How Companies Succeed By Engaging Radically With Society

"Organizations will pay significant consequences if they don't work openly, honestly and proactively with government and society. In order to survive over the long term and gain competitive advantage, companies must learn how to connect profoundly with the world around them -- not only with customers and stakeholders, but also with employees, local communities, politicians, and the environment itself."

This is the advice from the authors of the new book, Connect: How Companies Succeed By Engaging Radically With Society.

The book is all about redefining three discredited words: Corporate Social Responsibility. The authors want to put these at the center of business -- both because it's right and because success in business is inextricably linked to sustainability.

To achieve "connected leadership" you must:

Map your world -- Analyze stakeholders as precisely as your customers, understand trends and discontinuitites, and quantify the value at stake from external relationships.
Clearly and powerfully define your company's contribution to society -- which must be at the heart of the company's purpose, not a side operation.
Apply world-class management to traditionally "soft" societal topics.
Engage radically -- a completely open, proactive and constructive approach to the outside world.

Authors John Browne, Robin Nuttall and Tommy Stadlen kindly answer these questions about their book:

Question: What is the role of business in society?

John Browne: Business exists to serve society; it is the engine of human progress that feeds, enriches, warms and delights us. Computers, cars and antibiotics would not have made it out of the laboratory without companies; and there would be no movies, no mobile phones and no airplanes.

John Browne

Question: What does history tell us about the mistakes that companies make?

John Browne: When it comes to the history of corporate misbehavior, today’s scandals are merely tired reruns of ancient errors. Companies make the mistake of disregarding the concerns of consumers, employees, the environment and government oversight time and again; and for thousands of years it has led to cycles of deep suspicion in business activity.

Tommy Stadlen: History tells us that long-term success is only possible when companies connect with society. The past is littered with the remains of firms that broke these rules. The life expectancy of a leading U.S. company has plummeted in the last century, from 67 years in the 1920s to 15 years today. By 2020 more than three quarters of the S&P 500 could be currently unknown firms. Companies that engage with society will break through; those that do not will fall by the wayside.

Tommy Stadlen

Question: Why is engaging radically with society increasingly critical in today’s new business environment?

John Browne: Engaging radically is about companies connecting with stakeholders on their terms rather than the company’s own agenda.

Today, technology is making all business activity more transparent. People’s tools of communication and organization—from smartphones to social media—are more powerful than ever before. It means society has the ability to better hold business to account for what it says and does, and companies that make the mistake of disregarding society’s concerns are more easily found out.

In this new environment, there is a significant competitive advantage for companies that engage successfully with society. The evidence shows that an uncompromising commitment to be inclusive of all relevant parts of society, from employees, to customers, to NGOs, leads to the sort of engagement that generates 20 per cent outperformance in profits over average competitors in the course of a decade.

Robin Nuttall: There is simply a lot of value at stake for business in connecting well with society, and by society we mean a whole range of external stakeholders—government, academics, NGOs. Essentially McKinsey’s research for the book found that 30% of corporate earnings are at stake from effective connection with these external stakeholders.

To give a couple of examples: in the more classic, regulated utilities industries such as electricity, gas, water, telecommunications, regulations on pricing or on competition can have immediate impact on value. More recently we’re seeing this across a range of broader industries. For example, in food and beverage, where there is now substantial consumer concern regarding obesity, the way that those food and beverage players respond to those concerns, whether it is product reformulation or shifting their promotional activity, impacts their success and their value.

In the basic resource sector, companies that can cooperate well with local communities and governments are much more likely to secure deregulation, which promotes innovation. One implication for corporate communications and PR professionals is then turning the function from being a downside risk mitigator to being a profit center—a potential capability within the company that enables the business to realize its growth objectives.

Robin Nuttall

Question: What are the consequences if business leaders don’t?

John Browne: When it comes to relationships with external stakeholders, research conducted by McKinsey shows that on average, 30 percent of a company’s value is at stake. It means that companies that break their bond of trust with society stand to lose out significantly.

For some companies who have failed to build up a reservoir of societal goodwill over time, breaking their bond of trust with society might even mean losing their license to operate.

Question: What’s an example or two of a company in the news today that could have benefited from a CONNECT approach?

Tommy Stadlen: The Volkswagen emissions scandal is a terrifying illustration of the value at stake. By gaming the system for short-term gains, they destroyed decades of trust overnight. Their shares fell 30% when the news broke. VW was actually top of the Corporate Social Responsibility (CSR) league tables when this happened: it shows just how broken CSR is as a way for companies to ‘deal’ with society. We saw the same thing happen with Enron, which won every CSR award going the same year they caused the biggest bankruptcy scandal in American history.

Another example is the music streaming service Spotify. They unwittingly caused a fierce social media backlash when they changed their Privacy Policy. Leaders who hand over important societal issues to non-core corporate affairs or legal teams do so at their peril.

Question: You interviewed over 80 corporate leaders from around the world for the book. What insights stood out?

John Browne: Across the many interviews we conducted, there was almost universal agreement that Corporate Social Responsibility has failed; plenty of CEOs recognize that companies need a new model of engagement.

We saw excellent examples of companies thinking radically about how to do this. IBM, Unilever and Walmart have already changed the way they define the contribution they make to society, and some CEOs in Silicon Valley are thinking innovatively about how to focus their time on the company’s place in the world and delegate day-to-day management to others.

On the downside however, there are business leaders who recognize that public trust in business can be cyclical and are therefore content to wait for trust to come back rather than engage with people’s concerns. There are also business leaders that continue to maintain that only maximizing shareholder value is a sufficient goal.

Thanks to the book's publisher for sending me an advance copy of the book.

Comments

The Benefits Of When Everyone Leads

It’s only January and the new book, When Everyone Leads , could likely be my pick for the best new leadership book of 2023. It’s that good. There’s still nearly a whole year ahead of us so we’ll see what other books debut. In the meantime, add this book to your must-read list. You’ll learn that: Leadership is an activity, not a position. Leadership is mobilizing others to make progress on the most important challenges. Leadership is interactive, risky and experimental. Leadership comes in moments. Leadership is always about change. When Everyone Leads , by Ed O’Malley and Julia Fabris McBride , presents a revolutionary approach to leadership; not based on position or authority, but an activity that anybody can undertake by learning to spot opportunities for improvement and taking the initiative to engage others. “It can be unfamiliar and uncomfortable, but in a culture where everyone leads, organizations start to make progress on their most difficult problems,” explain t

Effective Listening: Do's And Don'ts

Here are some great tips from Michelle Tillis Lederman's book, The 11 Laws of Likability . They are all about: what to do and what not to do to be a leader who's an effective listener : Do : Maintain eye contact Limit your talking Focus on the speaker Ask questions Manage your emotions Listen with your eyes and ears Listen for ideas and opportunities Remain open to the conversation Confirm understanding, paraphrase Give nonverbal messages that you are listening (nod, smile) Ignore distractions Don't : Interrupt Show signs of impatience Judge or argue mentally Multitask during a conversation Project your ideas Think about what to say next Have expectations or preconceived ideas Become defensive or assume you are being attacked Use condescending, aggressive, or closed body language Listen with biases or closed to new ideas Jump to conclusions or finish someone's sentences

Five Must-Read Business Books To Read This Summer

Stumped for what business books to add to your summer reading list? Here are five must-read books for leaders well worth adding to your list: Lead With A Story -- A Guide To Crafting Business Narratives That Captivate, Convince, and Inspire . Author Paul Smith explains why storytelling has emerged as a vital skill for every leader and manager. In the book, you'll find over 100 ready-made stories you can use as templates to tell your stories. Stories are so powerful because they are simple, timeless, demographic-proof, contagious, easy to remember and inspiring. Most important, they put the listener in a mental learning mode. What's The Future Of Business? (WTF?) -- Changing The Way Businesses Create Experiences . This book, by Brain Solis, details the incredible transformation happening in business today, driven by new social and mobile technologies. And, he explains how experience design helps your business and how you can harness its power for business growth. This book

How To Make The Leap To Becoming A Leader

Here’s another must-read book to add to your list as you transition from manager to leader. It’s The Leap to Leader , by Adam Bryant . As the creator of the iconic “Corner Office” column in the New York Times , Bryant has spoken with more than a thousand leaders over the years about the challenges and nuances of leadership. Many of his discussions are included in his interview series on LinkedIn. “The goal of this book is to provide an intensely practical guide to making that transition by sharing insights, stories, and approaches from hundreds of leaders to build the skills you will need to make the leap to leader,” explains Bryant. He adds that the book is useful to everyone who is interested in leadership, regardless of where they are in their career. The book covers: The central paradox of leaders: selfless vs. self-centered. How to perfect the do-to-say ratio. Ways to navigate office politics. Tactics to making better decisions. The crucial art of compartmentalizati

Seven Tough Questions To Ask Your Team

High-functioning teams can disagree and still produce excellent products and results. Team members can also disagree and still care about each other. And, they can challenge each other to think differently. Best-selling leadership book authors Scott J. Allen and Mitchell Kusy recommend that leaders ask seven tough questions of their teams to help maximize their results. Here are those questions to ask each team member: What are some obstacles affecting this team? What are opportunities we could take advantage of that we have been largely ignoring? Where can you take greater ownership on this team? Where have you let this team down ? Compared to other teams with which you are familiar, how are we doing ? When was the last time you complimented the team or one of its members? How open are you to giving direct feedback to team members?

How To Listen Effectively

Here are some great tips from Michelle Tillis Lederman 's book, The 11 Laws of Likability . They are all about: what to do and what not to do to be a leader who's an effective listener : Do : Maintain eye contact Limit your talking Focus on the speaker Ask questions Manage your emotions Listen with your eyes and ears Listen for ideas and opportunities Remain open to the conversation Confirm understanding, paraphrase Give nonverbal messages that you are listening (nod, smile) Ignore distractions Don't : Interrupt Show signs of impatience Judge or argue mentally Multitask during a conversation Project your ideas Think about what to say next Have expectations or preconceived ideas Become defensive or assume you are being attacked Use condescending, aggressive, or closed body language Listen with biases or closed to new ideas Jump to conclusions or finish someone's sentences

How Leaders Can Move Teams From Isolated To All In

Here is a book that provides workplace leaders an urgently needed methodology for helping companies to reduce worker loneliness, and it delivers a blueprint for building strong, high-performing workplace teams. The book is, Connectable: How Leaders Can Move Teams From Isolated To All In , by Ryan Jenkins and Steven Van Cohen . “72% of workers suffer from loneliness. And, what was once a simmering problem shifted to a crisis when COVID-19 and the sudden transition to remove work isolated workers from each other as never before,” report the authors. “Loneliness is the absence of connection,” explain the authors. “Loneliness is not defined by the lack of people, because someone can be lonely even while surrounded by others. We require more than the presence of others. We require the presence of others to dream, strategize, and work toward commons goals.” Furthermore, “workplace loneliness is defined by the distress caused by the perceived inadequacy of quality connection to team

The Benefits Of When Everyone Leads

Today's FLASHBACK to earlier in the year: It’s only January and the new book, When Everyone Leads , could likely be my pick for the best new leadership book of 2023. It’s that good. There’s still nearly a whole year ahead of us so we’ll see what other books debut. In the meantime, add this book to your must-read list. You’ll learn that: Leadership is an activity, not a position. Leadership is mobilizing others to make progress on the most important challenges. Leadership is interactive, risky and experimental. Leadership comes in moments. Leadership is always about change. When Everyone Leads , by Ed O’Malley and Julia Fabris McBride , presents a revolutionary approach to leadership; not based on position or authority, but an activity that anybody can undertake by learning to spot opportunities for improvement and taking the initiative to engage others. “It can be unfamiliar and uncomfortable, but in a culture where everyone leads, organizations start to make progress on

A Playbook For How Women Advance Within Business

Describing the new book, In Her Own Voice , by Jennifer McCollum , Anne Chow (former CEO of AT&T Business) says that “for women, the book does a beautiful job of explaining not just what to do to advance in your career, but also what to expect. For leaders, it helps you recognize the gap between what you think women seeking advancement want and what they really need.” Chow adds, “the book is based on the experiences of tens of thousands of women, with guidance that is applicable to every one of us, no matter where we are on our own unique journey.” McCollum divides her book into three parts: Understanding the hurdles to women’s advancement Overcoming the hurdles Eliminating the hurdles She professes that women have unique gifts and abilities. “Businesses need talented women, now more than ever. We need to do everything possible to engage, develop, and inspire them—and to advance them into leadership roles, all the way to the C-suite and board positions, if they so c

How To Be An Inclusive Leader

“No matter your title, or how advanced you already consider yourself to be as an inclusive leader, I believe this book will help you evolve and motivate you to take action,” says Jennifer Brown about her book, How To be An Inclusive Leader: Your Role In Creating Cultures Of Belonging Where Everyone Can Thrive . The book is the second edition of the bestselling title from 2021. This newest installment includes a new introduction and addresses challenges posed by the pandemic—including remote work, flexibility, and mental health. “It also gives increased attention to embedding equity, empathy, and anti-racism in the inclusive leader framework,” shares Brown. “I’m proud that this second edition will help leaders and organizations respond to the changes unfolding around us in relevant, culturally competent ways and take action to address systemic inequities that persist in the workplace.” In her book, Brown explores how power and authority are changing fundamentally. She explains tha

Eric Jacobson On Management And Leadership

Search This Blog