A recent discussion thread on LinkedIn has really helped to crystallise a few thoughts on the links between approaches to corporate strategy and a business’ predisposition to manage CR and sustainability in a certain way.
All the pieces have been there but, until now, I hadn’t really brought them all together in one place or been able to properly articulate the apparent connections. Here goes…
A company’s attitude and approach to CR ultimately depends on their approach to corporate strategy and their perceived basis of competitive advantage.
If you derive competitive advantage through cost leadership/operational efficiency, a measurement mindset is likely to dominate your thinking on CR. At the lower end of the spectrum (since your customers are motivated by the lowest cost solution) your approach is about cost avoidance – doing the minimum to respond to social pressures, e.g. through voluntary codes and compliance with regulations. At the higher end, companies may actively pursue greater energy efficiency as a means to realise significant cost savings. Either way, you’re living in the world of CR 1.0, somewhere between Levels 1 and 3 on the CR Continuum.
It is only likely to be companies that derive advantage through the value disciplines of product leadership or customer intimacy (the ‘differentiation’ half of Porter’s generic strategies) that are naturally open to adopting a CR 2.0 view – i.e. a more ‘systemic’ approach, where CR and sustainability is used as a fundamental design value to challenge the business model and identify opportunities for product and process innovations.
What matters to product leaders is design, innovation and brand marketing, supported by a flexible culture. For customer intimate companies, it’s about personal service, consistently exceeding expectations and developing lifetime value, supported by a culture that devolves decision authority to those closest to the customer. Either way, it’s a mindset focused on how to create new value for customers through maximising the value of the business’ human and intellectual capital.
As with all theories, I’m sure there’ll be exceptions. But as a general rule, I reckon there’s definitely something in this. What do you think?