to prohibit a Wal-Mart store from being built. Do you
think it's that kind of activism that will ultimately
force companies to be more responsible?
Hollender: Absolutely. It's very encouraging that
a community is aware of the unintended and less obvious
impacts Wal-Mart would have on it and looks beyond the
case Wal-Mart makes about why it should be allowed to
open a store.
MCNews: You mean like more jobs and lower prices?
Hollender: Right. That community is saying we
care about a broader range of issues that Wal-Mart is
not addressing and, based on that broader set of concerns,
we don't want that business in our community. I hope
that level of community involvement is going to happen
a lot more often, although I'm not sure I would bet
on it.
MCNews: There have been a number of similar votes
in other cities recently. Do you think there is an underlying
activism emerging--not just among expected activists,
but by everyday individuals?
Hollender: I guess you have to question if this
is an extension of the "not in my backyard"
phenomenon or something else. I think this is a little
different because it's a much more complex matter. It's
not about locating a nuclear reactor in your community,
which is a much simpler issue.
What I worry about is that, given all we know about
global warming and the impact that has on the environment--and
to a lesser extent health--we as a society keep buying
more and bigger cars. Unless we are provided financial
incentives not to do so, many of us don't close the
loop on doing what we know is the right thing to do.
And that trend worries me. How much information do we
as a society need before we change our behavior in response
to that information?
MCNews: Has the corporate social responsibility
movement grown in the last few years?
Hollender: It's substantially growing. Today
125 of the 250 world's largest companies publish corporate
social responsibility reports (CSRs); 2,500 companies
worldwide publish them and I expect that in the next
couple of months when we see how many 2003 reports are
published, we will see by far the highest number ever.
Now not all those reports are equally valuable.
MCNews: Aren't some of the reports window dressing?
Hollender: Absolutely. But whether you look at the
attendance at relevant conferences or the number of
publications, staying on top of what is happening in
the CSR world is almost a full-time job. There is just
so much happening.
And I think that one could easily argue that the economic
drivers that are playing a part in that are just not
going to go away. When you consider that 75% of the
average US company's value is represented by intangibles,
it is an absolute requirement for businesses to protect
their brands and their reputations since those intangibles
are their assets.
Corporate social responsibility is a critical component
of managing the risk related to your brand and your
reputation and your other intangible assets. It's
hard for me to see that those fundamental drivers are
going to do anything but grow in strength.
MCNews: Do you think companies that make destructive
products like tobacco or firearms can be socially responsible?
Hollender: That is a tough question. Even if
you look at the oil business, it's not easy. Corporate
social responsibility is linked to sustainability and
oil companies are extracting a nonrenewable resource.
You can argue that companies like BP are attempting
to change their businesses so that they will depend
on renewable rather than nonrenewable resources. How
long it will take them and if they will succeed are
unanswered questions.
I hesitate to say that any company is totally beyond
redemption because I'm not sure whether that perspective
is limited by creativity of thinking. When it comes
to a product like tobacco, I guess if there was some
way tobacco companies could reinvent their products
so people could smoke without any of the negative side
effects maybe they could be responsible companies.
Maybe if you eliminated the negative effects of tobacco
and you argued that the process of smoking relaxes people
and relieves stress without any of the negative side
effects, who knows? But companies in certain industries
have a far harder, if not an impossible, road. And so
they tend to focus on donations and philanthropy because
those are the easiest ways they can engage.
MCNews: It was just a few weeks ago that we marked
the fifteenth anniversary of the Exxon Valdez oil spill,
and that case is still tied up in court. If you were
sitting across the table from the CEO of Exxon Mobil,
what would you say?
Hollender: I put Exxon at the bottom of the
list of socially responsible oil companies because they
spent fifteen years fighting the assumption of responsibility.
And from every possible perspective, that's contrary
to the basic tenets of what responsible business is
about.
A question that comes up frequently from employees
is what can I do within my own company to help move
it in the right direction? I don't know how you can
deal with a company like Exxon without making the business
case for this being the wrong thing for them to do.
And it's a complicated business case because not all
Exxon's revenue comes from consumers.
I will drive out of my way to buy gas somewhere else.
But you'd really have to look deeply at Exxon's turnover
rate for employees relative to other oil companies of
its size. Are they actually experiencing a higher turnover
rate because people don't feel particularly good about
working there, and what's the cost associated with that?
The toughest challenge we face is the resilience of
a value system and a culture that is hard to penetrate
with the notion of responsible behavior. If the leadership
and the culture at a company are not open to having
the discussion, the only thing that can create change
is a disaster that's so large that they can't ignore
it.
MCNews: Just one more question--what are you reading
these days?
Hollender: Lynn Sharp Paine's book, Value
Shift, is absolutely on the top on my list.
Another of my favorites is Simon Zadek's book, Civil
Corporation.
Other than that, I'm reading books about poverty. Getting
back to the impact a company like Wal-Mart has on our
society, I've begun to think about the effect that the
minimum wage structure has on society and I'm trying
to figure out how we can hold companies accountable
for that impact.
MCNews: I really appreciate your time today.
You can find out more about Jeffrey Hollender, his
books and his company at www.seventhgeneration.com.
Was this useful? Send a quick e-mail
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On
the Other Hand: A Contrary View of Corporate Social
Responsibility
As you might guess, some disagree with
Jeffrey Hollender. The Economist's Matthew
Bishop suggests that corporate social responsibility
is not only a poor use of resources, but also just bad
for business.
Read
the article.
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Meet
the MasterMinds: Seth Godin Takes the Prize (and Gives
One Too)
 MCNews
welcomes back Seth Godin, author of Permission
Marketing, Unleashing the Ideavirus,
Survival Is Not Enough, and Purple
Cow. Godin is a contributing editor for Fast
Company magazine and a frequent speaker.
His new book is Free
Prize Inside: The Next Big Marketing Idea.
Godin makes the case for "soft innovation"
as the best way to grow a business, instead of relying
on big ads or big innovation. He says that anyone can
think up clever, useful, and small ideas to make a product
or service remarkable, that is, worth talking about.
He calls this kind of innovation a free prize because
it generates much more revenue than it costs to implement.
Finding and implementing a free prize doesn't involve
standard brainstorming, but "edgecraft" and
a champion. According to Godin, "Edgecraft is a
methodical and measurable process that allows individuals
and teams to inexorably identify the soft innovations
that live on the edges of what already exists."
Once identified, a soft innovation needs a champion,
or sponsor, to help convince others of the value of
the idea and show the path to implementing it.
We asked Godin how to apply the concepts of the free
prize, soft innovation and edgecraft to consulting.
* * * *
MCNews: You've said that advertising is no longer
an effective way to grow a business. Why do so many
businesses, including consulting firms, cling to advertising
as a means for growth?
Godin: Because that's what the boss used to
do. Because it used to work. Because it's an easy way
to take action without taking responsibility. Because
it's not measurable. Because it's fun.
MCNews: Many consulting industry pundits suggest
that the lack of the "next big idea" is stunting
the industry's growth. Do you agree, or would you suggest
looking elsewhere for growth?
Godin: I don't think big ideas are the answer.
I think ideas are cheap and pretty easy, actually. What's
difficult is finding someone to champion an idea. Simple
example: Why don't major consulting firms seize the
opportunity to work with gurus who have hot books and
hot ideas (like Jim Collins), and unleash their hundreds
or thousands of consultants to implement those ideas
for their clients? Because they're stuck. And because
the people of influence who could implement an idea
like that are too afraid or too stuck to champion it.
MCNews: Is there a distinction between a free prize
and a gimmick? Could you think of an example of a free
prize a management consultant might uncover and offer
to clients?
Godin: A gimmick is just a gimmick until people
start talking about it and demanding it. Then, like
frequent flyer miles at the airlines, it becomes a free
prize. The idea I mentioned in response to the previous
question is an example of one for consultants. Another
might be a consulting firm that works only for progressive
non-profits. This needs a lot more thought, of course.
MCNews: In the first sentence of the introduction
to your e-book, The Bull Market, you say, "I
actually don't think much of Consulting." Why do
you think most consultants fail to cause real change
to occur and what can a consultant do to address this
issue?
Godin: I don't think Consultants (with a capital
C) get hired because of the advice they give. I think
they get hired because it makes the hiring executive
look good. It also gives her a lever to help her implement
the changes she wants to have happen. Consulting (capital
C) is often about many feet on the street, detailed
spreadsheets, lots of "proof" and not an awful
lot of action. But if that's what the client wants,
it's hard to blame the consultant.
MCNews: You made the point that great ideas need
champions to make them happen. How can consultants foster
cultures that encourage champions, both in their own
organizations and those of their clients?
Godin: How do the big consulting firms decide
which consultants to promote? How do they decide on
splitting the profits with the partners? People who
are working their way up pay attention to stuff like
that. Until consulting firms put their money where their
mouth is, they shouldn't be surprised if their organizations
are astonishingly stuck and conservative--smart people,
all paralyzed, no one willing to take what feels like
a chance but is actually quite a safe strategy.
MCNews: Can you train people in what you call edgecraft?
What "edges" might, for example, a strategy
consultant look for?
Godin: Of course you can. It's not very hard.
It's about doing the difficult work of digging deep
and finding the next superlative, the way of being bold
and getting ever close to the edge of what your clients
want.
MCNews: What's on your personal reading list these
days?
Godin: Hmmm. Unstuck
by Keith Yamashita. The Skeptic magazine.
Find out more about Seth Godin, his books and services
at www.SethGodin.com.
You can read a previous MCNews interview with Godin
at http://www.managementconsultingnews.com/godin_interview.php.
* * * *
Godin's Free Prize: The Bull Market
MCNews readers can download Godin's free 500-page e-book,
The Bull Market, by clicking on the link
below. His new e-book is a collection of hundreds of
resources to help you shake things up, including freelancers,
agencies and consultants. You can download the book
at http://www.sethgodin.com/bull/download.asp.
Was this useful? Send a quick e-mail
with your thoughts.
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"Beauty
is Only Skin Deep": Does Your Firm Truly Embrace
Differentiation?, by Suzanne
Lowe
Most professional service firms pursue
some sort of differentiation. According to one of Expertise
Marketing's recent studies, 81% of professional service
firms reported they used differentiation as a marketing
approach in the previous three years.
In recent surveys, it appears that the
most-used differentiators were not necessarily the most
successful. Read
the Article
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Are You Really Different?
Take the Test
Most professional service firms try to
differentiate themselves, but few do so successfully,
according to Suzanne Lowe (see article above).
What about your firm? Are you making the right choices?
Take a quick diagnostic and find out. Visit Lowe's site
to complete the diagnostic.
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 Guerrilla
Marketing for Consultants: Sneak Preview
Jay Conrad Levinson, the father of Guerrilla
Marketing, has teamed with Michael McLaughlin, Editor
of MCNews, to develop the new book, Guerrilla
Marketing for Consultants. It's due out
in October 2004.
The book is an owner's manual for a consultant's career.
In it, you'll find strategies and tools for handling
every aspect of marketing a consulting practice--from
building market visibility to creating winning proposals
and pricing your services.
You'll also find unbeatable guerrilla strategies for
selling your services and creating profitable client
relationships once you've been hired.
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This Month in History
On June 1, 2002, the Czech Republic became the
first nation to prohibit "light
pollution." All outdoor light fixtures in the
country must be shielded to ensure light goes only in
the direction intended, and not above the horizontal.
Czech astronomers lobbied successfully for starry nights.
On June 26, 1498, the toothbrush
was invented in China.
On June 30, 1972, the first "leap
second" was added to the world's time in order
to keep the super-accurate atomic clocks in step with
the Earth's rotation. Since then, decisions to add or
subtract seconds have been made by the International
Earth Rotation Service in Paris.
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Coming
Attractions
Next month we'll talk with Tom Stevenson, author of
The
Relationship Advantage, about the ins and
outs of building client relationships that endure the
test of competition and time. Stevenson taught more
than 10,000 IBM employees the concepts we'll cover in
the interview.
Look for the next issue of MCNews on July 6, 2004.
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The
End Page
"Now this is not the end. It is not even the beginning
of the end. But it is, perhaps, the end of the beginning."
- Winston
Churchill
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Management Consulting News ISSN 1539-2481,
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Copyright © 2004 Management Consulting
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