A new book out this month by Columbia Business School Publishing argues that many companies are lagging three decades behind a society driven by social media and the hyper-aware people to whom they sell their products and services.
“What has not changed in this new landscape is the need to be profitable,” write University of Virginia’s James Rubin and Barie Carmichael in their book Reset: Business and Society in the New Social Landscape. “What has changed is public vigilance for how that profit is made.”
Whereas companies in the 20th century had gatekeepers that could dictate corporate narratives, firm boundaries could take down a company today.
“The web-enabled activist public is auditing corporate behavior and holding companies accountable to address the social impacts of their business strategies,” Carmichael said in an interview. “Corporations need to anticipate and address their stakeholder footprint in an era of rising concerns including obesity, privacy, dwindling vital resources like water, and global warming. They have a clear self interest in ensuring a stable society and protecting institutions that predictably work.”
Rubin, a faculty member at the University of Virginia Darden School of Business for more than two decades, died in 2016, shortly after he submitted his first manuscript for the book. Carmichael, a Batten Fellow at the school who worked with Rubin for more than a decade developing the “inherent negative” innovation business model, stepped in to ensure the manuscript became a published book, adding timely content and becoming a co-author.
Recent headlines tell the story of how corporate and societal interests are merging, or should, Carmichael said.
After widespread backlash over its role in proliferating misinformation during the 2016 presidential election, CEO Mark Zuckerburg said any notion of his company’s involvement was “crazy.” He has since said he regrets not taking action sooner. Still, during a Congressional hearing on November 1, 2017, Senator Mark Warren (D-VA), told representatives of Facebook, Twitter and Google that, “Your actions need to catch up to your responsibilities.”
On the other hand, media and entertainment companies have rapidly fired men accused of sexual harassment in the wake of the international #metoo movement.
UPS and Waste Management: Turning Negatives into Positives
Corporate executives looking to reorient their companies toward societal demands would do well to explore inherent negatives, a major theme in the book. Carmichael provided some examples.
“The more successful UPS is, the more deliveries it makes, so the higher their carbon footprint,” she said. The company addressed the problem through several measures including investments in advanced technology vehicles and ORION (On-Road Integrated Optimization and Navigation), reducing the company’s carbon dioxide emissions by about 100,000 metric tons.
Waste Management is another company making a strategic pivot. No longer does it make money exclusively from hauling waste, a business model that was based on an increasing waste stream adversely affecting the environment. As a solution, the company developed consulting services to help clients reduce their waste. As of November 2016, its stock price had doubled in five years.
APCO Worldwide’s Champion Brand research, reflecting the views of more than 36,000 respondents in 14 of the world’s largest economies, supports the authors’ arguments. In a chaotic environment marked by complex problems, the public has increasingly high expectations.
- 94% of those surveyed said companies have the ability to shape a better society.
- 87% said most companies exist to create value for multiple interests in society, rather than just profit.
- 75% said they converted their opinions of a company into action.
- 68% said it’s more important to know how companies operate than what they sell.
- 58% said a company’s legacy is measured in lives enhanced.
While expectations have increased, trust in companies has decreased, the research showed. “Many companies still have a 1990s mindset even though we’re nearing the third decade of the 21st century,” Carmichael said.
Sally-Ann O’Dowd, founder of consultancy Sally On Media, is a communications and content marketing professional with 15 years of corporate experience. She recently moved from New York City to Fort Lauderdale so she could swim more. Write her at firstname.lastname@example.org and check out her case studies and testimonials at www.sallyonmedia.net.