2015-10-07 Speech at LvBS – Opening of Executive MBA and
MS in Technology Management
1) What is the meaning of Social Responsibility? And how does it apply to you and your business?
2) Most importantly: Is there a contradiction between social responsibility and profitability?3) Traditionally social responsibility meant extra costs or less efficiency.
a) So social responsibility was considered an expense.
b) Therefore it had to be justified.
4) First let’s review how this traditional approach to social responsibility works in today’s societal context.
5) Then I am going to postulate an alternative that you could consider for yourself – not as something that you SHOULD adopt.
6) But rather as an option available to you, help make your own social responsibility more sustainable in your business.
2. Definitions of Social Responsibility
7) First let’s consider different kinds of social responsibility:
8) Corporate Social responsibility in external action:
a) Supporting a charity
b) Supporting community causes
9) Social Responsibility in Products & Services
a) Producing a product or service that creates less waste as a by-product
b) Using materials and supplies created in a manner that causes less damage to the environment, and is created through fair supply techniques
c) Producing a service that is in some way charitable in its nature.
10) Social Responsibility as an Internal Process:
a) treating your employees fairly and graciously
b) treating your suppliers fairly
c) utilizing manufacturing techniques that are less wasteful, and less harmful to the environment
3. The Carrot and the Stick
11) Second let’s consider the traditional mechanism that motivates acting in a socially responsible manner – in any one of those types.
12) The Carrot and the Stick imagine describes the traditional way to think about Social Responsibility in the business context.
13) In this case the “carrot” represents positive motivation to expend resources on acting in a social responsible manner:
a) Attracting customers that feel it is important to buy green products
b) Attracting customers that want to support businesses that behave in a manner that is socially responsible
c) Gaining entry into markets where ecological regulations and regulations promoting fair practices are more prevalent and demanding
14) The “stick” represents motivation to avoid negative consequences:
a) Avoiding penalties and fees for ecological transgression
b) Avoiding costs for environment clean-up, if something goes wrong
c) Avoiding costs for damages caused to customers and others from use of your products and services
d) Avoiding bad publicity over acting in a manner that is not consistent with social responsibility – and which invariably drives away customers.
4. Today’s Societal Context
15) Over the past two decades, and especially over the past decade society has become increasingly conscious of social responsibility:
a) Ecological and green movements
b) Concern with Global warming
c) Social justice movements: think of Occupy Wall Street.
16) Social media has made bad public over lack of socially responsible behaviour particularly potent these days.
17) Governments are reflecting those societal concerns with more regulations and higher penalties for transgression.
18) Ukrainian businesses looking to enter European markets in a big way are starting to realize that they too need to accelerate their quotient of social responsibility, even if laws in Ukraine have not quite caught up to the rest of Europe.
19) Moreover, political events in Ukraine have accelerated societal focus on social responsibility. The Maydan and the war in Donbas have galvanized society to self-organize and act for the good of someone else.
20) During my stay in Kyiv I saw the keen interest of Ukraine’s new generation of entrepreneurs:
a) Climate Change Camp III – put on by Zavtra.UA, the Pinchuk Foundation and Coca Cola foundation.
b) At the Hacklab I visited Ecoisme – start-up company that has invented a device to measure electrical use of all home appliances through frequency recognition
c) At the IHUB incubator, I interviewed a number of startup owners.
21) It was interesting to hear these new entrepreneurs talk about their sense of obligation – that businesses ought to act in a socially responsible manner to help improve Ukraine’s society, and ecological footprint.
5. Marketing of Social Responsibility
22) Conducting business in a socially responsible manner, and making sure to be seen for doing so has become the latest marketing tool – the latest promotion to attract customers who want to support social responsibility.
23) Customers want to think that they too did something good for society, by purchasing products and services that are “green” and that come from businesses that are socially responsible.
24) Several recent studies have proved categorically that consumers are become much more interested in social responsibility and are using their buying power to support businesses that act proactively.
a) Crowding funding is a great example of this movement.
25) Therefore, both the carrot and the stick are become more pronounced in motivating businesses to act in accordance with social responsibility.
26) And from that perspective social responsibility can be considered to be a business product in itself. Since society and consumers are demanding it, businesses are prepared to deliver social responsibility as a good or service.
27) Ironically, this actually takes the altruism and charitable aspect out of the equation of social responsibility for businesses.
28) In other words, instead of acting in a socially responsible manner to do good for others, businesses can and will justify acting in a socially responsible manner because it is good business to do so.
29) That approach may work for you.
6. Alternative View of Social Responsibility
30) But let me offer for your consideration an alternative view – an alternative way to think about acting in a socially responsible manner in your own businesses – one that does not rely on the carrot and stick.
31) Bear in mind the following: if I was going to say that you SHOULD adopt this alternate view, then I would be preaching. But I’m not a preacher, and I don’t like telling anyone what they SHOULD do out of a sense of obligation.
32) Also, if I was going to say that most businesses will be motivated by this alternative way – then I would be espousing a utopia. But I don’t believe in utopias.
33) So in offering this alternative view, I am simply commending for your consideration a different and additional way to justify for yourself why, it is in your business interest, and in your PERSONAL interest to act in a socially responsible manner.
34) This is the first time that I’m offering this view – so you will be the first group to give me feedback on whether you find it to be appealing.
7. Personal Values That Drive Social Responsibility
35) My thesis is that acting in a socially responsible manner is intrinsically good for you personally, and therefore it is intrinsically good for your business.
36) Why? Because it you are probably like most people that I know – in that your personal values include:
37) Or at the very least, if you do not currently possess these personal traits, most of you probably strive to attain those personal values.
38) It is my opinion, that as a person, and as a business owner, and as an entrepreneur, and as a manager in another business or government, your effectiveness increases when you can be authentic, and act in a manner that is closely consistent with your personal values.
39) And I say that it is self-evident that people acting consistently with the personal values of integrity, generosity, kindness and thoughtfulness will necessarily be acting in a socially responsible manner.
8. Religious Analogy for Social Responsibility
40) Let me explain with the help of an analogy from a religious context. Many of us are members of a religion.
a) Each religion portrays an understanding of good behavior.
b) For many believers, the motivation for good behavior is the belief in a reward after passing from this world: heaven.
c) And equally the fear of penalty after death for inappropriate behaviour.
41) These are powerful motivating factors – and these factors have worked wonderfully since the advent of human societies, communities and religion.
42) You will recognize in these mechanisms the carrot and the stick:
a) The promise of heaven is the carrot
b) The threat of eternal damnation is the stick
43) Most people don’t need any other motivation to do good, or to live by the definitions of good behaviour handed to them by their religious leaders.
44) But my religious path led me to a different place and a different understanding.
45) I’d like to think that some of us can be motivated to do good for the intrinsic value of doing good, and helping others – totally irrespective of an other-worldly reward or penalty.
46) I don’t need the promise of heaven and the threat of hell to sacrifice my luxury or comfort to do good for others, and to act in a manner that is honest, kind, generous, and thoughtful.
47) In fact, I get much more intrinsic pleasure now, in the present, from doing good for the intrinsic sake of it, than for the promise of a future reward in heaven.
9. Intrinsic Social Responsibility
48) This intrinsic value applies equally well to social responsibility in the conduct of business.
49) As I said earlier, I believe that a person will be more effective in whatever they do when they act in a manner that is closely consistent with their personal values.
50) Why? Because I believe that authenticity, – being true to your personal values, makes you more effective in anything you do.
51) I do not yet have empirical evidence for this proposition and belief.
52) But recently I have been reading interviews of successful Ukrainians, in a project called The Ukrainians . org.
a) That project asked many interesting Ukrainians how they define success and how they understand responsibility.
b) It was very revealing that most of the people interviewed defined both success and responsibility in terms of acting, living and achieving goals while being consistent with one’s personal values.
i) “Успіх Це той момент, в який я відчуватиму, що знайшов внутрішню гармонію, коли добре почуватимусь щодня впродовж енної кількості днів.” Ярослав Ажнюк
ii) “Успіх — це баланс того, що усередині кожного з нас, чогось внутрішнього, духовного і зовнішнього, того, що ти віддаєш світові. Знаєш, це просто чудово, коли ти чиниш так, як підказує тобі серце, підказує совість, своє внутрішнє «я». Ірина Коваль
53) I’m persuaded. So in my opinion if you are like most people, and you therefore espouse the personal values of integrity, generosity, kindness and thoughtfulness, and if you conduct your business in a manner that is consistent with those values, then you will by definition be acting in a socially responsible manner.
54) The beauty of this approach is that you will not need to seek justification in an economic sense.
55) Moreover, your motivation to act in a socially responsible manner will be stronger because it will be more intrinsic.
56) Furthermore, the expression of your social responsibility will be broader.
a) In fact, it will not require specific definition and framing.
b) Your social responsibility will permeate everything you do – rather than be a specific action item in your marketing plan, or your risk mitigation plan.
10. Why is Authenticity More Effective?
57) It is an interesting question: why a person becomes more effective when they are authentic, and when they act in a manner that is consistent with their personal values.
58) I don’t know the answer – although I can postulate a possible explanation, or the beginnings of an explanation.
59) I think the first reason is that authenticity frees you from any contradiction and conflicts of consciousness. So everything you do in your business can be done with full unabated effort.
60) The second reason is that authenticity opens you to more creativity – because you are not burdened by the checks-and-balances, and the trade-offs of someone else’s values.
61) In my view, creativity is at the heart of business success and entrepreneurship. Creativity in turn appears when you are centered, grounded and in harmony with your personal values. Once again, just read the interviews with famous artists to see that is the case.
11. Logical Connection of Social Responsibility to Business Success
62) So there is a logical connection between social responsibility and success in business, if you believe the following propositions:
a) creativity leads to success in business,
b) creativity and authenticity are in a symbiotic relationship with each other
63) This is the logical connection:
a) Social responsibility arises from acting with integrity, kindness, generosity and thoughtfulness.
b) Acting according to those personal values, makes a person authentic.
c) Authenticity promotes a person’s creativity.
d) Creativity promotes business success.
64) The sequence of the first two logical statements does not matter – cause or effect.
65) But IF my postulation is correct, and IF you too believe in these principles, then it will be in your business interest to act in a socially responsible manner – entirely irrespective of the carrot and stick.
66) This is not meant as a utopia – because I realize that most businesses and entrepreneurs will still require the carrot and the stick to motivate them to act in a social responsible manner.
67) But you don’t need to settle for that. You now have a new and alternate way to motivate yourself to conduct your business in a socially responsible manner.
12. How to Get in Touch with your Personal Values
68) One final thought: How do you get in touch with your personal values? There may be more than the four that I pointed out.
69) My favourite exercise is one that I learned from Victor Frankl – a holocaust survivor. I adapted his thought experiment slightly, and I call it the Regrets Exercise. ….
70) Jump ahead, and imagine yourself 85 years old – looking back on your life.
a) What do I regret doing?
b) What do I regret not doing?
c) What do I not regret doing?
d) What do I not regret not doing?
71) Your answers will inform you of your personal values.
72) Now travel back in time to the present day – and give yourself the 2nd opportunity to live according to your answers.
73) If you can’t imagine yourself as an 85-year-old person, don’t worry. There are plenty of 85-years around that you can talk to: people in your family, friends, and others who you esteem and respect. Talk to them.
a) At the very least you will give them the great gift, pleasure and favour that someone young wants to listen to them, and cares for their life’s experiences.
b) At the very best you will re-generate your connection with your parents and grandparents.
74) So is this utopia? No – because we are only talking about you – not everyone else. I commend that you consider adopting this new approach to social responsibility.