My good friend Bob Eccles, professor of management practice at Harvard Business School, wrote an article (The Performance Frontier) that just appeared in the Harvard Business Review. Here is a PDF. I’ve been extremely interested in his work on integrated reporting for awhile now. What is integrated reporting? Essentially it is One Report that combines financial and non-financial information interactively into one document. A good example of a company that has done this is Natura. Although integrated reporting is voluntary today, it is required of all companies on the Johannesburg Stock Exchange. But integrated reporting is much more than an online CSR showcase. When it is done right, it is an authentic and innovative two way conversation where a company convenes its stakeholders to discuss its progress meeting its financial and nonfinancial goals. For example, Natura does this through Natura Conecta where the public is invited to have a discussion on environmental and social issues related to the company. It is a living exchange, not a static one that is one-way and more push than pull.
Bob’s article has an interesting slant which he points out in the introductory sentence . . .”But a mishmash of sustainability tactics does not add up to a sustainable strategy.” He argues, along with his co-author George Serafeim also at Harvard Business School, that we need a solid framework for simultaneously boosting financial performance as well as doing good. Tactics alone won’t do the trick. They provide a model for identifying the most environmental, social and governance (ESG) factors that drive shareholder value so that both financial and ESG performance are enhanced, not just one. A company that focuses on sustainability without paying attention to the financial costs is not going to have a genuine sustainability strategy that meets everyone’s interests. Similarly, a company that focuses solely on financial performance to the exclusion of good ESG performance will lose out as well in terms of public opinion and support. A major component of reaching this perfect balance, according to them, is by identifying major innovations in products, processess and business models that achieve these improvements and accomplishes superior financial and sustainability performance. A good example is the one with Natura mentioned above. They also cite innovative business models from Dow and Hong Kong-based CLP Group. And then, of course, Bob argues that these activities are ideally communicated through integrated reporting.
What fired me up was the SASB (Sustainability Accouting Standards Board) Materiality Maps that have been created for 88 industries in 10 sectors. Each industry has its own map that prioritizes 43 ESG issues and ranks them in terms of materiality. Not all the maps are complete but take a good look at this one for the health care sector. It shows which ESG factors impact financial performance so that a company knows what to prioritize. It’s a great contribution to understanding ESG factors as well as what drives strong corporate reputation. Don’t miss it.
And congrats to Bob and George for raising an important question about how to better balance financial costs and sustainability costs so that they complement one another instead of taking away.
As I mentioned, I am traveling in Asia to talk about social CEOs and generally spread the good word about our thought leadership and Weber Shandwick. It is so terribly interesting to present our research and learn what people have to say and listen to the kinds of questions they ask. Today in Shanghai someone asked me what type of emotional commitment a CEO has to make to become a social CEO. What a great question! It definitely takes an emotional commitment. Not only does a CEO have to commit time and resources but there is a genuine personal commitment as that goes hand in hand with being social. You are putting yourself on the line as well as your ego. It also takes courage. In our new upcoming research which we have not released yet, executives are quite aware that being a social CEO takes courage. It is not for the faint-hearted. However, one CEO reminded me that the CEO job is all about risk anyhow. True.
In addition, at a presentation yesterday in Beijing, someone mentioned that even if you cannot get your CEO to be social (meaning using social media in some shape or form), CEOs need to commit to “the intrinsic value of sociability.” He rightly said that sociability (whether online or not) should not be ignored in this business environment. It can make a significant difference. Smart advice.
I am starting to wonder if thought leadership is morphing into an entirely new terminology in this digital age — content provider. Lately it seems that people who consider themselves thought leaders, like myself perhaps, are now being confused with content providers. This latter term seems to carry even greater cache because it falls into the digital realm. I was recently mentioning this dichotomy to a friend at Forbes who writes a column on thought leadership and we came to the conclusion that anyone can be deemed a content provider but not everyone can be called a thought leader. Most people on Twitter or Facebook provide content of sorts but it is not always unique or new or truly awe-inspiring. Many times it is a rehash of what is in the news. Here is my definition of thought leadership from my first book.
“Thought leadership encompasses the development of new ideas – ideas that keep a company at the forefront of change. It can transcend sectors and geographic borders. What is perhaps most significant about thought leadership is that it distinguishes and differentiates a company from its competitors. Thought leadership often breaks with business or industry convention, astonishes if not startles. Thought leadership reflects on the company and builds reputation.”
There seems to be a continuum where simple chatter is at one pole of the continuum and true thought leadership at the other end. I would not pretend to know who would be those “genius” thought leaders but Malcolm Gladwell came to mind easily and he might be placed somewhere in the middle of original and genius. Those true thought leaders come up with thoughts that are so groundbreaking that everyone goes AHHHHHH.
chatter—>content provider—>thought leader—>original—>genius
It is hard to say what this all adds up to but the reputation of thought leadership as well as content provider needs better definition. Just providing content (even if it is more than what is contained in a press release) is different than providing new thinking that leads people to think twice or act differently or even possibly change lives. Something to ponder.