Filed under: Corporate Citizenship
The bankers and tax-dodgers may get the headlines, but the Occupy movement is also taking aim at the corporate PR and lobbying industry. It has an astonishingly bad reputation: anti-democratic, unaccountable fixers for the special interest of the 1%, sitting at the nexus of big business, government and finance. Here’s some of the critical voices:
- “PR agencies gloss over, tone down and greenwash some of our more controversial industries” – Andy Rowell of the excellent Spinwatch website.
- “Some PR companies on the one hand work for an environmental organisation and on the other hand are getting paid by some agent of the military-industrial complex.” – Mike Townsley of Greenpeace International talking to Ethical Corporation.
- “Sometimes PR companies try to defend the indefensible, and often they are unable to hold up the opinion that their clients want.” – Alex Wilks of Avaaz.org
- “The “invisible men” who control our political debates and public opinion, twisting reality and protecting the powerful from scrutiny”. – Center for Media and Democracy’s PR Watch website. They go on to say: “[PR is a] multi-billion dollar propaganda-for-hire industry [that] concocts and spins the news, organizes phony grassroots front groups, spies on citizens, and conspires with lobbyists and politicians to thwart democracy.”
It’s hardly surprising – the industry has a long, shameful record of using dubious methods to promote clients’ interests: fake science, spin, smears, abuse of political access. Here are some examples:
BURSON-MARSTELLER was busted in May last year for trying to plant bogus anti-Google stories on behalf of Facebook. It’s response was also less than honourable: blame the client. John Vidal’s account of the company is extraordinary:
The world’s biggest PR company was employed by the Nigerian government to discredit reports of genocide during the Biafran war, the Argentinian junta after the disappearance of 35,000 civilians, and the Indonesian government after the massacres in East Timor. It also worked to improve the image of the late Romanian president Nicolae Ceausescu and the Saudi royal family.
Its corporate clients have included the Three Mile Island nuclear plant, which suffered a partial meltdown in 1979, Union Carbide after the Bhopal gas leak killed up to 15,000 people in India, BP after the sinking of the Torrey Canyon oil tanker in 1967 and the British government after BSE emerged.
In the past few years it has acted for big tobacco companies and the European biotechnology industry to challenge the green lobby and counter Greenpeace arguments on GM food.
APCO is imfamous for running the Phillip Morris funded Advancement of Sound Science Coalition, set up to discredit links between tobacco and cancer. In 2010, the “Push Michael Moore Off a Cliff” smear campaign was exposed by a whistle-blower:
We felt that this movie would have such an impact that it would really pave the way for legislation to be passed that could be very detrimental to the insurance industry. So it was very important for the insurers to attack this movie as fiercely as possible,” Wendell Potter said. “We developed a very, very sophisticated communications campaign to make sure that people saw him [Moore] as a Marxist, as a socialist, and that he was going to be destroying the American Dream.
BELL-POTTINGER was secretly recorded by the Bureau of Investigative Journalism boasting about its access to the heart of the government, and how it uses the “dark arts” to bury bad coverage and influence public opinion. It also flaunted its prowess at cleaning up Google results and “sorting” Wikipedia entries. It’s excruciating to watch, but here’s the film:
Wikipedia founder Jimmy Wales said,
I am astonished at the ethical blindness of Bell Pottinger’s reaction. That their strongest true response is they didn’t break the law tells a lot about their view of the world, I’m afraid.
“Ethical blindness” would seem a kind way to describe some of these misadventures. The industry clearly has an ethical issue. This blog is about “the power of communications to bring about positive social change” – that doesn’t seem to be on the agenda for most PR houses. Yet they have an extraordinary opportunity: in many cases, they are the conduit between public sentiment and the powerful elites. That’s got to be an interesting place to be.
Filed under: Corporate Citizenship, Google, Unilever | Tags: Anglo-American, Corporate Citizenship, GE, Google, Kimberley Clark, Occupy, SABMiller, Unilever, Walmart
This year, I’ve had conversations on with ten major corporations about business and society – mainly FTSE-100 companies, and mainly at CEO or Chairman level. All really interesting.
They’re all keenly aware of the hostile, anti-corporate sentiment surrounding them. As one client put, “my teenage kids think we’re the bad guys”.
So it’s been interesting to read Screw Business As Usual – not an Occupy manifesto, but the new Branson book. I doubt that Branson’s kids think he’s one of the bad guys; he’s still the anti-establishment rock-star CEO.
It’s a good read. Raconteur-ish, but well researched. As you’d expect, there’s plenty on the power of entrepreneurial thinking, and its potential to solve the world’s problems.
More surprising is that Branson – the self-styled Goliath challenger – is a real champion for the positive impact that big corporations can have. He gives the clearest articulation of this when discussing Walmart:
[Walmart] now has 100,000 suppliers, 2.1 million employees, 200 million customer visits oer week and annual sales of $419 billion (greater than the GDP of more than 166 countries)… Just their sheer size means that when they do get something right it has incredible ripple effects. They can shift a whole industry by applying pressure in the right places… They can also create millions of opportunities when they shift their buying strategy.
It’s a good articulation of why I’m doing what I’m doing right now. There are plenty of other examples he picks up:
• GE’s commitment, through Ecomagination, to investing $1.5 billion annually into R&D on clean tech.
• Anglo-American’s pioneering work to fight HIV/AIDS in South Africa, before the ANC recognized the problem.
• Google’s work making data available to promote an open discussion on global drugs policy.
• Kimberly-Clark’s invention of the tubeless toilet-roll (trivial? 17 billion tubes go into landfill each year in the US alone. Who knew).
• SABMiller’s innovative work in Africa’s newest country – South Sudan – brewing beer from Cassava to in order to buy from local farmers.
• Unilever’s Project Shakti in India, establishing thousands of female “micro-entrepreneurs” in a distribution network across 135,000 villages.
Some of these companies are our clients – and it’s safe to say that none of them have had an easy time being the good guys. All of them have had difficult issues: tax avoidance, palm oil, privacy, safety, etc etc. But these businesses can be a positive force – and Branson’s book gives a handful of them a slap on the back. A bit of positive reinforcement, to balance the well-deserved public pressure.
Image from IndyBay
It confirms the worst anti-corporate suspicions: 147 companies control the world, according to an analysis by the Swiss Federal Institute of Technology in Zurich called The network of global corporate control. They look at the share ownership structures that link 43,060 transnational companies and created a map showing that a control is concentrated in a quite small number of companies. As they say,
A large portion of control flows to a small tightly-knit core of financial institutions. This core can be seen as an economic “super-entity” that raises new important issues both for researchers and policy makers.
The New Scientist covers this story, pointing out that, in effect, less than 1 per cent of the companies are able to control 40 per cent of the entire network – mostly financial institutions like Barclays Bank, JPMorgan Chase and Goldman Sachs.
Of course this doesn’t automatically imply a shadowy global conspiracy – but it doesn’t automatically imply openness and accountability either; and it certainly does suggest a consolidation of vested interests. Basically it’s great grist for the anti-corporate movement.
It’s a theme I picked up in a workshop last week – we got this short film made to show some of the great corporate anti-heroes from Hollywood (see my earlier post, Bad Guys Inc). Here it is – made for internal consumption only, but just for fun:
The above image comes from the New Scientist article, which comes with the following legend: The 1318 transnational corporations that form the core of the economy. Superconnected companies are red, very connected companies are yellow. The size of the dot represents revenue.
Filed under: Corporate Citizenship, Nike Foundation, Unilever | Tags: Burberry, Corporate Citizenship, Corporate Foundation, foundation, Nike, Nike Foundation, Thomson Reuters, Unilever, Virgin Unite
Last week I arranged a breakfast for a few big corporate foundations. Unilever kindly hosted it, in their plush CEO dining room – a clear bright morning, with a panoramic view of the London skyline. We were joined by the Thomson Reuters Foundation, Virgin Unite, Nike Foundation and Burberry Foundation.
One thing’s clear: in the world of corporate foundations, this lot are a new breed. Here’s why.
More matter, less art.
Historically, corporate foundations were likely patrons of the arts – but now the energy moving away from theatres and galleries and towards the slums and inner cities. The magic word is “impact”. The arts institutions really need a new narrative to retain their corporate patrons.
More international.
The multi-nationals are becoming multi-locals, so the story goes – and the new wave of corporate foundations has a naturally international outlook. Increasingly, their partners are the international development agencies and NGOs.
More employee involvement.
Many foundations are still far removed from real business – just benefactors for the favourite charities of chairmans’ wives. The new wave is much smarter: the corporate foundation is a catalyst for employee engagement, a feeling of belonging and shared endeavor, a feeling of pride, and in some cases a platform for developing new talent.
More aligned to corporate brand and strategy.
This is about leveraging the core competencies of the business – legal advice or journalism, if you’re Thomson Reuters. In other cases, it’s about being emblematic of the corporate brand: entrepreneurialism if you’re Virgin, or creativity if you’re Burberry.
There’s an instinctive sense in the people running these foundations that to make a difference, the foundation has to really resonate with the heartbeat of the parent corporate.
It was an interesting session, and fun to organize. Everyone agreed we should do another one before the end of the year, and invite a few other kindred spirits.
Lovely image taken from Unilever’s roofgarden from here.
Filed under: Corporate Citizenship, Defense | Tags: Corporate Citizenship, Defense
This week I’ve been invited by a client to DSEI, “the world’s largest defense and security exhibition” – or, to you and me, an arms fair. Or a “Death Fair”, as the campaign group Disarm DSEI calls it.
So, barely a year since my last project with Amnesty International, and what now – rubbing shoulders with generals from Indonesia and Chile? What’s going on?
I have a brief from a large defence manufacturer: articulate a narrative about their role in society, the positive contribution they make to the world. An interesting corporate citizenship task, huh? It’s easy to feel good about planning a campaign for human rights in Burma, but this is a challenge of a different nature entirely.
Plus, I have to admit I’m looking forward to the live demonstration of an unmanned UAV drone – and there’s even a chance to win one. Not quite sure what I’d do with it though.
Of course, the global defence industry sits firmly in the land of the Sindex and Vice Fund – in the popular imagination, they’re the ultimate corporate bad-guys. So, is it ever OK to work for the arms trade?
My friends have very polarized views. For me, it starts with the view that weapons have a place in the world, and so somebody has to make them. I’m glad that NATO was able to stop the ethnic cleansing in Kosovo. I’m glad that NATO intervened to stop Gadaffi’s threatened bloodbath in Benghazi. I wish somebody had stopped the slaughter in Rwanda.
But what happens when you stop to ask, who thought is was a good idea to arm these lunatics? As the Campaign Against the Arms Trade is keen to point out, we did, apparently: for example, Britain armed Lybia in the first place.
They point out that the UK Government’s 2010 Human Rights Annual Report identified 26 countries of concern. Yet, in that year, the UK approved arms export licences to 16 of these including Israel, Libya, Pakistan, Russia and Saudi Arabia.
The official logic goes like this: exports are regarded as vital to the health of the defence industrial base which is, in turn, an important adjunct of national security, foreign policy and the domestic economy. In other words, selling arms abroad achieves three objectives:
1. It effectively subsidises our own national defense capability.
2. The enemy of my enemy is my friend – so let’s keep them strong.
3. And while we’re at it, all of this means exports, taxes and jobs.
So this is the debate. It’s going to be fascinating. And if you’re Amnesty International, the real problem is that the industry is poorly regulated with illegal arms flooding the market.
And that’s my excuse to show one of the finest moments from my old agency, Mother – a few years ago now, part of Amnesty’s campaign against the illegal arms trade. How are you supposed to make such a serious subject entertaining, even funny? Here’s how:
Image from New Internationalist.
Filed under: Corporate Citizenship | Tags: Corporate Citizenship, CSR, Ethical Investment, SRI
Good – and surprising – news that Socially Responsible Investment is growing faster than ever. Does this mean that good companies are good investments? I did a bit of digging around.
Good company = bad investment
- In the UK, Observer Money’s Sindex shows that the bad guys outperform the good guys: it’s beaten the saintly FTSE4Good, returning 38% over the past year, against 17% for the saints.
- In the US, the Vice Fund invests specifically in alcohol, gaming, tobacco and defence. It’s beaten the S&P 500 since its launch, returning almost 70%, against 50% for the index.
Good company = good investment
- It’s all about risk. Kevin Parker, global head of Deutsche Asset Management, recently told Reuters that investors in longer-term debt including bonds will increasingly avoid unsustainable companies. This means bad companies will see rising borrowing costs: “What this boils down to be risk in capital markets, and capital markets know how to price risk once they understand it.”
- Don’t turn, just tilt. In other words, don’t shun the bad guys entirely, just tilt away from them. That’s the conclusion of Meir Statman and Denys Glushkov of Barclays Global Investors in The Wages of Social Responsibility published in 2008: “We analyze returns during 1992-2007 of stocks rated on social responsibility by KLD and find that this tilt gave socially responsible portfolios a return advantage relative to conventional portfolios.”
Good company = no different
A couple of meta analysis show that investing in good companies is no better, but no worse either.
- A 2007 report from the UN and Mercer Global Consulting reviewed 20 academic studies and concluded that there, “does not appear to be a performance penalty from taking wider factors into account in the investment management process”
- A 2008 report from the European Centre for Corporate Engagement conducted a meta analysis of studies on SRI and financial returns and found that “even though they do not present irrefutable evidence that SRI generates higher returns than ‘normal’ investments, most studies have found that they do not result in worse performance either, while, at the same time, they might actually decrease risk exposure.”
The trouble with money
We all know that equity investors are driven by a short-term return, whilst corporates need to make long term plans. Hence the whipping that PepsiCo recently got from the Wall Street Journal – asking for more performance and less purpose. Tomorrow I’m going to see a company with no investors – Arup, a private partnership, and one of the most successful engineering firms in the world. Here’s what the founder said about his financial model:
The trouble with money is that it is a dividing force, not a uniting force, as is the quest for quality or a humanitarian outlook. If we let it divide us, we are sunk as an organisation – at least as a force for good.
Figuring out how to reconcile that high-mindedness with the realities of the capital markets – that’s got to be the hardest question…
Filed under: Corporate Citizenship, Public Opinion | Tags: Corporate Citizenship, Corporate Reputation, CSR, film, Murdoch, News Corporation, pharmaceuticals, Public Opinion
So, the anti-corporate hysteria in Britain reaches new heights thanks to Murdoch and his evil empire. Funny that nobody would be better at goading the public and fuelling the outrage than News of the World.
The media and the public are all complicit in this, I think: everybody wants a simple story of good vs. evil with a villain and a few victims. The current scandal is like NOTW journalism at its finest.
I shared some slides on “corporate archetypes” in the U.S. last week – News International certainly fits the bill as malevolent megacorp, unaccountable and out of control. This is a strong theme in culture, one we all grew up with – especially in film: corporates are often the bad guys, never the good guys. Here are some examples:
Terminator
Part corporation, part computer – Skynet sends cyborgs from the future to kill an innocent mum, Sarah Conner. Here’s Skynet’s own corporate film:
It’s A Wonderful Life
Good guy George Carlin fights to prevent the bad-guy bankers from taking over the town. When people think of Bob Diamond from Barclays, they hear echoes of Mr. Potter, in this clip:
Erin Brokovitch
True story of an unemployed single mother taking on a multi-billion dollar corporation – and winning. Here she is, kicking ass in the boardroom:
The China Syndrome
A sinister conspiracy to cover up a nuclear accident – weirdly, released just 12 days before the Three Mile Island accident. Here’s the trailer:
Avatar
The fight to save a remote civilisation from RDA, a military-corporate entity run by Parker Selfridge. He’s an interesting villain – young and ambitious in an MBA type way. Here’s a profile of him:
The Constant Gardener
A widower tries to get to the bottom of his wife’s death – a “corporate murder” at the hands of a pharmaceuticals company. Here’s the trailer:
Total Recall
Arnie plays a hard-grafting construction worker who ends up in a battle with Rekall,Inc – a corporation with the technology to implant fake memories. Here’s their commercial,
So – big evil corporate, that’s a deep cultural archetype. Got it. The point here is not “oh poor corporates” – far from it: corporates have done much to deserve their reputation as bad guys. But that’s not the whole story: business can be a positive force in society – and those of us who want to be part of that need to realize there is some deep cultural resistance to this idea.
And what about the evil Murdoch Empire? I’m no fan of Murdoch, but the whole Punch & Judy show is Britain at its worst: a sanctimonious media, a meek and uncritical public, a pompous and ineffective House of Commons. If Murdoch has (/had) any power, it’s because it was given to him by desperate politicians, and a bored public in search of grubby entertainment.
Filed under: Corporate Citizenship, Unilever | Tags: Corporate Citizenship, corporates, development, DFID, language, Microsoft, Natura, Nestle, nextbillion, Oxfam, P&G, Technoserve, UN, Unilever, USAID, Wal-Mart, WEF
We all know why the oil companies talk about energy exploration instead of drilling for oil, and why the book-makers talk about gaming instead of gambling. Language matters… So we’ve been looking at the language of corporate citizenship, and there are a few interesting themes.
We looked at the reports and websites from a few global corporates (Unilever, P&G, Natura, Microsoft, Wal-Mart, Nestle), some global NGOs (Oxfam, Technoserve, nextbillion.org, Africa Progress Panel) and a few global institutions (World Economic Forum, United Nations, Department of International Development, USAID). Here’s what we found.
- Self-referenced language vs Independent reference. Corporates are much more likely to refer to people by their relationship to themselves: “suppliers”, “employees”, “customers”, etc. Non-corporates use much more independent references: “people”, “farmers”, “communities”, etc.
- Goal-orientated vs. journey orientated. Corporate language is highly goal-orientated, suggesting action and efficiency: “programmes”, “processes”, “targets”, “operations”. Non-corporates are more likely to use “journey orientated” words which suggest participation and inclusiveness: “support”, “together”, “work”, “shared”, “help”, “change”.
- De-personalized issues vs People issues. Corporates talk about issues in objective, de-personalized language – “water”, “waste”, “food”, etc. Non-corporates are more likely to use words which invoke a human aspect: “healthy”, “women”, “poor”, “social”, etc.
- Some words were less in evidence than expected. These include: “innovation”, “impact”, “invest”, “progress”, “growth”.
- Development is a word that is used by both communities – it’s a potential bridge. Unilever talk about “market development” a lot, and Nestle have “rural development” as a goal, and SABMiller have “enterprise development” as one of their ten priorities.
Interesting to think about how a shift in the words we use might help corporates and non-corporates to find new ways of working together. Anyway, to bring this to life a little, we got a bit carried away on Wordle – see what you think:
Filed under: Apple, Corporate Citizenship, Nike Foundation, Philanthropy, Vodafone | Tags: Apple, charity, Cisco, corporate, Corporate Citizenship, foundation, Girl Effect, LloydsTSB, Nike, Nike Foundation, Philanthropy, tesco, virgin, Virgin Unite, Vodafone
It’s not often one of the world’s biggest companies tells you they’re setting up a foundation, and asks for thoughts on strategy and positioning. I thought I’d share some of the questions we’ll need to think through, in case anyone has any ideas or experiences to throw in…
1. PURPOSE: How is the foundation linked to corporate strategy? Some foundations are set up to allow independence from corporate priorities – e.g., the LloydsTSB Foundation, which is a giving vehicle to range of charities. Others are set up to deliver complement commercial objectives – e.g., the Walmart Foundation, which directly tackles nutrition in low income groups.
2. CORE COMPETENCE: What does the foundation actually do? Most of foundations exist purely to give money, but some also draw upon the expertise of parent company. The Vodafone Foundations are a great example of this, using mobile telecoms for health, education and disaster relief. Similarly, the Cisco Foundation works to use Internet technologies for social inclusion.
3. PEOPLE: Is the foundation run by corporate management? Sometimes the foundation’s trustees will be drawn from the corporation’s senior management, other times they are completely independent. Some corporates will facilitate volunteering and/or secondments to the foundation, and an opportunity to galvanise staff fundraising. Sometimes corporates view the foundation as a positive tool for talent development – giving their rising stars a broader set of management challenges, and some valuable perspectives on the world.
4. MONEY: How does the foundation get funded? A clear endowment formula proves commitement – e.g., the Lloyds TSB Foundations gets 1% pre-tax profits (averaged over 3 years). Some foundations are set up during an IPO or M&A, and are given a chunk of equity – such as Google.org, which has 1% of Google stock. The foundation I’m closest to, the Nike Foundation, was set up with an initial $20 million, and this is topped up each year from Nike’s commitment to give 3% of pre-tax profits.
5. BRAND: What is the foundation’s public positioning? Many corporate foundations share a brand identity, but aren’t promoted directly as a brand asset. Nike Foundation is a great example of this, having created the Girl Effect campaign as the public face of the foundation. Other foundations align themselves with consumer interest: the Tesco Charity Trust, for example, is said to undertake consumer research to help decide their areas of focus. Virgin Unite is building on the Virgin brand’s reputation for entrepreneurship.
Corporate foundations are among the biggest donors of all foundations: 11 of the top 20 US-based foundations are corporate. (foundationcentre.org). All corporates are under increasing pressure justify charitable giving to shareholders, so foundations are becoming increasingly strategic about the way they give: aligning the focus of the foundation with commercial objectives, building upon core business competencies.
And for the record, the client I’m working with isn’t Apple – I just liked the cartoon (by Rob Cottingham) because their own philanthropy ambitions are either secret or absent. According to an answer on Quora, Steve Jobs eliminated all corporate philanthropy programs when he returned in 1997. It would be fun to think what you’d do with the Apple Foundation…
Filed under: Corporate Citizenship, Innovation | Tags: Corporate Citizenship, Google, IBM, Innovation, Kraft, LinkedIn, Michael Porter, Nestle, PepsiCo, Shared Value, social purpose, Unilever
Above is a visualization of my LinkedIn network (from LinkedIn Labs) – showing interconnections between networks of skills and relationships. Is this a clue to what corporates in the future might look like? It would be a big change from the old rigid structures…
I’ve been thinking about “tomorrow’s company” – not just the survivors, but the most innovative, progressive companies. Apologies it’s such a long post – but here’s seven characteristics I think the “Company Of The Future” will have.
-
1. Social Purpose
2. Diffused Power
3. Distributed Activities
4. Skills Networks
5. User Innovation
6. Failure Rate
7. Ambitious Goals
Companies which thrive in the future will be those with strong socially motivated innovation. We all know that one of the most innovative sectors in recent years has been Financial Services: high-frequency trading, arbitrage, complex new asset classes … none of which had any social purpose, and all of which have had negative or catastrophic consequences. As former Fed-Chairman Paul Volker put it (maybe harshly) “the only useful thing banks have invented in the last 20 years is the ATM”.
Maybe this is why CEOs are queuing up to talking about aligning business goals with a social purpose. Take Paul Polman’s Marketing Society talk, for example: “Brands and businesses that fail to integrate consumer needs with societal well-being will struggle to grow in the future.”
Michael Porter talks about innovation in his recent HBR paper, where he describes social purpose in terms of creating shared value:
Shared value holds the key to unlocking the next wave of business innovation and growth. It will also reconnect company success and community success in ways that have been lost in an age of narrow management approaches, short-term thinking, and deepening divides among society’s institutions.
…and he concludes:
We need a more sophisticated form of capitalism, one imbued with a social purpose But that purpose should arise not out of charity but out of a deeper understanding of competition and economic value reation. This next evolution in the capitalist model recognizes new and better ways to develop products, serve markets, and build productive enterprises.
As organisations grow they become subject to centripetal forces – power tends to accumulate towards the centre, instead of diffusing through the company. Laszlo Bock, vice-president of people operations at Google, tells the EIU:
“As you get bigger as an organisation, you have to work harder and harder, and more deliberately, to unpack the biological and cultural trappings that people normally bring with them. [People] assume other people will take care of things. They assume there’s some infrastructure for them. They don’t look at every activity in the company and think first, ‘I’m responsible for everything, whether it’s my job or not.’”
Block runs Google’s Advanced Leadership Lab, which aims to have people “think like owners” rather than employees – to consciously push power out from the centre.
It’s commonplace in Silicon Valley, of course – companies who distribute their activities across a range of geographical locations – companies like Automattic, supported by a range of cloud tools like SocialCast, Yammer, and real-time group blogging on WordPress P2.
That’s just what you’d expect from Silicon Valley – and Automattic’s Tony Schneider blogs on why this works so well. But the big beasts are doing it too: the EIU report talks about GM, who are using a similar model, supported by a robust development platform for advanced engineering:
Cars are becoming more technically complex. There are constant advancements in electronics and alternative propulsion, and high demand for engineers who are expert in the field. Ms Barra believes global collaboration lets GM leverage scarce human resources and innovate more quickly, while its regional engineering centres allow it to leverage knowledge of markets.
Social networks are now a mainstream mental model. At the top of this post is my own LinkedIn Map – a nice visualization of how individuals are thinking about their professional connections. So why is the organagram still the mainstream model for management? It’s only a matter of time before organagrams get superceded by skills networks, enabling communities to form around individual interests. Companies like Royal Sun Alliance and IBM are working on developing internal skills networks, and IBM’s Social Business initiative is worth looking at.
Skills networks would have a number of benefits:
I’ve heard the word intrapreneur floating around recently – and it’s true this would boost internal enterprise. However, more interesting is the possibility of making the company more porous: the skills map and the supply chain could begin to integrate into each other.
Eric A. von Hippel at M.I.T recently completed the first ever large-scale survey of consumer innovation. His finding – in this soon published paper – is that individual consumers spend twice as much making and improving products as companies spend on product R&D. He calls it the “dark matter of innovation”.
A recent New York Times article takes up this story, pointing out how most approaches to R&D are “completely dated”. It’s not just about crowd-sourcing, co-creation, or other buzz-words; it’s about being open to collaboration with individual users, groups, stakeholders, and widening the skills network to embrace people outside of the company.
We’re no in an age of perpetual beta: getting to market and then optimizing, rather than the other way around.. low cost, high failure rate. As this Business Week editorial describes it, fail fast and fail cheap:
The math of fail fast and fail cheap is simple. If it takes six months and $100,000 to take a product from idea to customer reaction, then at best you’ll get two cycles in a year. However, if you can do a complete cycle of learning in a week for $1,000, you can get 52 cycles in a year at about half the cost.
This isn’t new – the editorial is from 2007 – but it’s becoming widespread. For example, YouTube is buying Next New Networks, a Web TV show producer with a radical new take on content development: instead of spending $1million on a pilot, spend it on a hundred pilots, and test in the market. And it’s working – they’re generating huge volumes.
Another example comes from the Bill & Melinda Gates Foundation, which recently conducted a major review which resulted in a major shift of strategy – away from “big bet” large investments, towards high volume small seed investments, capped at $100,000. As they might say in India, let a thousand flowers bloom.
Future-facing companies will understand how setting ambitious goals can unlock innovation. Some recent examples from consumer packaged goods:
