RESPONSE - Insead

Recommendations Recommendations for business
a. Business Strategy. The link between the competitive strategy adopted by the
corporation and the degree of cognitive alignment was one of the most
interesting, and somewhat unexpected, results of this study. Taken its
implications further, this result suggests that corporate leaders of companies
competing on cost efficiency, and on large volumes with lower margins, might
consider changing the way the it competes towards a competitive posture that
prioritises differentiation, innovation and customisation of its products/services,
and consequently aiming towards higher margins. Of course, this is easier
said than done, and there are many other factors that would need to be
considered before a strategic shift of this sort could be designed and
implemented. The results of our analyses, however, speak clearly about the
advantage that this strategic choice would bring in terms of reducing the
discrepancies and thus enhancing the social cohesion among stakeholders,
with positive expected implications for both economic and social performance.
This recommendation is further informed by the findings that the superior
alignment of companies in highly dynamic, innovation and customisation­driven
sectors, vis­à­vis more stable and efficiency­driven ones.
b. Integration of CSR principles in Business Processes. This factor has
emerged in our analysis as one of the strongest predictors of social
performance. The implication for corporate leaders is clearly pointing to the
need to invest in deep internal change processes aimed at the adaptation of
operating and strategic processes towards the integration of social
responsibility principles. This means, in concrete terms, that all the
fundamental processes that make the organisation “work”, from the way
resources are allocated to the way people are hired and motivated, from the
procurement of resources to the marketing and sales of products; each
functional activity should be adapted to fully embed the consideration of its
potential social impact. This is a hugely tall order, of course, particularly
considering the peripheral role played by “CSR experts” in most of the large
business corporations today. The power and the responsibility to make this
happen rests primarily on the corporate leaders’ and senior executives’
shoulders, those with P&L responsibility, which typically comes with the control
of adequate resources and the endowment of sufficient internal power to affect
the evolution of business activities. We recommend this be the real litmus test
to assess progress in your company’s efforts to become an effective and
recognised corporate citizen.
For managers responsible for CSR related activities:
1. Reframe the problem: from external engagement to internal change. Our data
and observations show that the key factor explaining the difference between “good”
and “great” social performance is not the quality of the company’s stakeholder
engagement, but the degree to which CSR is integrated within business operations
and, even more importantly, the strategic decision­making process. In fact, in
some cases, we have observed subtle disadvantages in over­investing in external
communication processes, due to the consequent draining of attention and
resources from the necessity to drive internal change processes. We thus
recommend CSR managers refocus their attention and their time/resource
commitment away from handling external communication processes (beyond a
minimum requirement, of course) and focus on the complexities of championing
internal change initiatives aimed at mainstreaming CSR in all relevant business and
strategic processes.
2. Redefine Your Role. In some of the companies we have studied the “CSR
function” has been undergoing rapid change in both its position within the
organisational structure and in the nature of its mandate. In general, the changes
have been towards an increasingly central role in the strategic debate within the
firm, and a higher level of integration with business functions. The movement from
the organisational “periphery” towards the centre is welcome, of course, but the
road ahead seems to be still long and uphill, particularly in light of the changing
nature of the “challenge” (see above #1). If CSR specialists are to assume a role
RESPONSE: understanding and responding to societal demands on corporate responsibility
83