Senior executives rely on it, academic careers and the MBA syllabus are built on it; “it” is the strategy tool box.
To examine where CSR fits into strategy development and to see where innovative ideas are changing how business strategies are framed, we can break the strategy process into three elements:
working out where the organisation is going (developing the vision) working out where the organisation is now starting to map the steps that will take you from where you are now towards the vision.
CSR means thinking about the role of business as a citizen, and business in wider society, so CSR brings new perspectives to each of these elements. Taken seriously, those new perspectives can be the source of ideas for innovation. Where will new markets be? Which markets will fade? What do customers want in the future and how will their world be changing? What will employees require from organisations if they are to continue to bring their skills to the company? How will the infrastructure that connects your supply chain be shaped in future? What could be your new communication channels, or your routes to market? Which suppliers will flourish and which will find themselves under increasing pressure? CSR can help with preparing a business strategy to deal with these fundamental shifts in business direction.
In each of the three elements, we can look at the tools used to see where CSR is adding value and innovation is occurring.
Where are we going – Vision
A great deal of time, and flipchart paper, can be spent in determining an organisation’s vision. It is indeed vital to get the vision right so that the whole of the organisation and its processes can be aligned with achieving the same goals.
There seems to be increasing recognition of the importance of people and personal values in developing a company vision. Sometimes there’s even an ethical dimension, like the understanding of human impact on the natural world which drives Patagonia in one of this month’s case studies. Ethics and values certainly have to feature in any visioning work in the healthcare sector. Article 13 has recently completed assignments for healthcare companies which have demonstrated that institutional investors are aware of the pressures on a business to have a coherent, forward thinking strategy that has considered ethical issues.
Scenario planning remains an important tool in testing the robustness of a company vision. Made famous by Shell in the 1970s when economic models created detailed scenarios focusing on population growth and oil prices, scenarios are now usually created much more interactively, using information from a range of people inside and outside the organisation. Organisations still need to gather data for scenario planning, but that data covers many more dimensions of society: income distribution, demographic shifts, climate change impacts and so on.
Governance issues, a key CSR area, are also worth considering in the context of developing a company vision. What’s the role of the executive and non-executive director? Who needs to be involved in the process? Who could stop you implementing your vision, and is there a way of working with those potential blockers early in the process to understand their concerns?
Where are we now?
Understanding the current position of an organisation is conventionally done by SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis. When SWOT is coupled with PESTLE analysis then the organisation can start to put its own position in the context of the wider world. There are minor variations on the list of pressures the PESTLE acronym is used to trigger but a useful version is:
Political
Environmental
Social
Technological
Legal (regulatory)
Economic
Regular visitors to these pages need little reminder of the range of CSR-related drivers that should appear in SWOT and PESTLE analyses: poverty, climate change, social cohesion, globalisation, labour rights, natural capital, developing economies’ growth, biodiversity loss, and more. In order to complete PESTLE analysis effectively, most organisations will need to draw on expertise outside their own teams. This shift from strategy as an internal process to strategy as a stakeholder process is another area where CSR thinking has an impact. Article 13 has been working with a national UK organisation in recent months, gathering views from a wide range of stakeholders on the trends that will impact on the UK in the next two decades.
CSR thinking requires that companies see themselves as corporate citizens, with links to many external groups. So some of the newer tools in the strategy tool kit relate to stakeholder mapping and analysis.(1) Stakeholder mapping forces a company to recognise that there will be different priorities and views of what is important for different groups.
Stakeholder analysis then allows an organisation to examine the issues raised in the PESTLE analysis from different perspectives. Stakeholder analysis means that the different channels of communication that are used by different groups, the data they use, and the interpretations selected by those different groups can be clarified. This clarification helps separate out different impacts on the company from different stakeholder groups, and potential impacts on stakeholders from the company. CSR also reminds companies of the differences between groups of stakeholders – investors, neighbours, customers, potential customers, suppliers and so on are far from being a homogenous mass!
Stakeholder analysis looks for patterns as well as investigating the agreements and contrasts in different groups' aspirations. It is vital, of course, that a company using stakeholder analysis and inviting a range of stakeholders to provide their perspectives as honestly as they can, has systems to ensure that each individual’s view will not be attributable either to a person or their organisation.
Innovation in strategy comes about when this type of analysis and understanding of current position goes beyond risk management, into opportunity creation. GE is perhaps the biggest and boldest example of this at present, with its Ecomagination initiative seeking economic opportunity from continuing environmental pressures.
How do we get from here to there?
The visioning process is often fraught, particularly where there has been a real effort to understand and integrate stakeholder views. So it’s very easy to step away from that process and fail to think through how to move from ‘here’ to ‘there’.
There will, of course, be specific steps internal to the organisation that will help make the vision a reality. These actions might be investment in innovation and technology, or identification of new markets, new offices and sales initiatives to reach those markets, or new product development. But Article 13 finds that it is vital to identify the actions outside the company that can help to contribute towards the vision, and to plan and maintain a concerted programme of communication and engagement with a range of stakeholders who could undertake those actions.
An action plan to implement a strategy needs to reflect back on the stakeholder mapping and ask what those stakeholders need if they are to take action. Can the organisation help with that action? One of the issues here is that some management styles are more suited to working with stakeholders and ensuring that CSR strategy is aligned effectively with business strategy. Executive coaching is, therefore, an increasingly vital part of the strategist’s toolbox. Coaching lets managers identify and work within their own framework of values, ethics and goals. Coaching is an important method of enabling an organisation to integrate CSR into their work by allowing ethics and values to make an explicit contribution to how business is done.
Article 13 is also finding that realising an individual manager’s potential through coaching can transform the nature of the organisation, making ongoing learning and development a natural habit. A learning organisation seems to be much more able to adapt to a changing environment and reduce the kind of risks that CSR issues bring to the fore.(2)
Other innovation comes in the channels of communication with stakeholders. New media is revolutionising the accessibility of organisations to different stakeholders. Future thinking organisations will need to be aware of the power of viral communication. This isn’t solely a business issue. At a recent conference in the North West region of England, Steve Connor of Creative Concern(3) laid out a challenge for the regional policy makers to engage with 700,000 people in order to start to make an impact on issues of sustainable development. 700,000 is 10% of the population of the North West, and conventional marketing wisdom is that once a 10% market penetration has been achieved then word of mouth takes over.
Listening and Hearing – the two new tools in the toolkit
CSR concerns don’t change the strategy process or the techniques used in developing strategy. Instead, CSR provides new frames of reference and the opportunity to tap new sources of innovation through recognising stakeholders. Inviting stakeholder input to strategy development (listening) and using the creative power of these fresh insights (hearing) is where CSR helps make business strategy more robust for the future.
Sources:
1. Burgoyne J G (1994) “Stakeholder Analysis”, in Casell C and Symon G, “Qualitative Methods in Organisational Research”, 1995, pp 187-207.
2. Additional information on the use of coaching to enable responsible business can be found on the Wheelhouse website (Article 13’s sister company).
3. For more information, visit Creative Concern's website.
Also in this feature:
© Article 13 – November 2006
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