|A ‘new’ business concept for Europe Europe's Business Concept (CSR) - The Future 500 China 2004 Conference
|Ludo van Oyen
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It seems very strange to state that an economic system that has created so much wealth in the western societies could be called ‘a success that failed’.
My opinion is in fact that it is destructive to the human health, human spirit and the ecosystem that supports our life.
The presently dominant ideas about what a successfull economy means, how it is defined, how a succesfull business concept should be defined, originates in the USA and – unfortunately – has taken ground in the past 15 years or so in many boardrooms of European public companies. At its heart, at its very core, the dominant USA business concept focusses solely on maximizing profits for the sake of the shareholders. Its success is a myth, even a lie. It has put a high price on the development of societies and resulted in the degradation of ecosystems by using a very limited definition of “creating added value”.
There is an alternative for the American way of doing business. It is called “the Corporate Social Responsibility approach to business”, also called the “Triple P approach” (‘P’ stands for ‘people, planet and profit’). Fortunately, many american business leaders have discovered this concept, but it is especially in Europe and in other important economies of the world, that this business concept has aroused a lot of interest.
Its key premise is that a business organization creates added value for a broad spectrum of stakeholders, of which only one is the capital market (i.e. shareholders). Its objective is to meet the needs of present and future stakeholders, thereby exceeding legal requirements, by integrating the economic, social and environmental dimensions into the business strategy and operations. This business approach prepares an organization in a sound way to compete in the ever more complex and evolving global economy, because it creates value for a spectrum of stakeholders that it relates to, being:
A. its own people, its employees;
The key question to be answered is:
Is the “Corporate Social Responsibility business approach” successful, is it competitive? Is this an alternative for the presently dominant USA business concept of focussing solely on the maximization of shareholder value?
My answer to that question is definitely affirmative, I even believe that in the long run this approach will be more successful than the presently dominant US concept. I acknowledge the fact that academic research still has over time to provide the hard scientific data supporting the early anecdotal evidence.
This in itself is already a remarkable observation.
We also should clearly acknowledge this:
“The CSR approach is no panacea for weak, spineless leadership and ineffective, unprofessional operational implementation, but it explicitly has to be stated: neither is the “maximizing shareholder value approach”.
So there is an alternative for the American way of doing business, “the Corporate Social Responsibility approach to business”.
Now I wish to share with you the following, more specific characterizations of the values created for the different stakeholders.
A. own people, employees
Socially Responsible companies see their members as human beings (holistic view), rather than as human resources (mechanic, instrumental view):
SR companies are focused on:
By creating superior value for their employees, SR companies build professional, creative, innovative and flexible – in other words – competitive organizations.
SR companies both satisfy and surprise their customers by:
Providing safe, healthy products (services).
By creating superior value for their customers, SR companies create stable, loyal sources of income and a solid brand image - in other words - a competitive market position.
SR companies regard their suppliers as “long-term partners in business”:
Quality enhancement, product cost reduction, new product development are integrated in these relationships – working together based on shared values (economic, social and environmental) and trust;
By creating a superior quality of relationship with their suppliers, SR companies create trustful, innovative and professional partnerships in business that lead to increased competitive strengths for both.
D. The Community
SR companies create value on three “levels of community”:
By creating superior value for the communities in which they operate, SR companies remain competitive by gaining a strong ‘license to operate and license to evolve’.
E. Capital Markets
SR companies are attractive for the capital markets, the financial community, because of:
Their enhanced competitive strengths.
Strong, value-driven leadership and professional execution of the CSR approach to business lead to sound profits, satisfying the financial community in general and the own shareholders in particular – in other words – an improved competitive position in accessing capital.
SR companies are environmentally friendly, because:
They use a Life Cycle Assessment approach to the ecological dimension of the business process impact of the whole value chain in which they operate
By acknowledging and operating within the constraints of ecosystems in which they operate, SR companies create innovative products, a positive brandimage, reduced environmental liability, and therefore a stronger, more competitive market position in evolving and new markets.
The Corporate Social Responsibility business approach is not easy to implement. Besides strong, value-driven leadership it demands ‘out-of-the-box-thinking’, an open and receptive mind and attitude, integrity, unconventional creativity and the involvement of all main stakeholders. It requires professional in- and external process-management, and persistence.
But the results will reap rich rewards for European businesses. Basically they are the following:
new sources of sales and profit;
There are not enough entrepreneurs yet that have the vision, courage and entrepreneurial spirit to take the necessary strategic steps towards sustainable business development: creating social, environmental and economic wealth simultaneously.
But their numbers are increasing. And a new business mood for the 21st century has definitely been set. It is a great challenge and transition, in which the role of the European Union will be to set the market frameworks that facilitate this shift towards a globally competive, socially responsible and environmentally sound economy.