What You Need to Know About True Corporate Responsibility And The Role of Trust 175

This article was written by Sam Ford for Change Creator Magazine.

Creating Sustainable Change

The business world is driven by frameworks. By concepts. By new ideas with pithy titles, whose core concepts can be stated in an executive summary. By metaphors.

The people who author them may make their living writing books, giving talks, and doing the consulting that surrounds it — to attempt to change the way people see their professional lives and see their concept become part of business parlance.

The greater business consulting industry that surrounds this infrastructure grabs onto some of these concepts and attempts to translate them into wider business practice. With case studies. With benchmarking. With trademarked names and proprietary methodologies. And “change agents” within organizations sign up to do the yeoman’s work of trying to adapt old systems to begin utilizing new ways of thinking.

These interventions can be important work. These frameworks may, in many cases, introduce useful ideas. But the business world loves a good metaphor so much that we’ll very quickly stretch it far past its usefulness, to the point it does more harm than good. And we love a good business phrase so much that we’ll quickly turn it into a buzzword.

Soon, it’s been taken far past the boundaries of its original meaning, and well-intentioned consultants and “change agents” risk finding themselves looking for nails for their hammers, or suddenly imagining everything is a hammer, or
imagining that everyone needs a hammer. (I think my metaphor just outlived its own usefulness.)

As a business consultant myself, I know how this goes. I risk contributing to the pollution. I might even profit from it in the short term. But how can concepts and metaphors have power without becoming over-utilized buzzwords? We must insist on, first, understanding the depth with which a concept adds to our meaning, and the degree of elasticity it has. And we must realize that every ecosystem is unique and that frameworks imported in won’t naturally fit wholesale.

Striking these balances is crucial for those striving to be meaningful “Change Creators.”

And one of the people who has most shaped my thinking on this — on seeing the power for change within capitalism to make it more responsible, to make it regenerative — is Carol Sanford.

Carol Sanford: “The Responsible Entrepreneur” | Talks at Google

True Corporate Responsibility

I first met Carol in 2010, in the most unexpected of places: the comments section of Fast Company. I’d been writing about why people in marketing, and in business leadership, were often conducting practices that were against their own long-term business interests, for the sake of short-term gain.

Soon, I learned about Carol’s history of doing deep, systemic consulting with businesses, ranging from Fortune 500 leadership to early-stage entrepreneurs. Her frameworks challenged accepted corporate lore and buzzwords. They demanded that people ponder how language and metaphors matter deeply and that the systems we use for understanding things shape (and distort) what’s possible. But they also dared say that it’s in the best interest of the capitalist to act and behave responsibly, not just responsibly and socially conscious as a fad or as a byproduct.

She didn’t just come armed with theories. She was prepared to demonstrate how it had worked when it was really given a try. When it wasn’t a surface-level retrofit to the system that already exists. When it wasn’t just adopted wholesale from the outside. And when it was holistic, and past this quarter, in its way of
thinking.

If you want to get a glimpse at how Carol thinks, listen to her conversation with Adam Force here at Change Creator from late last year.

In The Responsible Business, Carol’s 2011 book (for which — full disclosure — I wrote a blurb for the back cover), she lays out a premise she calls the pentad: that truly responsible businesses are responsible to their customers, their co-creators, the earth, the communities they’re part of, and their shareholders…but, crucially, in that order.

It’s been a way of thinking that has guided my work ever since, in part because it provides a framing for something that seems like we should have known all along. Perhaps it’s, as Robert Penn Warren once said of Dixon Wecter’s

The Hero in America, “This, however, is what we always say about even—about especially—the most original and important books after they have appeared. Once written, they always seem so obvious and inevitable.”

Since that time, Carol has built on that thinking in her argument for regenerative organizations. This approach is focused on how living systems work, how they regenerate themselves in an evolutionary way that keeps them viable — and how that sort of logic can help shape organizational design and growth.

As Carol says in her interview with Adam, thinking in a socially connected and regenerative way is partially about finding our way back to the core of what comes naturally to our species, and divesting ourselves from toxic practices that have gotten in our way.

It’s also about helping organizations engage in long-term thinking. Carol’s work has focused on sustainability — not only in the environmental sense, but in the organizational sense. How do you keep companies fixed on what makes the most long-term sense, on what’s in the best interests of the organization beyond this quarter or fiscal year?

This takes us back to the pentad, and the argument that working toward long-term goals is ultimately in the best interests of shareholders, or at least shareholders that truly are invested in your company. Carol puts strong emphasis that this is about a core logic that must be adopted uniquely for every organization, not produced at mass scale. This is about enacting true change.

Negative ROI

With that in mind, and inspired heavily by Carol’s work, here’s the change that I’m spending my time advocating for these days. When organizations think about the strategies for communication and for engagement with the various
stakeholders about whom they care, how do they consider negative ROI?

When it is used, the phrase “negative ROI” typically refers literally to the fact that a project lost money. But I’m adapting the phrase to emphasize another, even more fundamental problem with how organizations typically think about their return on investment.

How do organizations account for whether/how their investment might have had negative consequences that are hard to see, and how do those negative effects (to reputation and the relationship to key stakeholders) account
in the final equation of whether an initiative was successful?

If your measures of success don’t account for the potential negative effects of your actions, then you may count as a success an initiative which has significantly damaged your organization. If you don’t count negative ROI, then any thinking about long-term reputation might seem like a cost center in the equation you use to track the success of a particular initiative.

Consider this example, for instance, from the publishing industry. For commercial publishers, ROI typically will ultimately translate back to advertising dollars earned. An investment in stories, and the marketing of those stories, drive audience acquisition. Those audiences are sorted, counted, and sold to advertisers. The ROI will look at how much a story, or set of stories, and their promotion cost, relative to how much revenue they brought in.

Let’s say a particular story drove a large number of clicks/visits and thus brought in a significant amount of advertising revenue, relative to what the piece cost. But, what if that successful story drew much of its audience because of a clickbait headline? What if the predominant image promoting the article was built around a cultural stereotype heavily offensive to some audience members? What if the article actually had little to do with how it was positioned on social media?

In a “classic” calculation of ROI, that wouldn’t matter. With “negative ROI” calculated, too, however, organizations would have to ponder the potential damage from the number of people who were annoyed by the clickbait headline, the number of shares of the article that were from people who were outraged by the offensive stereotype, or the number of people who vowed never too be fooled again when they realized the article they were led to had little to do with the headline they clicked in their Facebook feed.

Here’s another example, built on some research I did a few years back with Peppercomm and The Economist Group. In our survey of business executives’ opinions about content they received from companies, 71 percent said they didn’t like content they received from B2B brands because it “seemed more like a sales pitch than valuable information.” Meanwhile, 70 percent of B2B marketers we surveyed said that they measured the success of their content marketing by tracking it back to “calls from customers and prospects.” In a classic calculation of ROI, the cost of the content is weighed against the new business which could be directly tied back to it. In that case, it’s no wonder that a company might include a strong sales pitch in their content, if direct sales is how ROI would be calculated.

Conversely, a calculation that also includes “negative ROI” would have to account for, or at least acknowledge, whether some audiences were turned off by the content. The accretion and erosion of trust.

In some cases, of course, businesses are not so worried about negative ROI. A partisan news site might be totally fine with turning off audiences outside the circle of people they’re trying to reach. That Nigerian prince is okay if 99.5 percent of their audience knows they are a scam artist, as long as they find enough people to dupe in their email blast; he’s not worried about his long-term reputation.

Negative ROI is also difficult for many organizations to think about because the effects cannot be easily quantified. It’s simple to calculate money spent. It’s simple to calculate money made. If you can draw a direct line between
the two, or even imagine a direct line between the two, then the math can be done quickly. But, just because the math is easy, it doesn’t mean your calculation is accurate.

However, the biggest challenge for calculating for negative ROI is that the effects are seldom immediate. Rather, we have to think about reputation, and trust, in terms of a gradual accretion or erosion.

Brand trust, and reputation is earned slowly. Customers don’t typically develop immediate devotion. The consistency of your product or service, the resonance your marketing and communications might have over time, and the quality of your customer’s interactions with you all ultimately shape the trust you have in a brand. Each new experience with your brand is a chance to accrue a bit more trust and loyalty.

A startup is well aware of how much work it takes to build a following. As they build up those layers of trust, though, it’s easy to quit focusing on the accretion process so closely. Brands take loyal customers for granted. They frequently focus more on the continued acquisition and less on maintenance. And, thus, it’s easy to lose sight of the fact that every interaction is also a potential occasion for eroding some of that trust accrued.

One of the main reasons erosion is hard to notice is because its effects are seldom seen over the course of one business quarter. Sure, there’s occasionally a major crisis that may cause sales or stock price to plummet. But
the erosion process is typically much more gradual than that. It would take a longitudinal focus to see these trends. And companies seldom have the patience for that.

Actionable Steps and Takeaways: Four Tips for Tracking Sustainable Change and True Responsibility

If you are fortunate enough to build or work for an organization that has accrued enough trust and positive reputation to be successful, consider yourself a steward of that reputation. And, if you’re building a new organization from the ground up, how do you build it in a way that adheres to the concept of building a regenerative business, and so that you are making your decisions in a way that prioritizes your various stakeholders appropriately?

1. Think as Teams, Not Individuals. Humans Are Social Creatures.

Organizations are comprised of collaborative relationships, both within the company and around the company. As you build and maintain your logic and metrics, and your plans for growth, do so in a way that looks at the collaborative potential for your team, rather than individual goals.

2. Keep Your Priorities Straight.

Carol Sanford’s pentad is immensely useful in its stability. Are you prioritizing all your stakeholders? And are you
keeping those priorities in the right order? An environmentally friendly product that doesn’t solve customers’ problems won’t be viable in the market. A decision for the immediate benefit of your shareholders that has tremendous negative impact on your employees and co-creators will adversely affect shareholders who have a long-term commitment to the company.

3. Find Ways to Keep Track of Negative ROI.

Even if it can’t be qualified, find ways to include a check on negative ROI for your company investments.
Despite the allure of its simplicity, the equation is never as simple as money spent versus money earned.

4. Keep Stock of Your Accrual of Trust.

Build methods to check in on your reputational health on a regular basis. Taking your reputation for granted
will bring you long-term pain, even if you don’t feel it immediately.

 

Previous ArticleNext Article
Hello world! I'm a business professional and entrepreneur with more than 15 years of experience. Now I'm currently the founder of Change Creator, a digital media network and premier magazine app that provides business advice to Change Creators building businesses for social good. Start a free trial to Change Creator Magazine

Leave a Reply

Your email address will not be published.