Conscious Capitalism

Systems Citizenship: The Leadership Mandate for This Millennium

Critical Summary:

Systems Citizenship: The Leadership Mandate for This Millennium

Beginning with the comment that “for all of human history, societies that endured appreciated that their economies could be no healthier than the larger natural and societal systems upon which they depended”, Peter Senge reminded us of how unprecedented our interdependence has become. We belong to one inescapable network of mutuality. We are tied, indeed, in a single fabric of destiny on Planet Earth. “Policies and actions that attempt to tear a nation from this cloth will inevitably fail”.

Senge throughout this article calls for the change to the globalization, which first need us to wake up------ waking up to the fact that industrial growth as we have known it is now encountering severe social and environmental limits, whose costs are getting harder and harder to ignore. He cited example of the hardship of stabilizing C02 in the atmosphere, which requires cuts in emissions of 75 percent or more, far beyond what the Kyoto protocols or any other current plan call for and the simple fact that supporting the average American's lifestyle cause over one ton of waste to be generated per person per day.

As these costs become recognized and their sources understood, they are starting to be allocated back to the businesses and industries where they originate. These regulations are part of historic steps in the direction of making "extended producer responsibility" the norm for industry. Similarly, the idea of "circular economy", an economy that works like natural systems, where there is no "waste" and all materials move in continuing cycles of reuse, was raised by President Hu of China. “These costs are growing and they can no longer be regarded as somebody else's problems at some indefinite time in the future. For more and more the future is now.”

The business stakeholders, traditionally conservative insurers, consumers, and investors at leading the charge in coping with privatized environmental costs. “All businesses sit within much larger commercial systems, and it is these systems that must change, not just individual company policies and practices”, Senge emphasized, large-scale change must be taken place in areas including supply chain, regulatory and consumer awareness.

Despite little public recognition in rich northern countries, the global food system is arguably the greatest generator of poverty, and consequently social and political instability, in the world today. Prices for agricultural commodities have fallen 30 percent to 90 percent over the past 50 years, making cheap food readily accessible for the rich northern societies and simultaneously making living incomes increasingly inaccessible in poorer food-producing countries.

Imagine going to the grocery store and seeing two bins of green beans, one 30 percent more expensive than the other. Atop each bin is a picture showing where the money goes in each supply chain, along with an assessment (verified by an independent body) of the extent to which each provides a living income to all the players, including the farmers. Which would you purchase?

Frances Hesselbein asked Senge a critical question:"are the basic fundamentals for sound leadership the same and we are just responding to a different world, or are the fundamentals shifting?" His response is an unequivocal "yes”, the fundamental of which starts with a set of deep capacities which few in leadership positions today could claim to have developed: “systems intelligence, building partnership across boundaries, and openness of mind, heart, and will”.

Senge stressed that to develop such capacities requires a lifelong commitment to grow as a human being in ways not well understood in contemporary culture. Yet in other ways these foundations for leadership have been understood for a very long time. Unfortunately, this ancient knowledge has been largely lost in the modern era.

He illustrated the three capacities, firstly the systems intelligence. "The inability of leaders to see the systems and patterns of interdependency within and surrounding our organizations threatens our future," says Ford's CIO and head of strategy, Marv Adams. "Many big problems that could be solved are sitting there unsolved because of this failure." Senge then proposed two vital systems-thinking skills: seeing patterns of interdependency and seeing into the future. Once people start to see systemic patterns and understand the forces driving a system, they also start to see where the system is headed if nothing changes.  “The inability or unwillingness to see where we are headed is a massive failure of leadership foresight.”

In reference to building Partnerships with "the other", Senge cited from what Edgar Schein says "organizations are coercive systems," so that "doing something sustainable will require bringing parties together that normally do not cooperate. Inspiringly as we can see from the long collaborative work in a process that fostered deep reflection and candor before participants, participants in the Food Lab found themselves developing real connections, trust, and respect for one another, gradually recognizing that their strength as a team came from their differences.

Last but not least, Senge’s definition of openness to me sounds more like deep humility. He calls for a humble heart, “open to not having all the answers” for leaders who can build partnerships for seeing larger systems”. The criterion by which they must be judged is usefulness, not absolute accuracy. This means that effective leaders must cultivate open-mindedness in order to challenge continually their own favored views and to learn how to embrace multiple points of view in the service of building shared understanding and commitment.

This opening has been described by countless poets and mystics--indeed it is one of the oldest and most universal aspects of diverse spiritual traditions. It is what George Bernard Shaw called, "The true joy in life, the being used for a purpose you regard as a mighty one." Or as one of the Food Lab team members said, "We had come to a profound place of connection, with one another and with what we are here to do."

Speaking in ways like this, as Senge himself recalls, may seem romantic for today's times, but the subtle developmental processes behind these three openings have been understood for a very long while--and the loss of them may be a major reason we now struggle. In the end, he summarized the essence: “if we regard the human as a great mystery, if we understand humanness as being connected to the universe in ways that we can barely imagine, if we believe that the journey to discover and actualize who we actually are is the journey of our lifetimes, then there may be some chance that the leadership required for this new millennium will come forward”.

Qinyi(Isabelle) Ren

 

 

 

 

 

The Leader's Challenge: Installation or Realization

This is a very interesting article written by Stephen Conner showing us the stages of corporate change initiatives and pointing out where and why most of the initiatives fail.  One aspect of this essay that really caught my attention is that the descriptions, stages and categories that Conner describes are appropriate not only for describing business decisions and changes but also can be easily used to analyze any change process. 

 

Conner opens his essay by explaining the major misconception that many corporations fact when implementing change; they “confuse installation of their projects with the realization of their intent”.  He states that “all too often, important initiatives are properly installed but the returns expected from the investments made never seems to actually take form”.  We can easily see how this “poor application” and lack of follow though and monitoring could potentially be very damaging both monetarily and culturally for a corporation.  Conner allocates change initiatives to that “fail” are the ones that are “only partially implemented” or the ones that are “never really used as intended”.  The major reasons that Conner points to for these categories of “failure” are; “lack of understanding of the true intent and scope of the effort, mixed signals from management about its importance, resistance from those being affected, competition for time and attention from too many other changes, and so on”. 

 

Conner does a wonderful job of expressing the importance of using both project management and change management to allow change initiatives to realize their full and intended potential.  Conner points out that “project management alone does not adequately address the human dynamics of change which will ultimately result in installation – type only outcomes.” Conner continues that his paper will focus on change management, not because it is more important but because it is more neglected.”

 

All of the above scenarios describe situations that Conner proposes are only “installed”.  These types of changes are pretty obvious to recognize for anyone with some experience on the subject matter at hand.  The first example that comes to mind is our countries present situation regarding the wars in both Iraq and Afghanistan.  We announced that we will be sending over approximately 30,000 more troops to Afghanistan but we have not really addressed the “human landscape” of our initiative.  We do not have a clear purpose on “why” we are sending more troops overseas to fight.  We have very good “strategies” on how to “deploy” our forces but we have done this several times in our recent history and still seem to be missing the point that we have not figured out “how” to implement out plans “in such a way that they have their real intended impact.”  We seem to have fallen victim to all of the points that Conner associates with “poor application” and impending failure. 

 

In his paper Conner does a good job of explaining the importance of the “human landscape” and how important it is when initiating change.  He explains the “without people, meaningful integration of the various inert components wouldn’t exist: A procedure could stand alone, unaffected by a report showing declining quality, which would be completely detached from employed performance ratings, which would be unrelated to the new IT system, which would be sheltered from any influence by the recent merger.  It is because there is a human quality to these landscapes that interdependencies are possible.”  Conner is pointing out the fact that if all aspects, “the total system” that is affected by the change initiative in question is not taken into full consideration, then the initiative is only “partially installed” and will not produce the intended results.  In our current situation overseas, from a “concerned citizen’s perspective”, we do not fully understand or have the support required to succeed in this endeavor.

 

Connor’s paper goes on to explain the “executive’s moment of truth”, the point in time when after implementing the “right course of action” it is realized whether or not the intended outcome has been realized. 

 

The four possible outcomes that may be present:

 

Early Termination – This is explained as when everything looks like it is a “GO”, all budgets and agreements are in place but prior to any “official” announcements take place, everything is discontinued.

 

Meltdown- “A project is announced and engaged, but at some point during implementation, it is discontinued with a complete withdrawal of resources and activity. Meltdowns are visible for all to see, and the economic and political prices they incur are so costly they are generally avoided if at all possible”.  It is easy to see how situation could lead to “escalating commitment.”

 

Installation- “When change projects are first introduced into a work setting, they are announced, set up, assembled, and/or inaugurated, but the ultimate intent has not been achieved.  Conner explains that with installation comes a two edged sword, one carried the potential for furthering the primary purpose of the intended change while the other possible outcome is that installation could prevent the change from ever truly taking form.

 

    Beneficial Installation – Process where the actual “physical” installation of the change process.

 

    Dysfunctional Installation – “Installation becomes dysfunctional when it becomes an end state and not a phase in the implementation process”.

 

Realization – “This kind of outcomes takes place when the key purpose for the entire initiative is actually achieved.  Conner states that “realizing change requires fulfilling the “promise” made to shareholders”.

 

To briefly explore Conner examples of why “organizations that do no more than install major change almost never create the support and acceptance needed to produce the hoped for results.”  Through listening to the last Presidential Address and all of the press coverage and interviews following the, it is obvious that enough support for this military “surge” is not in place for it to be successful in the long term. 

 

There is a lack of understanding in the public over exactly why we are chasing terrorist in there own back yard while both the death toll of our soldiers and the cost of the operation are at unacceptable levels and increasing. 

 

There is no defined objective that has been put out by the administration; there is no goal and no stated purpose (that is achievable through the current and proposed actions).  The administration is confused.  The administration is being bombarded with semi support and total opposition at the same time regarding the importance of this “surge”.  There is resistance in the ranks of the military, the military families and the public at large regarding the increase in troops and both wars in general.  The administration is also under extreme pressure over our current financial situation in this country and this constant struggle over two enormous “changes” and the countless other items they are dealing with contributes to the difficulty of their decisions.

 

The President of the United States has and is facing the “Ultimate Leader’s Challenge”.  The administration is not making a very good decision with the announcement of sending the 30,000 additional troops to Afghanistan while at the same time divulging a timeline to exit the theater.  This senario fits the definition of “installation” that Conner presents.  Although it requires the final outcome to say whether or not the espoused goals (still confused on what they are) are realized, Obama has made a “promise” to the only stakeholders that should matter to him, The American People.  Of the four key elements to the human landscape readiness that Connor explains, although arguably, the Administration has missed the mark on all four. 

 

We will now take a brief look at how our current political situation regarding Afghanistan fits in with Conner’s “four key elements to human landscape readiness”;

 

Sponsors: The military – with out having complete support of the Commanding Generals to begin with, Obama undermined any support that he had by stating that the troops would be deployed for 18 months.  To properly prepare for this type of deployment is takes approximately 12 months and that is if there are enough of the appropriate recourses (which there are not).

 

Target:  Terrorist will not be influenced by this “surge”; they will take an 18 month vacation in their caves and return to thier reign of terror as soon as we demobilize.

 

Culture:  The difference in the cultures involved are to large to address here.

 

Capacity:  30,000 troops (ground) deployed to this theater is not enough power to accomplish the undeclared mission.  This really leaves the impression that this effort will most likely end in either a “meltdown or installation”.

 

We can only hope than when Obama faces his “Moment of Truth” that the United States has not taken any more casualties.

 

Dale Thistle

How to be an Effective Sponsor of Major Organizational Change

by Daryl Conner

The article provides a cookbook approach on how to lead effective change in an organization. The article begins by describing the change process and identifies the key approaches needed to effectively affect change.

The first section describes the pitfalls of doing change badly. In fact, it’s clear from the text that a badly executed change can result in far worse consequences than not trying the change in the first place. Furthermore, leaders identified with failed change related projects are diminished and are often rendered ineffective in all future endeavors.

The first step in effectively accomplishing change is identifying and clearly communicating the main problem that needs to be remedied. The decision matrix describes changes and the decision making process that needs to be applied to identify the correct change. The best scenario in which the necessary change was handle effectively. The worst outcome is achieved when the wrong change is implemented. Another bad outcome is when a leader, upon identifying a needed change, embark on the change without having the necessary skills or resource to achieve desired results. It is important to realize that the change being discussed is a major change –something that cannot be achieved with small, incremental improvements. Therefore the changes described are of the magnitude where the organization’s future is profoundly affected by the outcome of the change process.

While all agrees that change is good and often imperative, many barriers to change exist in any organization. The natural state of things is to defend the status quo. It is important for the change agent to illustrate the benefits of the change, but more importantly the, the change agent must show why the status quo will no longer suffice. The status quo must be shown to be more painful than the change. Only if the pain if doing nothing is greater than the pain of the change process will the change be embraced by the organization. Failed change projects are said to fall into “corporate black hole”, where project simply die.  Many reasons exist for project failures. Mostly passed failures or past lack of commitment by all the relevant parties causes future project to fail.

Even if the identified change is accepted by the organization, the actual change process can still fail. One of the first pitfalls that cause failure is known as “Cascading Sponsorship”. In this case the sponsor simple delegates the job to someone else who might not have the credibility or ability to actual affect the change. Therefore the change sponsor must enlist other co-sponsors to achieve the team wide buy in necessary for eventual success.  It is important for all change agents to have clearly identifiable roles. Any successful change efforts need to have a Initiating Sponsor (IS), a Primary sustaining Sponsor, and a number of Co-Sponsors, sometimes known as Local Sustaining Sponsors, each representing a relevant constituency. Also,  a clear Target of the change must be identified.

Once all the actors in the change drama are identified it is important to orchestrate and track the actual change process through the various phases of the change project. Clear identifiable goals and millstones must exists and be easily accessible for all the players to see. Furthermore, the relationship between the Target, those being affected by the change, and the sponsor must be direct and governing. In many situations the change agent either doesn’t have direct managerial relationship with the Target, or has mixed relationship. In either case the Target has conflicting responsibilities and confused reporting structure, therefore the change project fails.

The article concludes with listing key characteristics of effective change leadership.  If a leader carefully assess their own skills and gauges their own effectiveness against the checklist provided, the change project will have a great chance of success.

Boris Tabenkin

Internal Transformation of Corporations: The Road to Conscious Capitalism

by Michael Thomas & Bill Veltrop

Our corporations are the proverbial children of the world, who have been allowed to create any amount of mess they choose, without consequence or comprehension of the true nature and effect of this mess on the world. It is time for companies to “grow up” in a sense and take responsibility for their actions. The time of ignorance has passed and it is a time for conscious actions.

Three reasons why the corporations have been unconscious capitalists:

Design Flaw #1 — Narrow and Limited Definition of Success

For the longest time, the success of a company has been measured based on the amount of money it has made. This has been a skewed perception of success, especially because the natural capital utilized in creating the wealth was never brought into consideration. The treatment of the work force of a company and the environment as something that is unidirectional in a sense that it’s only job is to “give” into the company and not expect anything much in return has essentially stripped corporations of their humanity. They most vital part of any organization is the people who work for it and the diversity of perceptions they bring with them. Looking at a person as a drone has lead to a level of unconscious capitalism.

Design Flaw #2 — Mechanistic, Control-Over-People Organizational Cultures

The top down, hierarchical approach which most companies followed, as a legacy from perhaps the dark ages, lead to the controllers of the company having maximum control and profit share. This approach also insulated the leaders from hearing anything they didn’t want to, or hearing any “bad news” on a daily basis. Thus, even if the leaders of corporation were trying to do the right thing, they were essentially “flying blind” assuming everything is okay in the world and that their companies were not responsible for and negativity—physical or spiritual, being sent out into the world.

Design Flaw #3 — No provision for Ongoing Generative Design

Companies are carrying a large burden which is following from the previous systems of functioning and working. This burden needs to be alleviated and companies should allow themselves to re-invent certain systems. Companies should allow themselves to become more adaptive and fluid, growing with the people who form them. Companies need to evolve into the new world and adapt to changing environments. It is imperative they take lessons from nature—the largest independent system on the planet and learn that only through evolution can any entity truly hope to survive.

That corporations need to evolve and adapt is an irrevocable truth, however, how to bring about this change in both attitude and functioning is a new problem entirely Although many companies like Whole Foods, P&G, Interface, etc have been setting examples, they have so far been the exceptions, not the rule. Corporations and corporate leaders need to understand that the old ways of functioning are not only unsustainable, but are actually eating into the company slowly. Internally, corporations need to transform from a place where a “drone” is told what to do, to a place where an individual is respected for his talents and thoughts and is allowed the freedom to work in an environment which is encouraging and enriching. Only then will the individual be able to give himself completely into the cause of the company in which he is involved.

  Corporations require a catalyst for inducing change in their functioning. This catalyst needs to be external as well as internal, and it is the responsibility of the governing bodies of the world to ensure that there are external factors which not only encourage, but also aid corporations in this transformation.

Heavy policing is no way of getting long term results—a lesson the human race has learned time and time again, even in countries like Afghanistan and Iraq, where the presence of the American military, once considered a boon, is now becoming a bane for the locals. Heavy policing in the form of sanctions, fines, the Sarbanes Oxley Act, are good for very short term order, but in time, lead to corporations finding way to go around the system. What the world needs is a system that corporations and people actually want to follow and add to, in a positive sense.

Institutes like the GPTW and Fortune magazines’ coverage of this concept have been galvanizing a change in the way companies—successful companies are viewed. The Stakeholders of all companies are connected with each other in a way they never were before and this has made it important for companies to not only be profitable, but inherently good, because good people will not work for “bad companies”. And “bad” companies’ only ember of hope, if they are to survive, is to become good. This will require a painful and probably seemingly slow transformation, but will be worth it in the end. The metamorphosis of corporations is keenly analogous to the metamorphosis of the caterpillar to the butterfly. The caterpillar is the only organism that completely changes its genetic structure mid-life. But it needs to do so, to not only survive, but to transcend the boundaries which have been imposed on it. The caterpillar seems to remain dormant for a while and might even be in pain, but the results of the patient change are spectacular. Similarly, in order to bring about a decisive change, corporations will have to essentially change their “genetic structure” and might even have to appear dormant perhaps even endure some pain in the process, but the end results will be a brand new corporate entity, which is geared to the future and which will be far more successful. 

Adityajit Tiwana

Review: Four Contexts of Business Leadership Shaping the 21st Century

This article, “Four Contexts of Business Leadership Shaping the 21st Century”, argues that there are four different broad styles of business leadership (“contexts”) that have informed the way that leaders have behaved. Those four contexts are rational, humanist, wholistic, and spiritual. The authors believe that each of these contexts (in order) is contained within the previous one, and that each successive context builds upon the strengths of the previous and goes beyond it.

The article starts with a historical context dating back to about 100 years ago, at the beginning of the 20th century. The authors state that:
“Each context is now in varying stages of maturity and has been influenced by concepts from science and either psychology or spirituality. Each measures leadership success by its own view of the purpose of business and leadership. And each operates by its own understanding of how to lead and manage people.“

They believe that when work began to be organized (roughly around the time of the Industrial Revolution) it started out in a rationalist context. This context was influenced by the idea of “survival of the fittest” and that people much compete for limited resources. It was believed that if individuals pursued their own self interests, capitalism would balance everything out for the good of everyone. The result of this context is the idea of business as warfare, extreme competition, and the ideas of business as a machine (and employees as parts of that machine). This also led to patriarchal leadership, micromanagement, and the idea that people respond to punishment more than rewards. The authors find wisdom in this context in the following two ways: it honors the experience and wisdom of those who have “paved the way”, and it efficient use of resources. However they also mention two limitations of this context: that it discounts the inherent capabilities and motivation of man to do and be good, and that it believes that life (including people and nature) could and should be used and controlled for one’s own self-centered goals. The rationalist context is in its decline, according to this paper.
The next context discussed is the humanistic context. The authors state that this is the most common context being used currently. It is characterized by the idea of “enlightened self-interest.” This context recognizes that fear is an obstacle rather than a motivator to productivity. This context introduced the ideas of the empowerment of the employee, problem solving, and an emphasis on teams. Here capitalism is seen to be able to help create a win-win situation, when combined with situational or “relative” leadership models. The theories of Abraham Maslow are used extensively in this context. The recognized wisdom of this context are that it recognizes the essential goodness and work ethic of people and that it provides opportunities for individuals to fulfill potential (including self-actualization as well as work abilities and goals). Some limitations are that it focuses on explicit needs and is motivated only by missing elements, and that it focuses on individualism, where the win-win solution is between competing individual interests rather than that of the society as a whole.
The next context discussed is the wholistic context. The highlights of this context are its budding understanding that complexity and uncertainty are an essential element of all of life, including business. The theory of interdependence emerges in this context, and the shift from management of people to stewardship of them. The difference, as specified in this article, between management and stewardship is that management is the act of “handling” people, whereas stewardship is the “act of caring for things that you have been entrusted with for safekeeping—in this case, the interests of customers, employees, suppliers, society, future generations, and nature itself.” This context represents a small but growing portion of today’s businesses. In this context business is viewed as a living ecosystem rather than a machine, and wealth creation becomes a means to an end (the betterment of society) rather than an end itself. Recognized wisdom of this context includes that people, nature, and businesses are interconnected, and the emphasis on the wholistic nature of values and principles from which to operate “harmoniously and creatively”. Some limitations are that it bases motivation primarily on self-achievement, even if it benefits the larger whole, and that it precludes a discussion of spirituality in the workplace, focusing instead only on personal and business goals.
Lastly, the fourth context is spiritual. This context has yet to see a real following but is growing steadily. The authors argue that this context is one of self-transcendence that goes beyond any of the previous contexts. They start here by defining what spirit is: “[spirit is] the animating principle, the supernatural essence which breathes life into creation.” They point out that in the other contexts, if spirituality is considered at all, it would be as one “slice of the pie”, whereas in this context spirituality is the pie. This context switches from the idea that spirituality is a piece of the puzzle to the idea that it is part of every person, in everything we do. Also part of this context is the idea that one must earn the right to lead; spirituality is a way to achieve that. The authors sum up this context as “respecting people for who they are and not for what they can do for us.”

Waking the Sleeping Giant: Business as an Agent for Consumer Understanding and Responsible Choice

This commentary by Peter Senge opens with part of a speech given by John Browne, CEO of BP, stating “there comes a time when prudent precautionary actions must be taken…if we wait until there is complete unanimity among scientists about the effects of continued increases in carbon in the atmosphere, we will have waited much too long to do anything about it.” He uses motivation and goal setting to boost morale and interest around this environmental concern. Browne is also making a significant point that it should not take unanimity among scientists for actions to be taken; actions may be and should be taken now.

The commentary states, “There are at least three fundamental leadership roles global corporations can exhibit with regard to crucial issues shaping the future.” We’ll start by examining the first, which is, “to put a stake in the ground about the nature of particular issues and to lead by action around those issues.” This correlates to Browne’s initiative to act now instead of waiting for a general consensus. It’s one thing to talk about an issue and talk about potential fixes, but it’s necessary in some instances, such as protecting the environment, to take action and put into play these fixes now.

The second fundamental is, “to be willing to work in partnership with others to shift the market, technology and regulatory conditions that individual firms cannot alter by themselves.” This fundamental turns to strength in numbers. Certainly there are firms with minds and hearts in the right places, but sometimes it’s a problem too big to tackle individually. What firms should learn is the power and importance of partnerships. It is a “we can” attitude instead of an “I can’t.”

The third fundamental states, “Ultimately, companies must be prepared to undertake radical changes in their established ways of operating, including creating alternative products, processes, and business models.” The third fundamental encourages companies to think outside the box and to come out of their current comfort zones. Companies should not fear change, but rather embrace it and run with it. It is a proactive way of thinking and encourages strong leadership skills and cooperation.

The article goes on to state, “All three types of leadership illustrate corporations working in a way that few would have imagined even a few years ago, educating consumers on global issues and showing how they can be a part of solutions through their purchasing choices.” As more and more companies increase consumer awareness of major environmental issues the true test is whether these consumers who claim to care and want to make a difference will in fact do something about it. There’s no question that its currently more costly to make conscious purchases that benefit the wellbeing of our planet, so hopefully consumers realize the benefit beyond that of their own pockets in protecting the environment and ensuring sustainable business practices.

The commentary ends with a powerful notion that reads, “If companies are willing to face the dysfunctions of global systems of which they are a part, and upon whose health their future depends, they can also tap potentially the greatest leverage for changing these systems: the purchasing choices of consumers who care about the future.” Companies may give the power back to the people in enabling a healthier world by simply giving them the ability to do so. The companies are the ones with the major resources, so if they use this massive opportunity the right way it will be a win-win for everyone involved, including the environment in which we live.

Jennifer Myers

Recapturing Marketing's Mission

The article "Recapturing Marketing’s Mission" by Leonard L. Berry and Ann M. Mirabito speaks about the change in the direction of marketing. According to the authors, marketing has gone from:

“Marketing has influenced the creation of myriad goods and services that have lessened the drudgery of house work, enhanced consumers’ self confidence and sense of style, and enables consumers to use their time a finite resource-in more productive and satisfying ways"

to

“Clever Products and promotions encourage consumers to over eat take on debt, and fritter their money away on lottery tickets.”

Due to the misuse of marketing and advertisements, consumers' trust in marketing has drastically declined. Marketers do want to satisfy the client’s needs but the rapid changes in the client’s desires makes it more challenging. In turn the firms become more reactive versus proactive with the products and services that are offered. Firms look for an easy fix and many times resort to something that will have a good outcome in the short term, having a product that satisfies a desire versus a need.

Marketing can be broken down into two types: customer need centered and customer desire centered. Need Centered marketing is a proactive approach and therefore leads the markets while desire centered marketing is reactive and as a result is led by the market. Need-Centered marketing will almost always be more effective and longer lasting then desire centered marketing, the customers will be following the proactive and reactive technique will never be able to keep up with the consumers ever changing wants and desires.

A few companies that were in the desire centered category are cigarette manufacturers and Mc Donald’s. Cigarettes were initially made as a relaxing source for the soldiers in WWII. When it was realized nicotine is very harmful no measures were taken to substitute this with a substance that would help relax with out causing damage. Instead they used marketing to attract new customers. McDonalds was created to have a clean, cheap, family friendly restaurant. When the awareness was made about the bad nutrition that was in these foods instead of changing the ingredients in them they relied heavy on the advertising and marketing to help lure the customers.

What has been forgotten by many of these companies is the true mission of Marketing and that is to improve the quality of life. Because this meaning has been forgotten by many firms, consumers do not trust marketers.

We need to get to a place where “Marketers and the organization they represent can use marketing to harness the power of social profit in pursuit of financial profit. Companies create social profit when their actions produce net benefit to the society.”

There are companies that are trying to do that. These companies fill both the needs and desires of their customers. Two such companies are Progressive and Chuck E Cheese. Progressive is an insurance company and they want to built the trust with their clients. They not only try to appeal to the clients needs, they also try to fill the clients desires by making their insurance experience more pleasing then what they are used to. They currently show the customers both their rates as well as those of their competitors even when the rates of the competitors are better. That is just one of the many services that they offer their customers.

Chuck E Cheese is doing the opposite by being a desire centered business but also having need centered purpose. It offers a place where parents can enjoy time chatting while their children are in a safe environment with food and entertainment. Kids are able to be separated from their parents in the venue because on order for them to leave they Chuck E Cheese premise they have to be with the people that they came in with. Everyone’s hands are stamped when they enter and that stamp shows exactly who they came in with, and that’s exactly who they should be leaving with.

In order to fully recapture the magic of marketing we need to start with the education that is provided to the future marketing managers and re educating the current managers who don’t comply with what marketing used to be and what it should once again be. They need to understand the difference between right and wrong marketing. Right marketing is enhancing people’s lives, creating value for the customer. Wrong Marketing seesk to persuade customers to buy things that they do not need, it is focused solely on the firm's needs and not caring about anyone else’s. Marketing a great tool for firms when used correctly, it can improve individual’s quality of life.

Julia London

Critical Review/Summary:
Welcoming the Feminine Dimensions of Leadership

The article, “Welcoming the Feminine Dimensions of Leadership,” by Judy Sorum Brown, gives us some insight as to what we may be missing in leadership from both a feminine and masculine perspective. Brown suggests that both feminine and masculine traits are just as important as each other. In fact, they are complements of one another, and therefore need to be tended carefully in organizations.
Brown starts the article by defining some terms she uses throughout the article to ensure the reader does not take what she is saying in a different context. When Brown uses the term feminine, she does not mean gender, she is actually referring to “a quality within us all.” When she uses the term leadership, she is not talking about “a particular role or high position, but as a human capacity and action widely available although not always evident.” In fact, Brown goes so far to say that there really are not “perceivable differences between the leadership of men and that of women.” What she means here is that everyone leads differently; it does not matter if you are a man or a woman.
Then Brown discusses how many organizations tend to dismiss and even discourage feminine characteristics that both men and women exhibit in their businesses. Because of this, Brown suggests that the organization is lacking a very important aspect of what feminine characteristics can bring to the company. Sadly, of course, this trickles down into employees’ personal lives. Brown says, “as people realize that only part of them is welcome in organizational life, men and women cease to welcome that other dimension within themselves.” Eventually this could lead to men, women, and companies missing “cultural and emotional dynamics, creative potential, and aesthetics,” which Brown appears to deem as feminine traits.
According to Brown, the following is a list of guiding processes to help imbed the feminine presence in organizations:
• Check-in and check-out
• Dialogue
• Open space processes
• Creative processes
• Appreciative inquiry
• World café
• Clearness committee
• Storytelling
• Scenario work

Brown then invites the reader to think about how to incorporate these items into our own leadership styles. She suggests that we write down female characteristics next to their male counterpart. Brown believes that although the traits we may come up with are at odds with one another, they really compliment each another. Personally, I am not convinced by that, but I do agree that they all reside within both men and women; to what degree depends on the person, irregardless of whether they are male or female.
To get a feel for the word pairs that Brown refers to, I have listed a few below (feminine on the left, and masculine on the right):
• Welcome and boundaries
• Partnership and competition
• Inquiry and advocacy
• Appreciation and judging
• Nurturing and challenging

In conclusion, I think Brown says it best when she states, “Leadership work is just
that – holding both sides and valuing both.” In addition, in order to do this “we should pay attention to our own experiences and learn from those communities of practice that inform our work.” In my own words, the moral of the story is that we need to fill the gaps in our leadership styles with the traits that we are personally missing. If we exhibit more feminine characteristics, we should try to utilize some masculine traits, and vice versa.
Although I like how Brown presents her thoughts, I believe that she should have added more examples of feminine and masculine traits. Furthermore, she could have shown through actual stories how leaders rely too much on feminine or masculine traits, and how the outcome was negative in some way. I think these little touches would have made for a more concise and interesting article.

Reflection on “The Path of Kyosei”

Posted by Chris Iafolla

 

The article, “The Path of Kyosei” was Ryuzaburo Kaku’s description of how Cannon moved from a traditional business model to one that embraced the concept of kyosei.  Kyosei is described as the spirit of cooperation and it is something Kaku worked diligently at cultivating within the company.  In reading this article, I once again struggled with the viability of this theory.  Naturally, I interpreted the article through the lens of my own experiences, as well as my own personal tendencies toward business.  The truth is: I tend to view things as a zero-sum game.  For example, when my company goes on a new business pitch, my primary job is to beat the other agencies that are bidding for the business. In this case, somebody has to win and somebody has to lose.  Of course, these situations will always exist and it is that reality that allowed some skepticism to creep in when reading this article.

 

It’s not that I don’t buy into the principle of kyosei.  I certainly believe that acting in the sprit of cooperation is a lofty aspiration.  However, I do question how feasible it is in all circumstances.  That being said, this article seemed to run parallel to the theory behind “Firms of Endearment.”  Essentially, Kaku believes that by conducting business with the principle of kyosei as the guiding factor, businesses will not only be good for the world, but it will also be good business.  As “Firms of Endearment” has proved this is in fact the case.  Running a business that contributes to the social good and all key stakeholders does not mean that profits need to be sacrificed.  Where this article seems to diverge from “Firms of Endearment” is the path to reaching kyosei.

 

Kaku explains that in order for kyosei to be achieved, a business first has to focus on establishing a solid and sustainable business model.  Kaku argues that if profit is not central to a business’ goals than it will never be able to move along the path to kyosei.  He does go on to emphasize that profit motivation should not be the sole motivating factor or else it will consume the decision makers.  So in this instance, it almost seems that kyosei is a benefit of profit where “Firms of Endearment” maintains that profit is a benefit of stakeholder-centered decisions.  While this may be splitting hairs, it does seem that simply establishing a business with the hope of getting to kyosei is quite different than starting an organization with a purpose.  I do not question the necessity of profits.  Without profits it is impossible to survive in the business environment.  I simply wonder whether this path to kyosei may create short-term decision making that hinders the ability of a company to truly reach kyosei.

 

Kaku touches on the idea of a win-win scenario throughout his article.  Again, this is where I struggle from a personal standpoint.  The principle as presented is worthwhile and something that all businesses should aim to achieve.  But when I evaluate my own company, I fail to identify how we can truly meet the criteria of kyosei.  As a company, we are fairly active in our local community, we take on pro-bono accounts when possible, employees are treated fairly and top-level management never takes bonuses until everyone has been compensated fairly.  So at the surface, we would seem to be well on our way to the path of kyosei.  But where we fall down is when it comes to competition.  As mentioned earlier, the nature of our business is that somebody has to win and somebody has to lose.  If you extend that out, especially in this economy, losing businesses often equates to people losing jobs.  Does the fact that we beat our competitors more than we lose negate our ability to achieve kyosei?  I suppose this is a narrow-minded view of the industry but I can’t see many opportunities to partner.  We offer identical services and there is not enough budget for all of us to share in the pie.  The consequence is that some companies are whittled out while others survive.  When you are personally in those situations, it is difficult, if not impossible, to ignore that reality.  I rarely view circumstances as a win-win because if another agency wins, it puts my agency in jeopardy. 

 

Putting this in the context of the article, I am not sure a company like mine can truly achieve kyosei as defined by Kaku.  We are profitable, but do not have the resources to turn away business.  We also work in an industry where partnerships are not prevalent.  As a PR agency, it is natural to partner with ad agencies, branding agencies and marcomm groups.  But to partner with another PR agency is unheard of in the industry.  Where Cannon was able to partner with Kodak and HP, I am not sure we have those opportunities.

 

Does this mean that a cash-strapped company in certain markets is incapable of kyosei?  Maybe it does as currently defined but I don’t believe that is the intent of the definition.  In reality, my company treats its employees well, helps the community as much as possible and donates its services for free routinely.  The other stark reality is we have to beat our competitors more than we lose to stay in business.  So while that one instances may be a zero-sum game, the rest is a win-win.  In addition, we do play well with our competition when afforded the opportunity.  If we receive a lead we can’t service we gladly pass it to a competitor and we always fight fair in a new business situation.  Ultimately, kyosei is a worthy principle to strive for in business and something that can be achieved no matter what industry you are in and what resources you have at your disposal.   

Shareholder Value OR Social Responsibility? How Corporations Find the AND

by William H. Marquard and Ann B. Graham

At the beginning, the author objected the conventional wisdom of viewing corporate social responsibility (CSR) issues as a burden—a necessary cost of doing business in a multi-stakeholder environment. People generally view increasing shareholder value and serving the needs of society’s stakeholders as mutually exclusive: the Great OR of business.

By citing Peter Drucker’s statement of “Every single social and global issue of our day is a business opportunity in disguise.” the author argues that Finding the AND transforms corporate social responsibilities into corporate social opportunities and converts those opportunities into sustainable profits and competitive advantage.

The author uses outside-in and inside-out approaches to apply the Finding the AND lens as a constraint which can play in achieving breakthrough innovation and growth.

“How can we satisfy that business need AND serve a social good?”

“How can we serve that social need AND increase shareholder value?”

The example of the village of Santa Cruz Baja Verapaz and Walmart shows that Walmart increased sales and reduced logistics costs AND the villagers benefit by earning a fair return on their labor and increasing their income to raise themselves out of poverty.

Thus, the author concluded that we should view “societal stakeholders” such as environmental NGOs and local communities as potential business partners rather than as illegitimate adversaries.

The author introduced the AND Vantage Model and the efficient CSR frontier to explain the Method and Measurement of Finding the AND. Companies that want to apply Finding the AND principles in order to drive sustainable competitive advantage can often fund such efforts by identifying existing, non-value-added compliance and forced expenditures and redirecting them toward more strategic investments.

By giving four examples of companies Finding the AND, the author emphasized the benefit of Finding the AND: companies are able to achieve competitive advantage which includes Market Development, Product Innovation, Operational Efficiency, and Culture Building. It is important to rebalance the existing portfolios of CSR investment by keeping, refocusing, or eliminating each initiative on the basis of (i) its classification as compliance, strategic, or forced, and (ii) its linkage to the four sources for creating shareholder value.

The entry point for Finding the AND should be tailored to the unique needs and culture of the company by focusing its CSR strategy on a specific mission. And an effective, focused strategic plan enables a leadership team to say “no” to otherwise worthwhile ideas because they do not fit the direction of the firm. Each company can identify the particular set of societal problems that it is best equipped to help resolve and from which it can gain the greatest competitive benefit.

“We have come to a point now where this agenda of sustainability and corporate responsibility is not only central to business strategy but will increasingly become a critical driver of business growth…how well and how quickly businesses respond to this agenda will determine which companies succeed and which will fail in the next few decades.”

By citing the statement of Patrick Cescau, the author concluded that sustainable shareholder value derives from managing these complicated trade-offs in a way that enables the firm to endure and grow. And Finding the AND does this by measuring stakeholder and shareholder interests on one scorecard: sustainable profits and sustainable shareholder value.

From the line of reasoning of this article, we can easily derive a conclusion that the firms that transform corporate social responsibilities into opportunities and convert those opportunities into sustainable competitive advantage will be the winners as businesses and individuals emerge from the malaise of this global recession and begin to seek viable opportunities for growth.

 Xin Li

Summary and Review of "Bringing Society into Strategy - The 5 R Framework" McKinsey Staff Paper by Scott C. Beardsley, Shelia Bonini, Lenny Mendonca and Jeremy Oppenheim

Until recent history most business enterprise thought bringing society into strategy was responding to consumer demand or anticipated demand for products and services.  In today’s world that is but a small part of businesses responsibility for bringing society into strategy.  Meeting societal expectations demand more than just new products.  “Bringing Society into Strategy – The 5 R Framework” (BSS) contends that society and social issues have begun to influence business globally and that there are compelling reasons for business to listen.  The forefront being the virtual transparent world of business with “……..the global expansion of capitalism, the emergence of the Internet and the near-instantaneous access to information it provides…..”  Another compelling reason is that it helps the bottom line!  As the BSS article suggests, “….the majority of most companies’ value is represented by the net present value of their longer-term revenue streams, society will be an essential component of any corporate strategy”.  “Companies that successfully bring society into strategy will create enormous value, as well as contribute to the greater good.”  It also enhances the company’s reputation which in this global economy could lead to greater growth and opportunities in the future.  Conversely, companies and industries that neglect societal issues will lose future opportunities and may be faced with greater governmental restrictions.  In short, for business to live up to its full potential in the future it must shift from a paradigm of “The Business of Business is Business” to The Business of Business is Meeting Societal Demands.  This type of shift will not only meet the need of society by producing new products and services but will also meet the needs of society with respect to the environment, fair labor practices, community service and sustainability.  

The underlying theory behind the BSS article is that business and society have a contractual relationship in the form of formal contracts, semiformal contrasts and frontier issues.   The formal contract being in the form of governmental acts, laws and regulations, the second being in the form of current societal expectations and the third in the form of potential societal expectations in the future.    In support of bringing society into strategy the BSS article details a methodology, called the “The 5 R Framework”.  This framework assists business in incorporating societal needs into strategy, prioritizing society’s needs and provides for monitoring mechanism to determine the strategies success.   According to the writer’s of BSS the 5 R’s are interdependent and consist of risk, renewal, regulation, relationships, and reputation.   Risk is continuing to conduct business practices in a certain way as social expectations change in a way contrary to the practice.  It emphasis the need identify and manage or preempt the new risks that arise.  Many risks if identified early turn into a chance of renewal.   Renewal is identifying new sociopolitical trends or changes in social expectations and shaping them into new opportunities to meet or exceed social expectations.   These new opportunities, if identified early, can take the form of the reengineering of products, launching of new products, shaping, influencing regulations and building relationships with grassroots civil-society groups.  Regulation is centered on identifying potential future short-term and long-term regulations early enough in order to help shape it.   The goal of influencing regulations would be to produce legislation that produce “win-win” scenarios for both society and the company’s commercial interests.  Often individual businesses within an industry will group together to influence or prevent legislation.   The relationship “R” assists the company to identify where to invest resources in order to build and maintain positive and productive relationships with various stakeholders.  To achieve the company must not only identify the stakeholders but also indentify their individual issues and expectations.  Once individual stakeholder expectations are identified, the business must them attempt to meet them as well as the expectations of the core business and other stakeholders.  Reputation is centered on building credibility and trust for the company, its brand and values.  The goal is to overcome the often public perception that most companies are largely self-interested and have limited commitment to social issues.  In bringing society into strategy and using the 5 R framework many businesses will be faced with having to develop a new business model that may include the additional of new department and greater cooperation between existing departments.  It may also necessitate the need cross-department councils working together to meet new business issues and opportunities.   According to the BSS article, the role of the CEO is also likely to change.  With the globalization of most industries, the CEO will often take the role of “statesman” engaging more of their time in “business-in-society” issues.  Also with the CEO being the personification of the company their personal reputation will often become that of the company.  If the company wants to become and be viewed as a conscience socially responsible entity, the CEO within the organization must personify the qualities of a conscience socially responsible individual concerned with the greater good. 

Given our point in history, the article is relevant and timely.  It presents compelling reasons why society should be brought into strategy.   In addition to the underlying reason that it is good for society, it helps long-term revenue.  I agree that with the article that the internet has afforded society with greater transparency in business and it is more difficult for business to conduct itself in a manner that is detrimental to society.  Society is also more informed of current and long-term societal issues and can make more informed decisions of the type of companies they want to patronize.   Companies that embrace this turning point and meet not only the need of stockholders but the needs of society will flourish while I believe those that do not will perish over the long-term.   The article goes beyond just justifying the need to incorporate society into strategy; it demonstrates how it can be done.  A methodology, “The 5 R Framework” is detailed to illustrate how societies needs can be identified and brought into corporate strategy.   The framework also provides methods to evaluate the success of the strategy.  This article provides a great beginning for any company that desires to bring society into their corporate strategy.