Monday, December 3, 2012

CSR: Smart Business or Communist Plot?

It really does sound like tree hugger nonsense -- corporate social responsibility. This silly, childish notion that corporations, the greatest engines of economic monstrosity should suddenly be nice and actually spend money on "good" things. What about shareholder value maximization? Has the world gone mad??

Alright, so I exaggerate. The point is the biggest companies on earth did not get there by being kind stewards of the environment and by giving labor higher wages. It's just not in their corporate DNA so it's not realistic for them to adopt it successfully. Their best bet is to use it strategically, as a cost savings measure.

However, it seems that corporate social responsibility (CSR) is something that can be successfully built into the business from day one. That means it's very difficult for existing businesses but a potentially powerful advantage for future businesses.

If from it's birth, a corporate culture dedicated to the ideals of social responsibility were developed, it could enjoy a significant business advantage. For example, the TOMs shoe company which gifts a pair of shoes to a needy person in the world for every pair they sell. This has garnered the company untold millions of dollars in free publicity which creates the necessary brand awareness needed for people in industrialized nations to overpay for cheap shoes. They buy because they are doing something good for someone more needy while simultaneously making a personal statement for the world to see. This model has been wildly successful and I suspect we will see it re-emerge in many varieties.

The point is that a successful business model can be designed around CSR. If you work it into the DNA of the business, CSR can be a powerful marketing tool. If you correctly tell the story of how you can help the world, you will attract socially conscious customers.

R-Squared Computing | Lou RG | Nearly Free IT | Firm Wisdom

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