The impact-to-scale ratio

Every so often, I cannot help but comment from afar on corporate social responsibility (CSR).  I worked in this area for IBM and GE before coming to Acumen, and I greatly appreciate what it takes to get big companies to do things differently – to incorporate a broader set of stakeholders and to think in terms of longer time horizons when making decisions.  I also know how hard it is to move the needle on this stuff (e.g. Nike).

With this potential for impact, as a general rule I’m always amazed at what companies can get away with talking about and not talking about in public forums.

Simply put, should it be OK for a company to talk about a single program or initiative if that program / initiative is tiny relative to the scope of the entire organization?

I don’t think it should be, but time and again I’ve heard CEOs of companies with $50 billion to $100 billion in revenues give major speeches about $20 million programs (that’s 0.2% of revenues!).  Not once, but often.  And the programs are used as proof points for statements about how the company conducts its business globally.  It would be no less absurd for a CEO to talk about one call center or to talk about its smallest division in its smallest market – which of course would never happen.

There should be some minimum threshold of impact to scale before any CEO is allowed to talk about anything of this nature.

The reason we care about how corporations behave is because of their size and scope.  So: Apple’s supply chain matters a lot, what Apple does in and around Cupertino is good to know but essentially irrelevant.  Pepsi’s Refresh program is a wonderfully innovative form of corporate philanthropy coupled with crowdsourcing, but their opportunity for real global impact starts and ends with what they are and aren’t doing about obesity and  diabetes.  When Wal-Mart puts its weight behind fluorescent bulbs it matters.  If BP were to shift a major portion of its business away from fossil fuels the world would care, but Deepwater made it pretty clear that they are not “beyond petroleum.”

I’ve argued before that we can do much better than “more than nothing” when talking about the role of corporations in building a better world, and when you get Fortune 50 CEOs in a closed room to talk about the world and the future it’s clear that all of the top companies care deeply about these issues and see them as core to their long-term success.

But somehow we keep on falling into this trap of talking about nice, ancillary philanthropic endeavors as if the person on the stage is running a medium-sized nonprofit and not a multi-billion dollar, global institution.

We can do so much better.

4 thoughts on “The impact-to-scale ratio

  1. Maybe, size is not everything, and big companies have to make a beginning in a small way. But they cannot try to create a PR campaign without making any meaningful contributions. Do you think, the move towards integrated reporting will help the public get good visibility about what companies do and don’t in discharing their business, social, environmental responsibilities?

  2. Sasha, You make a very pertinent point. Although I’ve never worked in CSR, I understand your anger. I hope in the connected world of today, people would eventually be able to differentiate between those who are serious about change and those who see CSR as a Brownie point vending machine.
    You might want to correct the text to: “…Wal-Mart puts its weight behind fluorescent bulbs…”

  3. Whoops – thanks Subir. Have made that change (Freudian slip?!)

    Sankar, I think that integrated reporting is a good thing, and at the same time I think the move towards real change is slow and impact will come as the result of visionary leadership and not compliance.

  4. Thanks for a great post!

    I fully agree, and I was also thinking… Next to the impact to scale ratio, shouldn’t it also be about core business vs. support functions? For example, even if Pepsi came up with a way to produce its sodas in a “cradle-to-cradle way” (the impact would be large), to me this would still be answering the wrong question. As long as their core business contributes in a major way to the obesity epidemic, this is what the discussion should focus on, and the rest is just distracting from that discussion. What do you think?

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