When a Whole Industry Needs to Take Responsibility

When a Whole Industry Needs to Take Responsibility

All over the streets of Johannesburg you will see small piles of hardened concrete that have been accidentally or deliberately dumped by those huge trucks carrying ready-mixed concrete. They are an eyesore, they occasionally damage vehicles and tyres, and may have even led to collisions and injuries. And they seem to last forever, because after all, that’s what concrete is designed to do.

Whenever I see these unsightly piles, I get quite cantankerous, because I grew up with the belief that you should always clean up after yourself if you make a mess, as a sign of respect for others and for yourself. It’s maybe a bit old-fashioned, but it seems that this is not something that has been expressed by senior managers in many organisations today.

It’s perhaps unfair of me to pick only on ready-mixed concrete companies in this article, because this lack of responsibility and damage to society occurs in every industry. Municipalities and others dig up roads leaving massive holes all over the place. People spray graffiti on other people’s property. Cars drive into your vehicle or outside wall and the drivers don’t even leave a note of apology, never mind take responsibility. Customers bash into bottles of mayonnaise and just leave their mess lying around. And do it continues.

Some industries have an ombudsman who, in theory, has been specifically appointed to protect customers – and society – from the greed and unethical behaviour of some member companies. Others, like electricians, plumbers and construction companies, have set up industry associations with strict rules on how members must behave towards and perform for customers, (or they risk expulsion.) In yet other industries, such as lawyers and estate agents, there is even a trust fund that has been created to refund customers who have been ripped off. Even governments have jumped on the protection bandwagon by creating laws and bodies to protect consumers from unscrupulous businesses.

On the one hand, I truly believe that the “invisible hand” of the free market system should take care of this problem, where irresponsible businesses that cause harm will simply not survive as customers withdraw their support. I am also a firm believer that we don’t need even more legislation and laws to take care of customers and citizens. I will not argue with you if you think I am naïve, and that companies need to have the threat of negative consequences, possibly even jail time for executives, in order to toe the line.

However, the old-fashioned value system of the rules we all learnt at the age of five in nursery school still apply, and one of these is that you clean up after yourself. Another one says that if you have hurt someone, or done damage, confess, take responsibility, and fix the harm, destruction or loss. Otherwise you will have to bear the consequences.

Of course, some businesses have taken a very positive stand, and they must be admired. In fact, by making certain choices they don’t only articulate a value or purpose that goes far beyond just making shareholders happy, but also, in the immediate short-term, require a significant investment of money, time and innovation. In addition, they even risk losing customers and sales by doing what for them is “the right thing.” (In many cases, the remaining customers like what they see and become more supportive, while a new group of customers is created because they now support the new cause.)

While most businesses wait for pressure from governments, the media and society to make changes, there are others that do so well before they need to. In one illustration, at least two mega-companies, Unilever and Amazon.com, have unequivocally declared that their investors should not expect to see quarterly results announced because they were pursuing long-term growth, increasing value, and creating sustainability. In fact, Paul Polman, CEO of Unilever, proclaimed that shareholders were welcome to sell their stocks if they did not agree. (The strategies at Unilever also included purchasing all raw materials from sustainable and ethical sources, and reducing their carbon footprint by half.)

In another example of putting your money where your mouth is, an American pharmacy and health products retailer, CVS, controversially decided that selling cigarettes at their hundreds of stores did not fit in with their values, and banned all cigarette sales in February 2015. There was an outcry from cigarette manufacturers and lobbyists, but did they lose a big chunk of sales? Of course they did, but as Fortune magazine put it in an article from its 3 September 2016 issue: Last year, CVS Health announced that it was banning tobacco products from all of its stores. The decision was considered a bold statement since tobacco garnered the drug store some $2 billion in sales each year… But CVS said the results show that there has been “an additional 1% reduction in cigarette pack sales across all retailers in states where CVS had a 15% or greater share of the retail pharmacy market… In total, approximately 95 million fewer packs were sold.”

However, within two years CVS found that their operating profits also increased by almost 4½ % in spite of the dramatic drop sales of cigarettes. How did this happen? As they reported in the Wall Street Journal, “The removal of cigarettes did have a negative impact on front-of-the-store sales, but the strength from the pharmacy business offset that decline. Pharmacy revenue was up 16%.”

Many food companies have also pursued positioning themselves with healthier goals of better and more nutritional food free of fats, sugar and salt. Most of them have also – under pressure – included labelling products with certain warnings and measures of nutritional values. It may be true that most customers don’t even know how to read these values, but the general idea is good. I’ve even noticed that the bastion of junk food, McDonalds, has communicated warnings to customers that they should not over-consume the products sold, and pursue goals of fitness, and giving one’s body a chance to recover and restore itself.

So what can your business do to deal with paradoxical situations when you want to do the right thing but don’t want to risk your success? Andrew White of Oxford University writes that company and other leaders who are determined to deal with the puzzling inconsistencies and contradictions of ethical behaviour need to achieve three major goals to settle them: first, accept them; then confront them; and finally discuss, resolve and figure out how to transcend them. Let’s briefly look at each stage in turn.

Accepting the Contradictions: This is the stage which requires great courage and honesty.

  • Start by clearly and eloquently understanding which of the various stakeholders have what expectations from your organisation. You may need to prioritise these stakeholders, and you also need to clearly understand the short, medium and long-term goals that they have of your business or organisation. Remember, sometimes they themselves don’t know, so your insight must come from meaningful discussions and conversations – especially those that are perhaps obscure.
  • You also need to have clear insight into the possibly conflicting needs and expectations of the different stakeholders. Facilitating a balance between these is hard work, but cannot begin until you have acknowledged that there are contradictions and conflict between different groups. A truly skilled leader, facilitator or negotiator will be able to persuade these different group to be empathetic with the needs and expectations of other stakeholders, and to be prepared to make trade-offs in order to achieve the better good. If all else fails, you may need to insist that some stakeholders, (for example customers and the community at large,) are more important than others, like shareholders and investors.)

Appropriate Confrontation: Dealing with conflicting needs and expectations also requires some skill.

  • When clashes seem inevitable and disagreements seem impossible to resolve, you need to carefully listen to particularly those people or groups that are most vociferous in disparaging or being unsympathetic towards your organisation. You may be very tempted to ignore those that don’t have a direct influence on your business, such as special interest groups that seem particularly hostile. Your ability to resolve their unhappiness and concerns and even accommodate their opinions through decent discussion, negotiation and dispute resolution, can be very impressive for everybody, and demonstrates your commitment to doing the right thing.
  • Your commitment to inclusiveness and to following your ethical values may take a long time, and may also need to tackle some well-established culture, behaviours, infrastructure and structures in your organisation.
  • Also be careful that you take full responsibility: It doesn’t help to have the attitude that “everyone else is doing it,” but you also cannot pass on the problem to others. In the case of CVS, it is probably true that most smoking customers did purchase cigarettes somewhere else, but at the same time 1% of all smokers found a good excuse to quit. CVS was seen as a leader and an influencer by most other stakeholders, (except cigarette suppliers.) With the example of sugar, salt, preservatives, fat and other additives, the only really important alternative is to persuade and educate customers that your products can still be tasty even without all of these – and prevent harming themselves in the long term. That is what ethical pioneers do, even against impossible odds and predictions of failure.

Transcending the Paradox of Doing the Right Thing: Work in the “blue ocean” of unasked for, unexplored, unexpected and innovative options – and make your rivals irrelevant.

  • The moment you start creating limitations of your industry in which you operate, you could be dead in the water. Imagine if Richard Branson had accepted that “This is the way airlines are supposed to be”? Or if Guy Lalibert had not considered dumping animals and tents for his circus acts instead of believing in what Cirque du Soleil does in such a special way? Or if Steve Jobs decided to copy and imitate what Nokia did? You need to be on a mission to change or disrupt everything that you do and that your industry does – and also let go of the traditional conventional thinking that defines success. Business history is full of examples where innovative pioneers have done something spectacular to change everything: Uber, TripAdvisor, eBay, (and most internet companies,) but also companies that make things like wind-up radios and torches that don’t need batteries, or clothing made from recycled plastic bags, or businesses that make and sell a variety of cold or hot beverages that challenge the traditional gassy drinks we grew up on.
  • Finally, make a public commitment to dramatic and life-changing actions rather than cowardly intentions to “do something in the future.” This may mean that you reduce or even kill the things that you currently do in your organisation, and to increase others to way beyond traditional thinking. If you are particularly brave, you may even create something from scratch: “We will be the first ion the world to do….” That is what true innovation, disruption and/or transformation is all about. Make those choices rather than making bland statements of intent.

The leaders that get this right will reap the rewards in today’s unpredictable world, and I fully believe that they will be universally admired, and remembered for the better world they left behind. Sure, they will encounter many obstacles and criticism: Trust will not come easily from cynical stakeholders who are not used to authenticity, and many doubters will create uncertainty by pointing out the weaknesses and flaws but without emphasising the potential benefits and rewards. The general acceptance of the new approach may be initially slow to be taken up, to the point that rejection by conventional “powers that be” such as the government feel a need to attack. But is there a choice for your company? What is the price you pay individually and collectively if you don’t take action?

Oh, and next time you see one of those eyesore piles of hard concrete in your neighbourhood roads, please pick up the phone and call any concrete supplier demanding that they clean up their mess. You may have better luck that I did.

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