Here in the U.S. and across much of the globe, trust in most of our institutions is at an all-time low. This is especially true of business, due to the corporate scandals in the early 2000s followed by the fiscal crises a decade ago. Meanwhile, expectations that businesses can help solve our problems are stubbornly high. But the lightening pace at which information flows, along with the fact that so much of the conversation between stakeholders and businesses is occurring on social media, presents potential minefields for companies that can blow up at any time.
Nowadays, companies that relegate sustainability or corporate responsibility initiatives as stand-alone programs are at great risk of falling behind their competitors and losing consumers’ faith. Instead, understanding any potential impact that a company’s actions can have on stakeholders must be integrated within the core of a company’s strategy.
Thus is the viewpoint of the late James Rubin and Barie Carmichael in their book, Reset: Business and Society in the New Social Landscape, which will be published this week by Columbia Business School. Rubin was a member of the faculty at the University of Virginia Darden Graduate School of Business for more than two decades. Carmichael is a Batten Fellow at the Darden School and a senior counselor at the global communications consultancy APCO Worldwide. Her 35-year career in corporate communications has included stints as a partner at the Brunswick Group and Dow Corning’s corporate vice president and chief communications officer.
“In this new landscape, stakeholders have evolved from consumers of information to creators and movers of information,” the authors say in the book's introduction.
TriplePundit received a galley copy a few weeks before this week’s scheduled release. Crisply-written and laden with rich anecdotes of how companies have succeeded, and failed, when they have unwittingly found themselves in the spotlight after episodes have erupted on forums such as blogs, Twitter, Facebook - and in even what may seem quaint today, in email chains (as in the firestorm over a bug within Intel’s Pentium chip in 1994).
But the strength of this book does not lie in the listing of problems presented by declining trust manifesting itself in controversies erupting across social media. Rather, Rubin and Carmichael have written a playbook on how to navigate through this reality, while narrowing that gap between trust consumers have in companies juxtaposed against the expectations we often hoist upon them.
This new setting may be a painful transition for companies, which for decades were used to dealing with crises by hiding behind the twin shields of their communications and legal teams. But as the old saying goes, we are truly in an era when not words, but actions, are what matter. “Today, a company must prove its character through its actions at all levels of its stakeholder engagements,” the authors wrote in an article for the Darden School last month. “What a corporation does is the authentic content for what it says.”
So how can companies cope with this triple whammy of this new social ecosystem, the dramatic power shift in who controls this business narrative and a new generation of workers who are demanding far more from their employers than their parents and grandparents?
Each of the book’s seven chapters can stand alone as a guide that should be on bookshelves in every C-suite office. But of particular interest is the third chapter, which in a telephone interview with 3p and discussed intensively in Reset, is what Carmichael described as “Inherent Negatives.”
As Carmichael explained, the most successful and forward-thinking companies today have learned to adroitly manage both the ups and downs. Of course, no business can ever completely eliminate the negatives. But the strength of a company is how it can not only forecast and manage these challenges, but how they can even embrace such problems before they plunge a company in a public relations nightmare.
Take the example of UPS, which has been issuing annual corporate responsibility reports since that term even entered most of our vocabularies. The company’s inherent negative? Carbon emissions, carbon emissions and to be clear, carbon emissions. After all, while most of us know UPS for its iconic brown trucks, as much as 70 percent of its carbon footprint can be traced elsewhere across its massive transportation network.
For years, however, the logistics giant has done far more than reporting on its carbon footprint. UPS has been striving to integrate the tackling of its carbon footprint across its business model, leadership and corporate governance. The result has been efficiency initiatives such as ORION (On-Road Integration Optimization and Navigation), which has helped the company slash its fuel consumption and therefore, its emissions. And year after year, UPS makes the list of most trusted and reputable companies – no small feat for a carbon-intensive company.
And fundamentally, explained Carmichael during her interview with 3p, UPS addressed these challenges through the figurative windshield – not the rear-view window: i.e., the company boasts a culture of being proactive instead of reactive.
Another example of a company taking a more windshield approach to managing strategic risks is Diageo, which owns some of the most popular spirit brands worldwide. As outlined in Reset, Diageo goes above and beyond reminding consumers to “drink responsibly.” Instead, the company has integrated the mantra of responsible alcohol consumption into its corporate governance structure and what it calls its corporate marketing code. That code is reviewed every year to 18 months, and covers everything from marketing, packaging, R&D, customer training and engagement with organizations such as Mothers Against Drunk Driving (MADD). During the 2016 holiday season, Diageo even went so far as to launch a virtual reality experience that placed consumers in the front seat of a car involved in a drunk-driving crash – widely lauded as an industry first.
For any employee tasked with being in lockstep in this new and rapidly-changing business setting, Reset is essential reading. As Rubin and Carmichael conclude in their vivid 211-page work, “This new era’s ‘sweet spot’ is where the needs of the customer, business and society intersect. Businesses finding that sweet spot are building trust and meeting the rising expectations for business in the new social landscape.”
Image credit: Barie Carmichael
Leon Kaye has written for 3p since 2010 and become executive editor in 2018. His previous work includes writing for the Guardian as well as other online and print publications. In addition, he's worked in sales executive roles within technology and financial research companies, as well as for a public relations firm, for which he consulted with one of the globe’s leading sustainability initiatives. Currently living in Central California, he’s traveled to 70-plus countries and has lived and worked in South Korea, the United Arab Emirates and Uruguay.
Leon’s an alum of Fresno State, the University of Maryland, Baltimore County and the University of Southern California's Marshall Business School. He enjoys traveling abroad as well as exploring California’s Central Coast and the Sierra Nevadas.