Recently I had the opportunity to conduct a session for a group of middle-level managers from different industries in Sri Lanka. As an engager, I raised the question, what comes to their mind when they hear the phrase “Corporate Social Responsibility (CSR)”. To my surprise, for many, it was about charity. For some, it was about Non-governmental organizations and for some, it was about environmental protection. It made me realize that the awareness of CSR is very limited among the general public.
Corporate Social Responsibility
What comes under CSR? Based on the WBCSD (World Business Council for Sustainable Development), CSR is “The continuing commitment by business to behave ethically and contribute to sustainable economic development while improving the quality of life of the workforce and their families as well as of the local community and society.”. In today’s context, CSR has moved beyond mere legal adherence, from charities and marketing magician to a role of Social Value Creator. It has moved from ad-hoc projects to be the crux of organizational strategy.
Purpose of the Business
A decade ago, if you ask from an average corporate, What is the purpose of the business? The answer from the majority will be to maximize shareholder’s wealth. However, market dynamics and resource limitations have compelled organizations to find a purpose beyond shareholder wealth maximization. Entities have started to seek different ways to enhance value not only to customers and shareholders but also to government, society, suppliers or even sub-contractors. As per Heminda Jayaweera, Co-founder of Thuru, a Sri Lankan based mobile application to accelerate reforestation, “The survival of every business nowadays will depend on one thing and that is the social purpose. So, it is no longer CSR but essentially business integral. We have seen many world-class businesses failing when they lose the focus on the social purpose of the business”.
Another facet to look at this is, organizations are in a situation where they need to establish a trustworthy relationship with all the stakeholders and not only with shareholders. In simple terms, trust is a feeling associated with predictability. If we can predict the behaviour of someone that they will not harm us, we tend to trust that person or entity even though we don’t know much about them. In the modern world, one breach of trust with one stakeholder will lead to the loss of trust with the customers. It appears that organizations are operating in a glass box pushing them to be transparent in their end to end operations.
Entities need three key things, in the uphill journey to be a Social Value Creator. That is the leadership, supportive organization culture and how well you manage your change.
We talk about leadership today than ever before. The leadership is the driving force behind an organization’s business strategy. The leadership is responsible for the decisions made by the organization. Finally, it’s the leader who needs to plant the “Social Value Creator” seed within the organization. “The social and environmental limits of growth are now becoming very evident to the entire world, especially for businesses. New technologies have brought a very narrow breathing space but most likely will not penetrate the barriers”. As former US president Barack Obama mentioned, the current generation is the first to feel the importance of sustainability and the last which can take steps to ensure sustainability. Hence, changing business-as-usual practices is not an option anymore. Ensuring social equity, inclusion and environmental sensitivity is a must for businesses. This means businesses cannot treat its social purpose as a part of the business strategy but the DNA of the business. This is a mammoth transformation considering the predominant global business culture. Therefore, the transformational leadership has a significant role to play to ensure the social purpose is brought into every aspect of business” as witnessed by Ranga Pallawala, CEO of Janathakshan GTE, Sri Lanka based organization committed to delivering green and sustainable development using appropriate technologies.
Leaders will set and drive the organizational culture. Ideally, leaders will create more leaders within each level of the organizational pyramid, who will assist to be a Social Value Creator. Simply, culture is how an organization do things or behaves. It consists of values, beliefs and organization-specific behaviours. Whatever the strategy set by the top leadership; the execution effectiveness heavily depends on the culture. As originated by Peter Drucker, “Culture eats strategy for breakfast”. According to Mr Samantha Kumarasena, CEO of National Cleaner Production Centre Sri Lanka, “The first step to change an organisation or the society at large is elevating the people to the right attitude. In that sense, capacity building within the organization is an essential prerequisite for balanced social development. It is evident by societies such as Japan that have achieved economic development very fast with the assistance of a value-based culture”.
We discuss a lot about managing change, but we are poor in executing change within our own lives and organizations. The shift towards being the Social Value Creator embodies a lot of new practices and challenging the status quo. Based on the facts from McKinsey and Company shows that 70% of all transformations fail. Thus, we need to create more discussions about managing change from down. A small internal change within the organization can have a ripple effect on multiple stakeholders across different platforms. As Charles Davin stated, “It is not the strongest of species that survive, nor the most intelligent, but one most responsive to change”.
They have started…
However, good thing is that large organisations have shifted gears to be Social Value Creators, understanding their purpose of existence. They are mapping their value chains and have started to discuss ways to add value not only to customers and shareholders but also to employees, suppliers, service providers, distributors, retailers, regulators, society and government.
Dialog Axiata PLC, the Sri Lankan telecom giant, a subsidiary of Axiata Group Berhad, has understood about the impact they are creating to the society and have found creative ways to be a Social Value Creator. Govi Mithuru (Farmer’s Friend or ‘Ulavar Tholan’ in Tamil) is a mobile advisory service for farmers with the theme ‘Secure crop and Family health’ which has been created to address the information gap in this sector. Lack of access to information has been the key issue among Sri Lankan farmer fraternity, which consists of 33% of the workforce. According to Charitha Ratwatte Jr., Head of Group Sustainability, “Dialog Axiata PLC placed Digital Inclusion as a core focus at its inception because broadening the addressable customer base required it – and this, in turn, was a rational strategy for the fourth entrant into a market that had captured most of the potential elite customers. Despite becoming the market leader within four years, Dialog has continued to interpret its mission of empowering and enriching Sri Lankan lives and enterprises in its broadest sense. An ethos set at the Board and senior leadership levels and reinforced by strategic decisions and partnerships empower the Dialog team to create value for all stakeholders by maximizing the liberating and empowering nature of its digital technologies.”.
The journey of a social value creator will be challenging. No one has perfected the model yet. As Simon Sinek highlighted in his TED Speech that, “corporates are in an infinite game and not in a finite game such as cricket, rugby or football. The objective of a player in an infinite game is to be in the game rather than to win.” Social value creators are in an infinite game. They have understood that it is not about short term profits but much about long term strategy. Social Value creation is not a buzz word, it is the core of the organizational strategy. It is a constant journey where you try to become a better version of yourself compared to yesterday. The path is tough but, it is better to be in the right path rather than to be in the wrong path.
About the Author
Chamikara Jayakody is the Head of Strategy and Executive Education at Universal College Lanka (UCL), Sri Lanka. His interest is on business strategy, leadership and organizational development.