Strategy and Social Responsibility:
New Opportunities for Competitive Advantage
Craig A. Anderson
A recent McKinsey strategy white paper noted that "chief executives have
increasingly incorporated environmental, social, and governance issues into core
strategies... and see opportunities to gain a competitive advantage and address
Strategy and social responsibility. Once again, we find another "new" concept that
is already well embedded in the Baldrige Criteria! As we have noted several
times, the Criteria have been field tested and improved for 20 years; little has
slipped through the cracks during this time. In this case, the critical importance of
aligning strategy with a broader sense of social responsibility has been a central
part of the Leadership Category for years. In fact, an entire Item, 1.2, Governance
and Social Responsibilities, focuses on how an organization "addresses its public
responsibilities, ensures ethical behavior, and practices good citizenship."
We believe this Item will become increasingly important in the years ahead. There
is no place to hide any more, figuratively or literally, from the consequences of our
actions, as individuals and organizations. We are all part of larger systems, and
our success over the longer term depends on how well we can integrate ourselves
and our organizations into these larger systems. Baldrige helps jump-start this
process by posing the key questions: How do you address any adverse impacts
on society of your products, services, and operations? How do you anticipate
public concerns with current and FUTURE (emphasis is ours) products, services,
and operations? How do you prepare for these concerns in a proactive manner,
including using resource-sustaining processes, as appropriate?
We could go on, but the intent is clear: the Baldrige Criteria are designed to guide
your thinking toward a higher, more abstract level, because this is where we must
be if we are to deal with the challenges that lie ahead. This will be a tough
transition for many organizations. We pride ourselves on our resilience and
self-reliance, and we strive to control our systems to operate at peak efficiency.
But control is often an illusion. We are vulnerable to the impact of systems that
extend outside our organization. Some are obvious: our educational system,
infrastructure, legal environment, regulatory environment, natural environment, etc.
Others are more subtle: The desire among our employees and stakeholders to
stand for something beyond our organizational success. The challenge of
managing "tail risk"-- the very low, but real, probability of a catastrophic event that
exceeds our ability to plan and anticipate.
What McKinsey and others (note here the excellent work of the Comptroller
General of the United States, David Walker, as he conducts his "fiscal wake up
tour" to "state the facts and speak the truth regarding America's current financial
condition and long-term fiscal outlook in order to increase public awareness and
accelerate actions") point out is that leaders have options as they approach this
changing landscape. One option is to continue business as usual and hope that
the gathering storm will head out to sea. The other option is to envision a new
model of leadership that embraces outrageously higher standards of governance,
ethical behavior, and good citizenship, based on a profound understanding of what
success looks like in an interconnected world. Don't worry, the Baldrige
Performance Excellence system has you covered; all you need is the vision to take
the first step toward your larger purpose as a leader.