"CSR as a core business strategy" - masterclass by John Holm at MSM Romania

www.msmromania.org
facebook.com/msmro
@msmromania

Changing The Conversation….

Community

Maastricht School of Management Romania www.msmro.org

Food For Thought…

“No Social program can rival the business sector when it
comes to creating jobs, wealth, and innovation that
improve standards of living and social conditions over
time. Any business that pursues its ends at the expense
of society will find its success to be illusory and
ultimately temporary”

Michael Porter – H.B.R. – Strategy & Society December 2006

Food For Thought…

“Businesses will often be far more effective than
governments and nonprofits are at marketing activities
that motivate customers to embrace products and
services which create societal benefits, like healthier
food or environmentally-friendly products.”
Michael Porter & Mark Kramer – H.B.R. – Creating Shared
Value January-February 2011


The Demand For Market Virtue

“Few firms have been rewarded or
punished by the financial markets for their
social performance”
Demand for Market Virtue Pg.73


Getting Back To The Basics….
 What exactly is Corporate Social Responsibility?

 Why do companies undertake CSR Initiatives? How do they
measure success?

 How is CSR communicated/promoted internally among
employees? Among leadership?

 How can CSR have a negative impact on my bottom line?


And Defining Relevancy
 Which NGOs should For-Profits choose to collaborate with
and why?

 Non-Profits and ethics…Where are the boundaries?

 If profits fall, will CSR Initiatives be the first to be cut?

Can CSR Initiatives be profitable?


The Four Key Myths of CSR

Myth 1
"The ethical consumer will drive
change.”

Deborah Doane – “The Four Key Myths of CSR” Stanford Social
Innovation Review, Fall, 2005



Myth 2
"There will be a competitive 'race to
the top' over ethics amongst
businesses.”




Myth 3
"In the global economy, countries
will compete to have the best
ethical practices."




Myth 4
“The market can deliver both short-term
financial returns and long-term social
benefits”
This myth can be ‘debunked’ in Romania as the case study
will illustrate


The Key Question…

In what conditions does it appear to make
business sense to implement CSR?


Category 1

CSR is part of the company’s corporate strategy
and business identity.

Ex. Patagonia, Starbucks, C&A, Ikea, Merck


Category 2

Firms that have been targeted by activists for
the visibility of their brands and are highly
defensive and risk-averse.

Ex. Shell, Nike, McDonalds, and Carrefour


The Main Business Stakeholders

What are the foundations for the business
case of CSR?

• Consumers

• Employees

• Investors



The Investor

Two issues must happen to effectively measure how
corporate performance affects share price….



The Investor

1. Provide verifiable information about their social
and environmental performance in a form that is
comprehensible and relevant to mainstream
investors

Ex. Triple Bottom Line??



The Investor

2. Investors must take social impact into account
before making business decisions

Short- term pain but long-term pain not yet proven

ex. Reebok labor policies better than Nike


‘Business-As-Usual’
CSR


‘Business As Usual’ CSR

PNL budgetary item that gets in the way of
profitability?

A PR Opportunity/Photo Op with no value add to
core business?

Extra salary and payroll in times of economic
uncertainty?

Over-Promising….

http://www.brandweek.com/bw/content_display/news-and-
features/direct/e3ieedb56d6b7d31495787a33374c63794b


And Under-Delivering….

http://www.greenpeace.org.uk/blog/climate/bps-wins-coveted-emerald-paintbrush-award-worst-
greenwash-2008-20081218


And the result…

http://www.suite101.com/content/bp-goes-from-beyond-petroleum-to-big-polluter-in-
csr-setback-a235924


Or Strategic CSR…


Or is it Strategic CSR?

A Competitive advantage among your evoked set
that sets you apart?

A ‘positive’ emotional connection to your core
consumer?

A part of your core business strategy that keeps
employee morale high thus lowering turnover… and
expenses?

A tool that provides innovation and opens new
markets…and improves the bottom line?

Strategic CSR
Value Proposition - Best Price / Best Deal
 Low cost is the core business
 Every year IKEA plans to cut 3%-5% of its cost
• Re-design products
• Overhaul manufacturing techniques
• Shortening supply chains
Bang Mug Example
 Design made mug shorter and more stackable
 Mugs per pallet from 864 to 2,024
• Shipping costs dropped 60%

Strategic CSR

How vital is sustainability and an eco-
friendly attitude to IKEA?
U.S. locations are aiming to reclaim 90% of store
waste by the end of 2012
 Increased energy efficiency by as much as
20% by lighting, heating, and cooling systems
facilities
New locations
 Access to ports or strong rail corridors
 Often qualify for brownfield redevelopment credit
 Ocean and rail are some of the least carbon intensive
shipping options


IKEA and the WWF - Why?

International leader in responsible forest
management
One of the largest consumers of forest
product
 Risk of illegal wood coming into the Supply
Chain
Supplier Code of Conduct
 Compliance is only at 50%
 Only 4% in China
 Boosted the number of unannounced audits to its
suppliers and tightened standards for resource use and labor
practices

Asking the right question…

The essential test that should guide CSR
initiatives is not whether a cause is worthy
but whether it presents an opportunity to
create shared value


Prioritizing Social Issues

Social Issues of
Generic Social Value Chain
Competitive
Issues Social Impacts
Context

Social Issues Social Issues that
Social issues
that are not significantly
that are
significantly affect the
significantly
affected by a company’s
affected by a competitiveness
company’s
company’s in the locations
long-term
activities where it operates
operations


Examples

Carbon Emissions might be generic social issue for
Banca Transilvania (Financial Services) but a value
chain impact and competitive issue for both IKEA and
Dacia Renault

The impact of Malaria in Africa may be a generic social
issue for Brico Store but a value chain impact for Glaxo
Kline Smith and a competitive issue for Anglo American
Mining Company (labor)


Responsive and Strategic CSR

 Corporate Involvement in Society – A strategic approach

Social Dimensions
Generic Social Value Chain
of Competitive
Impacts Social Impacts Context
Strategic
Mitigate harm from philanthropy that
Good citizenship value chain activities leverages
capabilities to
Transform value improve salient
chain activities to areas of competitive
Responsive CSR benefit society while context
reinforcing strategy
Strategic CSR


Directly Influencing the Bottom Line:
Purchase Behavior
Positive Link between CSR and Purchase:
The consumer supports the issue central to the
company’s CSR efforts

When the social issues align with the company’s
strategy

When the consumer is not asked to pay a high price for
Social Responsibility

Price and Quality

The Consumer…It’s Complicated

More than 75% of US consumers report that they
would avoid purchasing products made under poor
working conditions

However…
Half of US consumers thought it was the
responsibility of business and not themselves to do
more to protect the environment

Is the Romanian Consumer Naïve?

șmecher
• (slang) An individual who can handle any kind of situation, that is
always on top of things, is cunning, is intelligent, is street-smart is
slick, is a wiseguy. Somebody calm, crafty or deceitful who never
backs down.
• (slang) someone who makes "easy money" or a lot of money
usually by illegal or questionable means but necessarily without
hard work.
• slick, wiseguy


The Consumer – The Methodology

Identify the key demographic/psychographic
consumer segments that would be most
influenced by CSE Strategies.


Actualizers
 For them the most important in life is to
‘leave a mark’ create something enduring
 Family & friends oriented
• Enjoys spending time with the family
• Enjoys entertaining people at home
 Actualizers are more active than the life stage average
• They often go out to cinema, restaurants and theater
• They are interested in arts, listen to music and read books

Consumption
 Their consumption is characterized by the use premium of brands and a
large variety of different ones
 Prefer organic food
Source: Garrison Group

Balancers
Trying to balance work and private life priorities
• They are very concerned about providing quality time
for the family
 Entertainment and socializing typically includes the
whole family
 In raising their children they are liberal, but
consistent
 In their career they are striving and disciplined
Positive thinking - satisfied with their lives
Concerned about arts and creativity
• They read a lot and listen to music
• Balancers more modern and open-minded
Consumption
 Their high standard of living enables them to buy high quality brands, and
stick to them - brand loyal
 They are more spontaneous purchasers than average

Libri Book Chain Market Entry 2007

 Established a precedent of an international book chain
successfully moving from one publishing language to
another by expanding into the Romanian market

 Hungary’s largest ‘specialty’ book retailer garnering
Super-Brand Status two consecutive years

• archive.superbrands.hu/konyv_2005/pdf/libri.pdf

 Hosting renowned authors such as Salman Rushdie

• http://www.muvesz-vilag.hu/irodalom/hirek/6878

Why Romania? The New ‘Golden Child’

 Over 100 Malls in planning phases in the next 5 years (2008-
2013)

 Only one specialty book chain with 3 stores in 2007

 The largest book retailer with 71 stores also sold electronics,
kids toys, music, and paper products

 Only 17% of the public bought at least one book in 2006
compared to 54% in the United States and 82% in Hungary
displaying ENORMOUS growth potential


Romania - Market Entry Obstacles
 Cultural Hurdles:
• Hungarian retail chain entering Romanian publishing
community
• Language adaptation and identification with Romanian
consumer

 Business Hurdles:
• Supply Chain – HQ in Cluj-Napoca
• In 2007, Romania ranked last of all EU countries in
transparency
 http://www.transparency.org/policy_research/surveys_indices/cpi/2007


Libri Romania
Passion for Books, Passion for People

Transparency as a Value Proposition

Employees Community

Shared Multicultural
No
sense of Multiethnic
„sub masa”
community

Industry-first 12 Gifts of
consignment D.E.A.R
Christmas
contract


Little People/Temerarii 2007

 Founded in 1996 in Cluj-Napoca with current offices in Bucuresti, I asi, and
Timisoara

 Collaboration with all 12 Children Oncology Wards in Romania focusing on
outreach programs

 76 Oncology volunteers (highly trained)

 194 Cancer survivors as volunteer patient advocates

 104 Corporate Volunteers


Little People/Temerarii 2007
Business Partnerships Community Partners

Danone Romania British Embassy
E-On Gaz Romania Romanian National Theatre
PWC Hungarian National
Starbucks Theatre
Libri Book Chain Cluj and Timisoara Town
MOL and PETROM Halls
Various Special Education
Inst.

Step 4 – Identifying The Consumer

The Consumer

Business to Business to
Consumer Community

Demographic Psychographic Babes Public
CEU
Targets Targets* Bolyai Schools

Mothers Teachers Balancers Actualizers


Business To Consumer

Demographic Target

Families/Mothers with expendable income

Preferred loyalty card holders

Teachers


Business To Consumer

Psychographic Targets*
Actualizers
Balancers

C.S.R. Social Issue/Value Platform are directly
correlated to these two targets.


Business To Community

Direct sales to many public schools receiving
public funds to build library

Direct sales to Central European University
sharing the same value platform

Exclusive collaboration with…


Babes-Bolyai University


The Strategy & Implementation….

Change the Conversation…


Libri Romania
Passion for Books, Passion for People

The Results

Year to Year Comparison

Dec.2007=344 548 Dec.2008=527 567
Jan.2008=167 379 Jan2009=264 369
Feb.2008=171 837 Feb.2009=217 113
Net Year to Year
Revenue Increase
683 864 RON of 52,3% 1 009 049 RON


CHANGE THE CONVERSATION!!!!!!
 WHO – Who are your customers and are they going to be receptive
to your C.S.R. initiatives?

 WHAT – What is your value proposition and how is C.S.R. related to
your core business?

 WHEN – When did your direct competition begin launching CSR
initiatives and how often do you run CSR competitive diagnostics?

 WHERE - Where are the areas that your company can create a win-
win situation for both community and bottom line?

 WHY – Why are you investing in C.S.R. initiatives if you cannot
deliver what you are promising?

Mulţumesc pentru atenţia
acordată!

John Holm | TRANSNATIONAL PERSPECTIVES

jholm@tpgroup.eu
Twitter: transnational_1
Skype: tpgroup.eu


"CSR as a core business strategy" - masterclass by John Holm at MSM Romania

Recommandé

Recommandé

Contenu connexe

En vedette

En vedette (8)

Similaire à "CSR as a core business strategy" - masterclass by John Holm at MSM Romania

Similaire à "CSR as a core business strategy" - masterclass by John Holm at MSM Romania (20)

Plus de Armina Stepan

Plus de Armina Stepan (10)

Dernier

Dernier (20)

"CSR as a core business strategy" - masterclass by John Holm at MSM Romania