Innovation + Responsibility

The December issue of the Harvard Business Review (you can access the article by watching a short ad) features an article co-authored by Michael Porter, of Porter's Five Forces fame (but can I remember the five forces from my core strategy class during my first year of business school? ) and one of the godfathers of corporate strategy. After founding the Monitor Group way back in the day, Porter has gone on to establish the Foundation Strategy Group - a strategy consulting firm focused in the area of corporate social responsibility. Yes, there are lots of these firms. But not one of them has the core business credibility of a Michael Porter. But I digress.

Porter's article (the other co-author is Mark Kramer, managing director of the Foundation Strategy Group) is quite compelling and offers a lot to think about in terms of corporate social responsibility and its connection (or lack thereof) to business strategy.

I found myself nodding my head in strong agreement as I read the article, often wondering if that makes me as brilliant as Michael Porter himself, or (more likely) if that just means that my experience and education in the subject of CSR happen to have led me to the same place. Either way, I was thrilled to see that a new kind of CSR - the kind I hope to pursue in this job here at Sun - was prominently featured in a leading business thought publication in an article by a business strategy demigod.

From my point of view, the most important statement in the whole article is the following:

"The essential test that should guide CSR is not whether a cause is worthy but whether it presents an opportunity to create shared value - that is, a meaningful benefit for society that is also valuable to the business."

The problem with that statement, however, is that it is likely to elicit the same reaction, "Duh!" from anyone who has spent time thinking about CSR. Of course that is what should guide CSR; But how?

Much to my surprise - and pleasure - the article goes on to offer a suggested strategic approach, complete with an easily understood framework (a requirement if we ever want this to be taught in business schools!), and a tool of sorts that can be used to help one map a company's social impact throughout the value chain.

Now, there are some things in this suggested approach with which I do not agree. All of a sudden I am feeling shy about disagreeing, though, because it is Michael Porter, after all. But it is an important distinction that I think is worth being made. And I disagree, with some qualifications, which I will explain in a moment.

Porter's approach suggests that strategic CSR is achieved by focusing on two main things:

"1) Transform value chain activities to benefit society while reinforcing strategy; 2)Strategic philanthropy that leverages capabilities to improve salient areas of competitive context"

I certainly agree with the first notion, which is, in my opinion, at the heart of any effective corporate social responsibility strategy. The second point, however, is uncomfortable for me. Among CSR professionals, I know I am outside of the mainstream with this point of view. And I admit that I am open to having my view challenged and, ultimately, changed. But so far I have not heard or seen anything that compels me to do so.

So, why my disagreement?

I just cannot bring myself to see corporate philanthropy as a core component of corporate social responsibility. This is the one area where I sort of agree with CSR naysayers who claim to be criticizing CSR when in fact they are criticizing corporate philanthropy. Don't get me wrong, I am an advocate of corporate philanthropy, in particular strategic philanthropy that "leverages capabilitiies." But I also believe strongly that philanthropy is not a corporate responsibility any more than philanthropy is a personal responsibility. Yes, it is the right thing to do. And yes, it can be good for your business. But at the end of the day, you are giving away shareholder money to charity. It may be "the right thing to do" but I am not convinced it is a responsibility.

To me, the difference between corporate responsibility and philanthropy is this: corporate responsibility is about how you make your money; philanthropy is about what you do with it. They are both, in my opinion, important. And in many ways, in today's corporate environment, philanthropy is a license-to-operate kind of issue. But I have yet to hear a compelling argument that puts philanthropy at the center of corporate responsibility.

I would love to hear opposing viewpoints, though, because I sense I am way outside the norm on this. And I am open to seeing it differently, if only because this is the direction things seem to be moving in the corporate sector generally.

As for the first component in Porter's suggested strategic approach, I truly believe that this is how Sun is viewing CSR. And while I would like to think I have something to do with that, I actually think this thinking was there way before I arrived just three months ago.

The best proof is that Sun started a formal CSR program at a time when our business is still in the red. For many companies, when the going gets tough, the CSR gets going. By initiating a formal program now, Sun is signalling to the world (or at least to anyone who is paying attention) that we get - fundamentally - that CSR can and will be good for our long-term competitive positioning.

Pretty cool place to work, eh?