By Bill Valentino
Virtually everyone in our society is affected by the strategic choices companies make about their products, services and methods for doing business. Businesses are the engines of society that drive them to prosper.
The private sector is the largest and most innovative part of a society's economy. They create a majority of the jobs, wealth, and innovations that enable society to move toward a better future by driving social progress and creating well-being. Their strategic planning significantly affects the wealth and well being of society as a whole.
Companies intertwine with the societies in which they operate in mutually beneficial ways. In growing recognition of this interdependence, the overlap where economic benefit and social benefit meet, defines the essence of how Corporate Social Responsibility is integrated with strategic planning. This represents the big picture for how companies can match their organization's strengths and core competencies with market opportunities.
The scope of CSR in strategic planning creates a mosaic of issues and competencies that reinforce the maxim that businesses need to satisfy key stakeholder groups if they hope to remain viable over the long term. It emphasizes that it is in every organization's best interest to anticipate, reflect, and strive to meet the changing needs of its stakeholders in order to remain successful.
Companies need to view CSR through a strategic lens, which also means undertaking strategic planning with a distinct Corporate Social Responsibility component. Business exists for many reasons but survival ultimately depends on profits. Although CSR is only one part of the strategic big picture that generates profits, it injects multiple considerations into the strategic decision mix beyond just profit maximization goals. These CSR focused considerations act to screen business strategies for their impact on multiple stakeholders in the larger environment called society. This is where a company operates and seeks to implement its strategy, mission and vision.
Aided by CSR, business strategy becomes a source of sustainable competitive advantage by melding a company's internal strengths and competencies with external opportunities.
Profits are from revenues, which come from customers and stakeholders who are satisfied with the value a company delivers. Both CSR and strategy are primarily focused on a company's relationship to the environments in which it operates and most importantly to its stakeholders. Strategy addresses how a company competes in the marketplace but CSR complements this by deliberating what the impact of that strategy is on stakeholders. This describes to some extent the complexity of integrating CSR into the vision-mission- strategy-tactics linked process while meeting the ever-changing expectations of society. The results of effectively combining CSR and strategy enables businesses to operate from the perspective of multiple stakeholders and balance the means they use with the results they want to achieve.
The fine points of CSR and strategy are that they establish a unique value proposition compared to competitors. This is executed through operations that provide different and tailored value to customer and stakeholders. This focuses on the functions and activities in a company that fit together and reinforces each other for the purpose of driving continual improvement within the organization in pursuit of its mission, aspirations, and vision.
CSR is a key element of business strategy because it strives to provide business with a source of sustainable competitive advantage. In a strategy context, brand value is critical to a firm. CSR is a means of matching corporate operations with stakeholder value. This is achieved through brand value built on perceptions, ideals and concepts that appeal to higher values. CSR is critical to companies because shareholder value can be maximized over the long term only if a company addresses the higher values of its stakeholders. Meeting stakeholder's expectations is most efficiently achieved when strategic planning includes a CSR perspective.
CSR is increasingly crucial to business success because it gives companies a mission and strategy around which multiple constituents can rally. The businesses most likely to succeed in today's rapidly evolving environment will be those best able to balance the often conflicting interests of their multiple stakeholders.
In the MBA toolkit, CSR becomes an integral part of this strategic process because it serves as a filter of how businesses interact with their environment and implement their ideas. Placing CSR in a strategic context means consciously choosing to be clear about a company's direction in relation to what's happening in the dynamic environment. Firms operate within the broader context of society and the resulting interaction requires a CSR perspective for firms to maintain their social legitimacy.
Corporate Social Responsibility influences all aspects of a company's day-to-day operations because everything it does interacts with one or more of its stakeholder groups. It adds value because it allows companies to reflect the need and concerns of their various stakeholder groups. Simply put, CSR creates a tool that enables a company to match corporate operations with societal values in a hypercompetitive business environment.
The fine points of strategy with CSR embedded in it are that this establishes a unique value proposition compared to competitors. It makes companies focus on activities and functions in a company that fit together and reinforce each other for the purpose of driving continual improvement within the organization in pursuit of its mission, aspirations, and vision.
In order to integrate CSR into the firm's strategies and its culture, business leaders must start an ongoing dialog within the organization and with key stakeholders about the strategic and operational importance of CSR. Businesses that embrace CSR can use this as a source of pride, retention, and vitality for employees inside a company while gaining the enthusiastic support and trust of external stakeholders.
As a part of the MBA toolkit for CSR, strategy goes beyond just good public relations tactics or being nice to have. It reflects a company's authentic concern for society through substantive actions based on well thought out strategies.
CSR integrated into strategic planning and acting in tandem with strategic business planning shows how the elements of a strategic plan come together to create a framework for sustainability and success that defines clearly in a holistic way where an organization is, where it is headed, what path it should take, and how it will get there.
About the author:
Bill Valentino, continuously working for Bayer in China since 1987, holds a MBA from Thunderbird, the Gavin School of Management, and a MA in Technology and Communications from Columbia University, New York. He co-directs the Tsinghua-Bayer Public Health and HIV/AIDS Media Studies Program and is a Senior Guest Lecturer at the Center for International Communications at Tsinghua University. He is also currently the Chairman of the European Chamber's CSR Working Group and a long-standing member of the AmCham CSR Committee in Beijing.
