Download - Booz & Company Bangkok, 21 August 2009 Profitability and Social Responsibility “Quo Vadis”
Booz & Company
Bangkok, 21 August 2009
Profitability and Social Responsibility“Quo Vadis”
Booz & Company21 August 2009
2Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
Booz & Company is a leading global management consulting firm
Booz & Company is a leading global management consulting firm — for nearly a century, we have helped our clients realize the essential advantage needed to survive, thrive, and win
Founded in 1914, our Firm is the oldest management consulting firm and the only consultancy that is a top-tier provider of consulting services to the private, public, and non-governmental sectors around the world
We bring foresight and knowledge, deep functional expertise, and a practice approach to build capabilities and deliver real impact
In 2008, we separated our operations from our U.S., government consulting business, which retains the name Booz Allen Hamilton
We continue our work with businesses, governments, and organisations around the world, now under the name Booz & Company
With annual sales of $1.3 billion, we have over 3,300 staff members in 57 offices than span more than 30 countries and 6 continents worldwide
Booz & Company21 August 2009
3Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
We create ‘Essential Advantage’ through our four key capabilities
Client Quotes
“Booz enabled different functional areas to work with each other, breaking down the normal departmental barriers and parochialism…” CEO
“We had done over 20 projects with other consultants, but none of them were successfully implemented. Booz accompanied us from initial concept all the way through successful implementation” Program Executive Sponsor
“The real benefit is that Booz not only helped us develop a process, but we ended up with something we could use. I was impressed by the fact that we learned by doing. The savings potential across all our product lines is staggering”. Client Executive
“Booz’s ability to coordinate people in several countries, different sites and functions – along with suppliers – was one of the major challenges it met. I don’t think we could have pulled this off at the level we did without Booz”. Client Executive
Results that Endure
Strategy
“Establish the case for Change”
Implementation
“Make the Change”
Functional and Cross-Functional Skills
“Define what to Change”
Change Management
“Make the Change stick”
A unique perspective on the dynamics of businesses and the competitive environment
Client-specific solutions to complex issues
Ability to execute or directly supervise the success-critical elements of the solution
Ability to structure and mange change programs on a global level
Deep functional expertise
Combined with specific industry knowledge
Ensuring results by changing behavioral and organizational characteristics of an organization
“Creating Essential Advantage”
Booz & Company21 August 2009
4Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
A Point of Departure …
“A corporation's purpose is to maximize returns to its shareholders.”
Booz & Company21 August 2009
5Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
A Point of Departure …
“A corporation's purpose is to maximize returns to its shareholders. Therefore,
corporations are only responsible to their shareholders and not to society as a whole.
Only people can have social responsibilities.”
“Those who would not force Greenpeace and the Salvation Army to generate a profit
should not force businesses to take responsibilities outside their area of
expertise.”
Booz & Company21 August 2009
6Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
Some definitions -- but not ‘labels’ (others include ‘Business Ethics’ and ‘Corporate Social Responsibility(1)’)
“Stakeholder Theory”
Developed by R. Edward Freeman in 1984 -- “Strategic Management -- a Stakeholder Approach”
“Stakeholder theory argues that a corporation is also responsible for other parties involved, including governmental bodies, political groups, trade associations, trade unions, communities, associated corporations, prospective employees, prospective customers, and the public at large”
“Sustainability”
“Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts: – The concept of 'needs', in
particular the essential needs of the world's poor, to which overriding priority should be given; and
– The idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs."
“Triple Bottom Line”
Coined by John Elkington in 1994, on his article “Towards the Sustainable Corporation: Win Win Win Business Strategies for Sustainable Development” (California Management Review)
The triple bottom line is made up of "social, economic and environmental" aspects -- "people, planet, profit"
It suggests that Corporations should be evaluated not only by their Financial Performance, but also by their ‘Environment’ and ‘Social’ performances
Source: www.corporate-ethics.org//pdf/Strategic_Management_A_Stakeholder_Approach.pdf
Source:“Our Common Future”, Brundtland Commission Report, United Nations (1987) -- World Commission on Environment and Development (WCED)
Source:http://cmr.berkeley.edu/search/articleDetail.aspx?article=4900#9601
(1) A built-in, self-regulating corporate mechanism whereby business would monitor and ensure their adherence to law, ethical standards, and international norms (Wikipedia)
Booz & Company21 August 2009
7Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
Some different views
“Stakeholder Theory”
Developed by R. Edward Freeman in 1984 -- “Strategic Management -- a Stakeholder Approach”
“Stakeholder theory argues that a corporation is also responsible for other parties involved, including governmental bodies, political groups, trade associations, trade unions, communities, associated corporations, prospective employees, prospective customers, and the public at large”
“Sustainability”
“Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts: – The concept of 'needs', in
particular the essential needs of the world's poor, to which overriding priority should be given; and
– The idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs."
“Triple Bottom Line”
Coined by John Elkington in 1994, on his article “Towards the Sustainable Corporation: Win Win Win Business Strategies for Sustainable Development” (California Management Review)
The triple bottom line is made up of "social, economic and environmental" aspects -- "people, planet, profit"
It suggests that Corporations should be evaluated not only by their Financial Performance, but also by their ‘Environment’ and ‘Social’ performances
Source: www.corporate-ethics.org//pdf/Strategic_Management_A_Stakeholder_Approach.pdf
Source:“Our Common Future”, Brundtland Commission Report, United Nations (1987) -- World Commission on Environment and Development (WCED)
Source:http://cmr.berkeley.edu/search/articleDetail.aspx?article=4900#9601
(1) A built-in, self-regulating corporate mechanism whereby business would monitor and ensure their adherence to law, ethical standards, and international norms (Wikipedia)
“The idea of sustainable development is an oxymoron because development inevitably depletes and degrades the
environment” Redclift, M. (2005). "Sustainable Development (1987–2005): an Oxymoron Comes of Age.”
Booz & Company21 August 2009
8Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
A better starting point?
Booz & Company21 August 2009
9Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
Some objectives
Aims of today’s discussion:
– Improve our understanding of what sustainability means for us
– Raise questions that will ultimately drive what we might need to do differently
It is NOT:
– A list of actions
– Workplans
Potential Questions that companies need to answer:
– How do we define sustainability to fit our market, people and beliefs?
– How important is sustainability?
– Should we take a leader or follower position in sustainability?
– Where to from here?
1
2
3
4
Booz & Company21 August 2009
10Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
How do we define sustainability to fit our market, people and beliefs?
“being able to adapt to future challenges to continue to do what we do”
1
What do we think? What is our definition?
“integrating economic progress, social development, and environmental concerns with the objective of ensuring a quality of life for future
generations that is at least as good as today's.”
United Nations
“meeting the needs of the present without compromising the ability of future generations to meet their needs”
“using, developing and protecting resources in a manner that enables people to meet their current needs and also provides that future
generations can meet their own needs”
Or should we say:
Oregon State University
Booz & Company21 August 2009
11Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
• Health concerns (e.g. childhood obesity)
• Responsible marketing• Resource efficiency • Community
investment/engagement
• Organic• Consumer-conscious
labelling• Green initiatives• Corporate mission & values
• Socially responsible employer• Employee learning &
development
• Low cost• High quality• Labelling• Reduced packaging• Food miles / carbon footprint• Responsible sourcing
• Investment returns• Corporate social responsibility• Good governance
• OH&S• Waste disposal & recycling• Waste minimisation
How important it is depends on our current challenges
Current Operating Landscape
Regulation
Consumers preferences
Community expectations
Customer advocacy
EmployeesShareholder requirements
Any others?
2
CLIENT EXAMPLE:
Candy Manufacturer
Booz & Company21 August 2009
12Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
Should we lead or follow?
Compliance
(immediate term)
Short term business advantages+ compliance
Investing for the future
+ short term business advantages
+ compliance
Altruism (investing for society)
Doing the minimum necessary
Capturing short term opportunities
Addressing long term issues
Do things for the right reasons and profits will follow
Head office told us to The legislation/customers
require it Competitors doing so we
need to keep up
To manage risks to our business
To save money (eg through energy efficiency, reduced packaging)
To be prepared for coming changes (eg emissions trading)
It will drive innovation that will keep us ahead of our competitors
It will shape our future products
To ensure the long term future of our company
To build credibility in the community against brand shocks
It is part of who we are/our heritage
It is good for staff morale It is our duty to leave this
world a better place
What we measure and report
How we make our products What we make Why we exist
Description:
What it impacts:
Sustainability approaches:
Possible contexts:
3
Booz & Company21 August 2009
13Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
Alternative frameworks exist…
3
Philanthropy
Community Affairs
Corporate Community Investment
SustainableEnterprise
Meeting Government Regulation
CSR Tree
Inc
rea
sin
gly
Stra
teg
ic
En
ga
gin
g S
tak
eh
old
ers
Source: Richard Bernhard, “Transitioning to Strategic CSR”, Thai-American Business (Journal of the American Chamber of Commerce in Thailand, 2009)
Booz & Company21 August 2009
14Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
Hotel Chain
Sustainability mission
To place an emphasis on all four elements of Sustainability (social, cultural, economic and environmental)
Shift mindsets (values, attitudes and beliefs) when they are out of step with the realities of a finite planet and a globally powerful human race
Restructure objectives and targets when the rewards and incentives are inconsistent with long-term social, cultural, economic and environmental aims
Actions
Philanthropy / Community
AffairsAltruism
Contribute a percentage of revenues to local communities and local charities, who may be in need of assistance
Matching donations from guests
SustainabilityShort term
business advantage
Bulk purchasing Minimal packaging purchasing policy
Community Investment /
Sustainability
Investing for the Future
Priority of purchasing locally manufactured products & natural / organic produce -- enhancing local capabilities
Fair trade purchasing practices Carbon offset Fund
FUNDING 0.5% of all income from guests is ‘donated’ to our Social
Responsibility Program
An example
Booz & Company21 August 2009
15Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
Example: Global beverage company
Sustainable companies find areas of mutual interest and ways to make “doing good” and “doing well” synonymous, thus avoiding the implied conflict between society and shareholders
XXCo. is working toward several sweet spots
– It has business goals of cost reduction which overlap with a series of environmental improvements to reduce energy, waste, and packaging
Source: The Sustainability Sweet Spot; Andrew W. Savitz, with Karl Weber; Environmental Quality Management
Booz & Company21 August 2009
16Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
Another example
The Bedol Water Clock is the most accurate, environmentally practical, hassle-free chronometer of its kind. Want a high quality, beautifully designed clock that literally runs itself? Look no further. Because the handsome Bedol Water Clock works 100% on natural power. It’s true. No batteries, no chemicals, no electricity – no pollution. You don’t even need to wind it up! Just fill the tank with natural tap water ... add a splash of natural lemon juice ... and you’re set for 6 to 8 weeks of accurate timekeeping before refreshing. (You won’t even lose time while changing water, thanks to the built-in memory chip!)
Booz & Company21 August 2009
17Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
Example: We have examined the major emissions from our travel and office consumables
TravelTravel Office ConsumablesOffice Consumables Office FacilitiesOffice Facilities Off Site CostsOff Site Costs
Carbon Emissions SizingCarbon Emissions Sizing
ServicesServices
BusinessBusiness
EconomyEconomy
FirstFirst
AirAir
AutoAuto
Public transportPublic transport
LimosLimos
TaxisTaxis
ElectricityElectricity
Copying paperCopying paper
Food & BeverageFood & Beverage
WasteWaste
WaterWater
LightsLights
EquipmentEquipment
Examined in this analysis
Bldg embodied energy
Bldg embodied energy
Building maintenance
Building maintenance
Furniture embod. energy
Furniture embod. energy
Air-conditioningAir-conditioning
CleaningCleaning
Banking & InsuranceBanking & Insurance
CouriersCouriers
IT and CommsIT and Comms
Client facil. & consumablesClient facil. & consumables
HotelsHotels
Meals & entertainment
Meals & entertainment
Hired carsHired cars
Out of scope:– Personal decisions unrelated to the business: Eg Travel to and from office,
Use by staff of client facilities and consumables– Indirect emissions which result from the choices made by others and
therefore beyond our control eg, Created by restaurants which we use
Booz & Company21 August 2009
18Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
EmissionsFY09
6,39296,021462,061
5,904,345
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000
6,000,000
kg of CO2e
PaperTaxis & LimosElectricityAir travel
Air travel dominates our emissions followed by electricity and vehicle travel
91% of emissions
Total = 6,500,000 kgs of CO2e
Note: FY is April to March
Booz & Company21 August 2009
19Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
Compliance
Fighting FiresPlaying Catch-up with Competitors
Doing what we have to
Lagging the pack and ultimately exerting more effort
Adopting a reactive approach to dealing with matters of sustainability
Conforming to minimum societal expectations and keeping within
regulations
4
Booz & Company21 August 2009
20Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
Short Term Business Advantage
Managing RisksIn the Pack Saving Money
Being in the slip stream requires less effort
Adopting sustainable practice to mitigate risk exposure
Implementing sustainable practice has a short term financial upside
4
Booz & Company21 August 2009
21Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
Investing for the Future
Embracing ChangeLeading the WayInnovating New
Products
Being the leader of the pack and setting the standard for sustainable
practice
Understanding that the definition of Sustainability is not static and that
the only way to fully adapt is to embrace change
Allowing sustainable initiatives to shape ideas and drive innovation
4
Booz & Company21 August 2009
22Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
Altruism
A Better WorldValues and Beliefs Connection
Being guided by values and beliefs and holding a set of objectives
beyond profit
Contributing to a greater purpose that serves humanity
Creating linkages between people
4
Booz & Company21 August 2009
23Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
A Hypothesis …
“XXX can significantly improve long-term corporate profitability because it reduces
risks and inefficiencies while offering a host of potential benefits such as enhanced
brand reputation and employee engagement”
Booz & Company21 August 2009
24Profitability_Social Responsibility_Booz&Company-vFINAL.ppt
“The future can no longer be takenfor granted – it needs to be rescued.”
“… after Agriculture, Industry, and Knowledge, the next revolution is Sustainability.”
Richard Neville (Footprints of the Future)