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Just Good Business Community & Corporate Responsibility

20 November 2013

Professor Kellie A. McElhaney

Haas School of Business, UC Berkeley

Who I Am

• Former banker

• At Berkeley since 2002

• Ross School of Business (Michigan) 1995-2002

• Founder, Center for Responsible Business; ranked #2 in world by Financial Times

• Extensive corporate consulting: Gap, HP, Nokia, Ulster Bank, eBay, Ernst & Young, Frontline, McDonalds, Blue Cross, Statoil, Nvidia, Kimberly-Clark, Yum! Brands, Twitter, Navigant, McGraw Hill, Chevron, Accenture, ING, Toyota, Apple, Pandora, Carolinas Healthcare System, United Health Group

• Research focus areas: 1) Strategies of CSR; 2) Branding & CSR; 3) Women, Business Leadership & CSR

• Author of Just Good Business A Strategic Guide to Corporate Responsibility

• (A Carolina Alum!)

We Live in Interesting Times

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It’s a new world for

business….

Hasbro Learned Recently

I have always been adamantly against anything that promotes specific roles in

society for men and women...it truly saddens me that such a successful business

would resort to conforming to society’s views on what boys do and what girls do.

I want my brother to know that it’s not “wrong” for him to want to be a chef,

that it’s okay to go against what society believes to be appropriate.

A13-year old effects change

Jamba Juice Learned, Too

To:

Jamba Juice

Celia Sepulveda, Jamba Juice Media Relations

James D. White, CEO Jamba Juice

Bruce Schroder, Executive Vice President and Chief Operating Officer

Gregory A. Schwartz, Senior Vice President, Supply Chain

Janice Duis, Media Relations

Jamba Juice Customer Service

I just signed the following petition addressed to: Jamba Juice.

----------------

Stop using styrofoam cups!!

.

Styrofoam takes so long to break down into the Earth. In the ocean, several animals

think that this product is food, so when they go to eat it, the styrofoam can kill them!

Also, did you know 57 chemical by-products are released during the creation of

styrofoam? That is a lot of chemicals...

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Why CSR Now?

Bad News Leads

CSR Drives Company Reputation

Top of Mind CSR Issues:

Healthcare #2

Trust in Companies Lowest Ever

Trust & Bottom Line

Refused to buy their products/services

Criticized them to a friend or colleague

Shared negative company opinions/experiences online

Sold shares

Chose to buy their products/services

Recommended them to a friend or colleague

Paid a premium for their products/services

Shared positive company opinions/experiences online

Bought shares

+ -

91%

76%

55%

42%

26%

77%

34%

17%

Expectations-Performance Gap

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What is Strategic CSR?

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First What It’s Not….

Fail.

• Buckets, Breasts & Pink?

o KFC launched Buckets For The Cure with the Susan G. Komen

for the Cure, which promotes breast cancer awareness. KFC will donate 50 cents for every pink bucket of chicken, ultimate goal of raising $8.5 million dollars.

o Same week, KFC introduced the Double Down "sandwich": an extravaganza that replaces buns with deep-fried chicken filets, with melted cheese and bacon strips in between: It has 540 calories, 32 g’s fat and 1,380 mg’s of sodium.

o Next campaign was a partnership aligning childhood diabetes with biggie soft drinks…

Not Strategic.

Win.

Strategic.

• $25M commitment in 1999

• Given $34M, plus 73,000 refrigerators, ranges, household items to 36,000 homes

• Pledged to give appliances to every house built through 2011

• Send employees & customers to neighborhoods for 1 week to build an entire block

• From onset, was philanthropy; in 2004, became brand message

• “We make very large, very heavy metal machines, often with big motors. This puts a human face on what could be a very cold metal category.”

Corporate Social Responsibility

A business strategy that

creates value & supports business goals

for the company,

and creates societal value.

(Above & beyond what is required)

CSR is:

S A Brand Strategy

S A Risk Mitigation Strategy

S An Employee Hiring,

Engagement & Retention

Strategy

S A community trust strategy

S A Product/ Process Innovation

Strategy

S A Profitability/ Growth Strategy

S A Market Entrance Strategy

S A Reputation Improvement

Strategy

S A Cultural Enhancement strategy

S A Long Term Business Success

Strategy

Strategic CR

Must link to corporate mission/ vision, and link to two

things:

1. Core business objectives:

S Increase sales, penetrate new markets, engage employees,

reduce operating expenses, improve reputation, protect

brand, beat competitors

2. Core competencies:

S Technology, financial products &services, making markets,

natural food, automobiles and transportation systems, travel

& tourism.

Great CSR Leaders

S 10t. Please name a specific large company that comes to your mind as fulfilling its responsibilities to society better than others—in other words, is a “responsible company”. Can you name another?

Global Leaders: Only 2 Healthcare

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CSR as Corporate

Strategy: Frameworks

Civil

Strategic

Managerial

Compliance

Defensive

3.0

2.0

1.0

Are You 1.0, 2.0 or 3.0?

Value

Creation

Risk

Mitigation

The Baby Parable

Save babies, one at a time

-Charity work

-Serve desperate needs

Teach babies to swim

-Empowerment work

-Teach skills

-Help people overcome

Run upstream to stop

whoever is throwing the

babies in

-Advocacy work

-See cause of suffering, work to stop it

Analyze why people throw

babies in rivers

-Problem analysis

-“Big picture” view

-Educate self, share knowledge

WO

RL

D

Transform multiple industries.

IND

US

TR

Y

Transform an industry. Take responsibility for full impact (social, environmental, economic).

Take responsibility for adjacent industries.

Take responsibility for global conditions (climate change, global inter-dependence, etc.).

Be a beacon to others. Develop codes of conduct for industry.

Build strong coalition to effect & enforce them.

CO

MM

UN

ITY

Be a good neighbor. Innovate & demon-strate CR business practices.

Influence industry indirectly by example.

Give something back.

Support local commun’s.(philan, direct programs, employee matching & volunt’ring.)

Reduce waste, consumption & emissions.

CO

MP

AN

Y

Run a good business

Provide access to tools/ product.

Disaster relief.

COMPANY COMMUNITY INDUSTRY WORLD

CR Leadership Framework:

Where Do You Want to Be?

What’s at Your Nexus?

Source: FSG CSV 5/11

Social Need

Business

Opportunities

Corporate Assets

& Expertise

Shared Value

Opportunity

Integration is Key Level of Engagement with CR/Sustainability Function

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CSR Has Significant

Brand Value

http://www.youtube.com/watch?v=xMyeEgRRSHA

Finally, it’s turned positive.

http://www.youtube.com/watch?v=j9zfkYHtuMc

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CSR + Brand = Just Good

Business

The Iconic Example

Standing for Something Bigger

CSR can transform a brand.

http://www.youtube.com/watch?v=XpaOjMXyJGk

Other Companies Followed

It Can Drive Behavioral Change

We Don’t Know What You Don’t Tell Us

Consumer Awareness Is Still

Low

CSR Gains on Brand Choice

CSR + Brand = Impact

Company Value 1981

Intangibles - Nonfinancials

Tangibles Financials

Market Capitalization

83%

17%

-Data: Economic Value of Eco-Efficiency

-Image: Bob Willard

Company Value – 2010

Intangibles Nonfinancials

Tangibles Financials

20%

80%

-Data: Economic Value of Eco-Efficiency

-Image: Bob Willard Market Capitalization

CSR Powerful Predictor of Brand…if KNOWN.

Emotional

Appeal

Financial

Performance Workplace

Environment

Products &

Services

Vision &

Leadership

Social

Responsibility

Reputation

QuotientSM

(RQ)

Feel Good About

Admire and Respect

Trust

Market Opportunities

Excellent Leadership

Clear Vision for the Future

Rewards Employees Fairly

Good Place to Work

Good Employees

Outperforms Competitors

Record of Profitability

Low Risk Investment

Growth Prospects

Supports Good Causes

Environmental Responsibility

Community Responsibility

High Quality

Innovative

Value for Money

Stands Behind

Source: C. Fombrun, Reputation Institute, Harris Interactive

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McElhaney’s Eight Principles

1. Authenticity

2. Fit

3. Consistency

4. Simplicity

5. Fun & Positive

6. Targeted

7. Story-Telling

8. Social Media

Dear Mr.Drexler, I have something to tell you about J-Crew. Sorry, it's not the best thing about your company. But, your company is great. Do you know the story called " The Giving Tree"? Well, in the story, that one tree gives up everything to the boy. Everything. Apples, wood, branches, and even the tree stump……

… I think if you try this, you will end up not spending as much money on boxes, as well as gas for your trucks, not killing as many trees and getting better feedback from customers, kids, mail men, anybody. Sincerely, Kellie's* daughter, Isabel P.S. I am nine, please respond and, don't take this personally, because it's not only you.

* Kellie is my Mommy. She teaches busyness.

---------- Forwarded message ---------- From: Millard Drexler <Millard.Drexler@jcrew.com> Date: Fri, Jun 12, 2009 at 9:13 AM Subject: To: sportyizzy658@gmail.com Cc: Brittany Sydnor <brittany.sydnor@jcrew.com> Hi Isabel – thx so much for your letter and your mom’s book – much appreciate – our team totally agrees on your points regarding packaging – not sure if Brittany mentioned to you in her call, think she did but not sure, but we are in fact taking steps to “fix” - have a good weekend –

Best,

Mickey

You Are Always Branding

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Stories trump facts ten times

out of ten, period.

Differentiation lies in

activation & communication

Please Lead!

kmack@haas.berkeley.edu