Archive | February 2011

Modern Capitalism Based on Shared Values

Goddamn that Alex Bogusky is inspiring.

I finally had a chance to watch his presentation for the newest project from Fearless – the open source brand called “Common” for socially minded businesses (for lack of a better term). One of the biggest hypocrisies of my life is the fact that I work in brand strategy consulting while maintaining a very cynical view of big businesses and capitalism in general. My friend affectionately calls me a corporate whore and there’s nothing I can do but resignedly sigh in agreement.

Part of me feels like the concept has always existed, but it wasn’t of an interest until big businesses figured out how to make money from it. The HBR podcast titled “How to save capitalism” makes a compelling point about how current CSR programs are a huge waste of money. They’re essentially giving money away to random third parties who aren’t even part of the stakeholders group. Sure, it looks generous but it’s also horribly neglectful. It’s like buying dinner for someone else instead of your family. Smart CSR programs would try to evenly distribute value between all the stakeholders to promote mutual success.

My friend mentioned that idea is reaching it’s tipping point because it’s gotten so much heat lately. I’d say it’s a pretty cutting edge idea because if a business wants to implement the model, they’re going to have to defy business logic. But I realized that I’m probably too cynical about things for my own good.

I realized is a situation that represents this shared value concept is the Antoine Dodson story. If you’ve already forgotten, he’s the bed intruder guy. He got famous off of a song that someone else wrote about him. The creator of the song shared the proceeds of the iTunes sales with Dodson. Dodson also made money off of ringtones and TV appearances and was able to get himself and his family out of the projects. Under the old model of capitalism, Dodson wouldn’t have made a cent unless he sued. People would see that the value was created by the guy who wrote the song. But in this “shared value’ capitalism, Dodson would be seen has having contributed to the song and ultimately its success.

And to be fair, that’s one of those weird stories that happen on the internet were it’s all kind of a fairy tale (or nightmare depending on how your perspective). How does this work for a big business where it’s extremely tough to change course?

I was watching Stephen Colbert last night and saw the segment with Wal-Mart’s vice president talking about a program they created with the U.S. government to sell lower priced fruits and vegetables in their stores. That’s pretty amazing right? They are the largest retailer in the U.S. and are in the position to affect behaviors on a grand scale. And then you think about how they are buying their groceries from local farmers. They are forcing their supplies to adopt green practices (in the past they’ve also forced suppliers to adopt crazy inventory systems). They’ve switched to a fluorescent lighting to save energy.

For a big evil company, they’ve done a lot of good. And the good isn’t that stupid, wasteful-throw-money-at-a-random-cause good, it’s a sustainable action and an investment in their stakeholders. In this case, their stakeholders are their customers (the cheaper produce and vegetables, local and organic farmers) and the environment. And investing in both these stakeholders, Wal-Mart stands to gain big as well. Going green with the lights saved them tons of money. Offering organic and local foods allows them to strategically leap ahead of grocery stores (who are slowly figuring it out) to capture market share. This is assuming that they are betting that local/organic foods is the next evolution of grocery products.

I think there’s a little bit of greater awareness of how other parts of the system adds value, but I’d like to think that we’re slowly becoming nicer to each other and more mindful of how our actions affect others around us.