business innovation, csr and competitive advantage: strategic pathways to value
TRANSCRIPT
Business Innovation, CSRand Competitive Advantage
Strategic Pathways to Value
Nov 29, 2015Maple Leaf Club
Canadian EmbassyRiyadh, Saudi Arabia
Presented by
Wayne DunnProfessor of Practice in CSR (McGill University)
President & Founder, CSR Training [email protected]
Business Innovation, CSR andCompetitive Advantage
• CSR History (how did we get here?)
• What is CSR?• More than philanthropy?
• All about value
• CSR Value Frameworks
• CSR, business strategy and competitive advantage
Strategic Pathways to Value
CSR What it is|What it isn’t|What’s in it for you?|What’s in it for Society?
CSR and Islam
• CSR actions are not new (maybe the CSR name is)
• Builds from concepts of ethical and social behaviour
• Applies to individuals and organizations
• Sharia compliant finance and banking
Islamic institutions are perceived to be an essential part of the larger environment and therefore should also contribute to the needs of the larger environment, as Islamic moral economy requires horizontal and vertical equality and growth in harmony with all the stakeholders, and also aims to remove all the barriers in front of the development path of all the stakeholders including individuals, society and natural environment.Financial Times
Lecture Focus
• This lecture will focus on CSR from a broad, global perspective rather than exclusively on CSR and Islam
• Will use some examples drawn from Islam based companies
• For more specific information on CSR in IslamReferences from Qur'an, Hadith, and Islamic history and practice.• http://www.slideshare.net/farhanahmad/concept-of-csr-in-islam
• http://www.slideshare.net/aizannoriz/corporate-social-responsibility-based-on-islamic-perspective
Rise of the Global NGO Movement
By 2006
• The NGO sector was the eighth largest economy in the world
• Worth over $1 trillion a year globally.
• Employs nearly 19 million paid workers, not to mention countless volunteers.
• NGOs spend about $US15 billion on development each year, about the same as the World Bank.
https://www.globalpolicy.org/component/content/article/176/31937.html
Where did it come from?
Globalized world is demanding more of business…• Global media – The CNNization of the world – remote
local issues direct to television screens
• Internet – direct communications from remote projects to worldwide audience
• Proliferation of NGOs and CBOs – direct, well organized and financed support to communities
• Global Democratization – increased attention to local issues
• Social Media – everywhere is here and instant
You think business is easy?
Has the World Changed?
1960s• NGOs
• Communications
• National Governments
• Business
• Technology
Today• NGOs
• Communications
• National Governments
• Business
• Technology
Society expects more ANDhas more power to force change
Increasing societal expectations and influence
0
50
100
150
200
250
300
1975 1980 1985 1990 1995 2000 2005 2010 2015
Soci
etal
Exp
ecta
tio
ns
& In
flu
ence
Applies to organizations of all types, but especially business
*directionally indicative data derived from SWAG analysis
Managing societal expectations& creating shareholder value
Framework
Plan
?Results?
System
Think before you spend
More spending and more complexity doesn’t always produce more value
CSR is Simple: Just Charity
• CSR is about philanthropy and charity
• Done on the margins of business
• Unrelated to core business activities and operations
• Not necessarily about business or shareholder value
CSR is about Value
• Can include charity
• Can include philanthropy
•MUST include value FOR THE COMPANY• And for one or more stakeholders
Value for company & societyBusiness• Employee attraction
• Access to contracts
• Access to customers
• Market development
• Employee retention
• Reputational (customers, regulators, stakeholders, employees, etc.)
• Operational/financial efficiency
• Shareholder returns
Society• Social
• Health
• Education
• Poverty
• Development
• Community
• Etc.
And environment and ecosystems too
Business / Society Interface
Business
Society
Environment
Where business meets society and environment
What about “Shared Value”
The ‘Shared Value’ 4 bucket model
Do Nothing
Bad
Philanthropy
BetterBut not good
CSR
AlrightOK..
The Best
SharedValue
CSR Value Continuum©
Value Distribution
Value Creation
© CSR Training Institute 2013
From Value Distribution to Value Creation
It’s all Shared ValueEvery CSR investment and activity should create value for the company & for one or
more stakeholders.
CSR Value Framework
Thinking about CSR & Value
• Mining company builds a community sports field
• Mostly charity and philanthropic
• Reputational capital for company
• Community, social, youth… value for community
CSR Value Continuum©
Value Distribution
Value Creation
© CSR Training Institute 2013
From Value Distribution to Value Creation
It’s all Shared ValueEvery CSR investment and activity should create value for the company & for one or
more stakeholders.
CSR Value Framework
Community sports fieldMostly about value distribution
CSR and Value Alignment
CSR is about value alignment between and organization/business and society
• Value for shareholders
• Value for society
• Better value alignment | value proposition innovation
• More value for society AND shareholders
Value Distribution
Value Creation
© CSR Training Institute 2013
From Value Distribution to Value Creation
It’s all Shared ValueEvery CSR investment and activity should create value for the company & for one or
more stakeholders.
ValuePropositionAlignment
1 1 3
CSR Value Alignment Framework©
Innovation Opportunity
Business
Society
Environment
Innovative value alignment can create sustainable competitive advantageANDSocietal value
Beyond philanthropy building from core business interests and strengths to support societal value
• Extensive community engagement around health and well-being.
• Support and partnership in key programs addressing important community health issues• 10KSA – Holistic Health (breast cancer focus in 2015)
• www.10ksa.com to sign up for current program
King Faisal Specialty Hospitaland Research Center
Health and social cohesion value
Market awareness, reputational capital, partnership development and staff engagement value
• Integrating CSR into regular staff functions and activities
• Innovative use of strategy, communications and outreach
• Big internal and external impacts
• See more at http://www.kfshrc.edu.sa/wps/portal/En
when it is unveiled tomorrow!
King Faisal Specialty Hospitaland Research Center
Value Distribution
Value Creation
© CSR Training Institute 2013
It’s all Shared ValueEvery CSR investment and activity should create value for the company & for one or
more stakeholders.
ValuePropositionAlignment
1 1 3
CSR Value Alignment Framework©
KFSHRC – beyond philanthropyMore value created for society & business
Value Sustainability
•CapEx or OpEx?• Does the initial investment continue to
provide value beyond the investment timeframe
• Investment?
• Expense
Value Sustainability©
Current
Value
Medium Term Value
Long Term Value
Does a CSR investment continue to produce value over time?
© CSR Training Institute 2013© CSR Training Institute 2013
Saudi Telecom CompanySocietal and shareholder value
• Research Chairs Program (10mm Riyal/$2.5mm total project cost)
• Communications and Networks Factory and Electromagnetic Imaging Factory at the University
• 16 Research projects
• Consultancy support to Ministry of Defense
• 38 Scientific workshops
• Publication of 35 scientific research papers
Societal value (students, academia, business advances and efficiency)
Company value (recruitment, access to research, market profile, links with leading researchers, employee retention, reputational capital)
Value Sustainability©
Current
Value
Medium Term Value
Long Term Value
Does a CSR investment continue to produce value over time?
© CSR Training Institute 2013© CSR Training Institute 2013
Saudi TelecomResearch Chairs Program
Supply Chain & Customer Experience
• BlueBud program
• Mentors small start-ups to become suppliers (primarily food related)• Includes all aspects of operations plus
environmental/climate change impact
• Partners with GrowNYC, a nonprofit that supports local agriculture and farmers' markets
• Vendors helped include • ice creamery Blue Marble,
• 2 Degrees Bars
• Ronnybrook yogurt
Supply Chain & Customer Experience
Value Proposition
• Societal value (local business/income, employment, support infrastructure)
• jetBlue (unique artisanal suppliers, wholesome onboard food, climate-cleaner supply chain, public profile, reputational capital)• CSR investment leverage –
more value per $ spent
• Environment (climate cleaner operations)
Value Distribution
Value Creation
© CSR Training Institute 2013
It’s all Shared ValueEvery CSR investment and activity should create value for the company & for one or
more stakeholders.
ValuePropositionAlignment
1 1 3
CSR Value Alignment Framework©
jetBlue – BlueBudIncreased value through aligning interests
Value Sustainability©
Current
Value
Medium Term Value
Long Term Value
Does a CSR investment continue to produce value over time?
© CSR Training Institute 2013© CSR Training Institute 2013
jetBlue – BlueBud programShort, medium and long term value
Employment & Procurement
• Developoment of Uranium mining industry –remote, undeveloped area (40,000 people, 250,000 sq miles)
• No history of industrial employment
• Needed local support for industry to develop
• Launched comprehensive employment, training and supplier development program plus philanthropic support
Employment & Procurement
• ~75% northern and Indigenous
• Up to $400 million/year in local procurement• Transportation
• Catering
• Underground mining
• Camps
• Supplies
• etc
Value Proposition• Society (business, income, employment, infrastructure, grants, etc.)• Company (social license, happy communities, local employment and
procurement reduces costs, relationship with regulator)
Value Distribution
Value Creation
© CSR Training Institute 2013
It’s all Shared ValueEvery CSR investment and activity should create value for the company & for one or
more stakeholders.
ValuePropositionAlignment
1 1 3
CSR Value Alignment Framework©
Cameco: employment & supply chainIncreased value through aligning interests
Value Sustainability©
Current
Value
Medium Term Value
Long Term Value
Does a CSR investment continue to produce value over time?
© CSR Training Institute 2013© CSR Training Institute 2013
Cameco – employment & supply chainShort, medium and long term value
Triple header impactlimited promotion! (yes, this is that Nike)
• Support to community athletics & athletes
• Support to hi-performance athletes
• Support to communities where products are made
• Limited communication and promotion!
CSR, Value, Sustainability & Balance
No hard and fast rule
• All have their place
• Value distribution (pure philanthropy)
• Value creation
• Short, medium and long term value returns
• Successful strategies generally involve all of these• Saudi Arabia CSR seems to have a lot of philanthropy/charity focus
• What is important is clear understanding of the motivation and the value strategy
CSR is about Value
• Can include charity
• Can include philanthropy
•MUST include value FOR THE COMPANY• And for one or more stakeholders
Value for company & societyBusiness• Employee attraction
• Access to contracts
• Access to customers
• Market development
• Employee retention
• Reputational (customers, regulators, stakeholders, employees, etc.)
• Operational/financial efficiency
• Shareholder returns
Society• Social
• Health
• Education
• Poverty
• Development
• Community
• Etc.
And environment and ecosystems too
Innovation Opportunity
Business
Society
Environment
Innovative value alignment can create sustainable competitive advantageANDSocietal value
Other issues (for another lecture)
• Stakeholder engagement
• CSR Communications
• CSR Metrics
• Social License
• Global Standards and Norms
• CSR Partnerships
• CSR History (where, how, why, when)
• CSR and Natural Capital/Climate Change
• CSR and Tax Strategy
CSR Value Continuum
http://www.csrtraininginstitute.com/knowledge-centre/csr-value-continuum/
Below are some recent articles and publications on CSR Communications and strategy that you may find interesting. They are short and pragmatic, hopefully helpful and interesting. Read them, download them, share them and feel free to comment on them by sending us an email.
CSR Knowledge Centre Articles on CSR & Value
Available onlinehttp://www.csrtraininginstitute.com/knowledge-centre/
Business Innovation, CSR andCompetitive Advantage
• CSR History (how did we get here?)
• What is CSR?• More than philanthropy?
• All about value
• CSR Value Frameworks
• CSR, business strategy and competitive advantage
Strategic Pathways to Value
CSR What it is|What it isn’t|What’s in it for you?|What’s in it for Society?
Contact Information
Wayne Dunn
Professor of Practice in CSR, McGill University
President & Founder, CSR Training Institute
www.csrtraininginstitute.com