Copies of O.J. Simpson's book If I Did It were already en route to bookstores and publicity was already underway for a coming TV special on Fox when News Corporation Chairman Rupert Murdoch pulled the plug on the project in late November 2006. The firestorm of public disapproval had obviously influenced the decision. Some Fox stations had said they wouldn’t carry the show; some bookstores had said they wouldn’t display the book. Murdoch had built his career on tastelessness, but this time he had gone too far. “He learned after the fact how far the envelope would push before ripping,” Columbia University Journalism Professor Todd Gitlin told Richard Siklos of The New York Times. “Normally he has a fairly keen sense of the cultural limits – this time he blew it.”
But Murdoch’s statement didn’t attribute his course reversal to public pressure. In fact, he didn’t admit there was any course reversal, preferring to imply that he had only just found out about the Simpson book and show, both honchoed by News Corp. executive Judith Regan. “I and senior management agree with the American public that this was an ill-considered project,” Murdoch said. (Regan’s four-page statement said she didn’t do it for the money, but rather to help victims of domestic violence get closure.)
I doubt many readers believed Murdoch's statement (or Regan’s). Certainly the media coverage focused on how Murdoch’s misreading of the zeitgeist had damaged News Corp. All the business writers I read agreed that the decision to scuttle the project in deference to public disapproval showed far sounder business judgment than the decision to launch it in the first place.
Compare what Murdoch said about abandoning News Corp.’s business collaboration with O.J. Simpson with another public statement, this one by the CEO of a Canadian oil company. This CEO has long been convinced – and remains convinced – that global warming is nonsense. A scientist himself, he has studied the climate change controversy and says he’s confident we will all eventually learn the whole issue was an expensive red herring. Despite this conviction, he recognizes that the societal consensus (even more in Canada than in the U.S.) is moving the other way, and that large corporations (especially oil companies) that refuse to take global warming seriously risk punishment – not just by regulators, but also by customers, shareholders, and the public at large. In early 2006 the company asked for my advice on how to reconcile the CEO’s personal views with the company’s need to make concessions.
This was not a difficult problem to solve. The solution was to do what Rupert Murdoch didn’t do. The company never even considered claiming that its CEO had had a change of heart; that would have been neither honest nor credible (nor sustainable – the CEO would have outed himself sooner or later). And it quickly rejected ignoring its CEO’s personal opinions and simply announcing the new corporate policies; his opinions were well-known and he would immediately have been asked about them. Instead, the company’s current Corporate Responsibility Report includes a list of accomplishments and pledges to reduce greenhouse gas emissions. And it includes this quotation from the CEO: “I remain skeptical of the science related to the impact of CO2 on the climate. Nonetheless, I acknowledge that many stakeholders hold a different opinion on this issue, some very strongly. I also understand that the issue of CO2 emissions and climate change poses particular risks to the energy industry, be it reputation or regulatory risk.” In other words, public concern about global warming, at least in Canada, is so strong that the company is taking and publicizing precautionary steps its CEO considers scientifically silly.
Hardly anyone saw this as hypocrisy – because it so obviously isn’t. Nearly everybody saw it as a sound business decision candidly explained. Though I don’t have any firsthand data, I’d expect to find that environmental activists were particularly pleased. The CEO wasn’t pretending to agree with them. He was publicly bowing to their power. He wasn’t claiming to be responsible. He was claiming to be responsive – to them.
Yet most corporate and government managers prefer to imitate Murdoch rather than my oil industry client. I see it again and again. Your organization is under pressure to do X. You don’t want to do X. You’d much rather do Y. But stakeholder outrage is high and rising, and it’s clear that Y won’t fly. Your “social license to operate” is at stake, you explain to top management through gritted teeth. “Much as we all wish things were otherwise, we have no practical choice but to switch from Y to X.” So you switch. And then you issue your public announcement. No mention there of social license to operate, of public pressure, of your long history of preferring Y. Nope. The announcement begins: “In keeping with our deep and longstanding commitment to X, we are proud to announce that….”
It’s as if the consolation prize for being forced to do something you don’t want to do is that you get to pretend you wanted to do it.
This column is about the wisdom of giving away the credit – the wisdom of acknowledging that decisions made in response to pressure were made in response to pressure.
It’s not about the wisdom of giving in to pressure. That’s much more debatable. Sometimes you can’t give in to pressure; what your critics are asking you to do would put you out of business. Sometimes it would be ethically wrong to give in to pressure; you’re adhering to a principle that’s worth angering some of your stakeholders. Sometimes, instead of giving in to pressure, there is a better course of action: finding other ways of addressing people’s concerns without doing what they ask; or bringing stakeholders on opposite sides of an issue into contact with each other, so they realize you’re under pressure from both sides; or even just plain fighting back. And sometimes, of course, giving in is the best response to pressure.
None of that is what this column is about. I’m not advocating giving in to pressure in all circumstances. I am advocating saying you’re giving in to pressure when that’s what you have decided to do.
There are at least five reasons why. The first reason is that it’s the truth. The other four require some discussion.
Reason #1: To document your accountability
Here’s how most people – most people in the west, anyway – view the universe. Multinational corporations, big government agencies, and other powerful organizations will do bad things if they can. They’ll act in their own self-interest instead of serving the larger society. We need them; their size and power can be an enormous force for good. But we can’t trust them. So we need a system of checks and balances; we need critics and gadflies watching their every move and blowing the whistle when they get out of line. We wouldn’t want the critics and gadflies running the world; they wouldn’t know how, and they’d mess it up. Though we don’t much like to admit it, we actually want multinational corporations, big government agencies, and other powerful organizations running the world. We want the critics and gadflies keeping them accountable.
It follows that powerful organizations must document their accountability. I have sometimes called this “the theater of risk communication.” Each controversy constitutes a two-act play. The critics and gadflies pretty much control Act One, mobilizing stakeholder outrage against whatever powerful organization they have targeted. By the end of Act One, that organization is looking and feeling pretty humiliated. So in Act Two it starts making concessions. Thanks to the critics and gadflies, it genuinely improves.
The play has two alternative endings. One possibility is for the critics and gadflies to declare victory. “Lord knows what the Big Bad Corporation would have done if we hadn’t been on the job,” they crow. “But we were there, holding their feet to the fire, tracking their every move. Thanks to us, what they’re now proposing to do is okay.” That ends the play. There will be other plays, of course; the Big Bad Corporation isn’t in the clear forever. But for now, all’s right with the world.
The second ending results from the reality that critics and gadflies often resist declaring victory. They (and their followers) are often happier staying pure and losing the fight than winning just half a loaf. So it may fall to the Big Bad Corporation to declare their victory for them – by giving them the credit. This effectively ends the play. The audience starts gathering its belongings and leaving the theater. As the audience exits, the critics and gadflies are left with little choice but to accept the credit.
Given the plot of this two-act play, it is obviously in the interests of the Big Bad Corporation to keep Act One as short as possible – that is, not to prolong the agony by stonewalling the pressure to change. It is also in the interests of the Big Bad Corporation to make sure its Act Two concessions are vivid to the audience. Invisible concessions may be tempting to the corporate ego, but they do no good; they cost the company money without advancing the play toward an acceptable closing curtain. And finally, it is in the interests of the Big Bad Corporation for somebody other than the company to take the credit, thus documenting that the company has been properly constrained and is now accountable. If nobody looks likely to claim the credit, the Big Bad Corporation needs to give it away.
Some years ago, Greenpeace decided to expand its anti-dioxin campaign by sending a team of activists to Midland, Michigan, international headquarters of the Dow Chemical Company. The plan was, in essence, to brand dioxin a Dow brand. Dow knew the Greenpeace campaigners were coming (it was in the Greenpeace newsletter), and started planning its response. Initially, Dow was going to say something like this:
Look, Greenpeace wants zero dioxin in the world. In fact, it’s demanding zero chlorine; it wants chlorine out of the periodic table. That’s not possible. It’s irrational; it’s Luddite. Nobody knows that better than us. We’re Dow. We have already spent tens of millions of dollars reducing our dioxin emissions by 90%. So on one side you’ve got Greenpeace, irrationally demanding the impossible. And on the other side you’ve got Dow, responsibly solving the problem.
By the time Greenpeace got to Midland, Dow’s rhetoric had changed. Now it was saying something like this:
Look, Greenpeace wants zero dioxin in the world. It’s even demanding zero chlorine. That’s not possible. Greenpeace knows it’s not possible; they’re not stupid. Greenpeace also knows that by demanding zero they’ll get closer to zero than if they had a more “reasonable” demand. Nobody knows that better than us. We’re Dow. We have already spent tens of millions of dollars reducing our dioxin emissions by 90% – and we know the main reason we did that was Greenpeace. Now, Greenpeace isn’t satisfied with 90%. They want 100%. By the time the controversy is over, we’ll end up somewhere between 93% and 95%. Both sides know that already. As you watch the endgame, bear in mind that Greenpeace has already achieved 90% of its goal for Dow, and now we’re arguing about whether it’s going to get another 3% or another 5% out of us.
In the face of Dow’s acknowledgment of Greenpeace’s success, media interest and public interest in the Midland front of the war on dioxin quickly waned. Would you want to spend an evening at a meeting to hash out the last three to five percent of the solution? Greenpeace had expected its Dow campaign to bring it lots of new members, new contributions, and new media attention. It didn’t. So Greenpeace did what any well-run organization would do (what Dow would have done in its place): It cut its losses and reassigned its campaigners. On their way out of town, having no real choice in the matter, they proclaimed victory: “Even Dow admits we have already achieved 90% of our goal, and thanks to our hard work Dow has already promised another 3–5%.”
Dow’s dioxin problems weren’t over by a long shot. More than a decade later, there is still a major controversy over whether Dow will be required to clean up its past dioxin emissions in and around Midland, and Greenpeace has continued to play a role in that controversy. But Dow’s decision to give Greenpeace the credit for its dioxin emission reductions – credit that Greenpeace richly deserved but didn’t especially want – clearly demonstrated the company’s accountability. It diminished stakeholders’ outrage and it bought several years of comparative peace with Greenpeace.
See my 2002 column on “Accountability” for another example: McDonald’s giving the credit to Environmental Defense (then called Environmental Defense Fund) for its decision to replace the polystyrene clamshell with recyclable packaging.
Reason #2: To make your improvement credible
As I noted at the start of this column, companies often make a reluctant decision to do what stakeholders are pressuring them to do, and then announce the decision without mentioning the stakeholders. They hide the pressure. They use words like “voluntary,” and even words like “proud.” They talk about how responsible they are, and say nary a word about being responsive. In short, they lie about their motives.
There is nothing terribly unethical about lying about your motives. Lying about your behavior is unethical. Lying about your motives is childish. When you make your seven-year-old clean her room, there’s a good chance she will end up standing in the middle of her room, fists clenched, tears running down her cheeks, insisting: “I’m not cleaning my room because you made me. I’m cleaning my room because I want to!” A wise parent permits this. “That’s fine, dear.” As long as she cleans her room, we let her preserve her self-esteem.
Unfortunately, the public doesn’t know whether the Big Bad Corporation is cleaning its room or not. But we know it doesn’t want to. So when it says it is cleaning its room because it wants to, we draw the logical conclusion that it isn’t cleaning its room at all. Offering a motive that isn’t credible makes the behavior itself incredible as well.
Look at two different factories, both of which claim that they have stopped polluting a nearby stream. Factory A says, “We stopped polluting the stream because we love fish more than profit.” Factory B says something like this:
We stopped polluting the stream for four reasons. First of all, the regulators told us if we didn’t stop they were likely to yank our permits. Second, our lawyers told us if we didn’t stop we were going to get sued by people downstream. Third, the activists told us if we didn’t stop they’d be raising hell at our next shareholders’ meeting. Fourth, and most important, our neighbors, our employees, and even our families told us that values were changing, that if we wanted to be the kind of company people were willing to live near and work for and marry into, we were going to have to stop polluting the stream. So we did – not because we love fish more than profit, but because you’re not allowed to earn a profit anymore unless you protect the fish.
Here’s the $64,000 question: Which factory will people believe stopped polluting the stream? Obviously, Factory B. In reality, both factories stopped, for B’s reasons. But when it lies about its motives, when it gives people a reason they can’t believe, Factory A undermines the credibility of the good thing it actually did.
When you do something under pressure, it’s generally the kind of thing you tend not to do on your own. So people will probably have trouble believing you when you say you did it on your own. Hiding the pressure will make the behavior hard to believe. Acknowledging the pressure will make the behavior believable. So acknowledge the pressure.
Reason #3: To avoid making your stakeholders even more outraged
I once worked with a company in Wales that was under pressure to do noise abatement. The pressure came chiefly from a local activist group run by a woman named Mrs. Jones. Mrs. Jones beat the company in the media, and she beat them in the courts. Eventually the company decided to spend several million pounds on noise abatement. Mrs. Jones was delighted, and made her plans to retire to her garden.
Then the company announced its noise abatement program. “This is an example of how deeply we care about the welfare of the community,” it boasted. The announcement went out of its way to deny that the program had anything to do with Mrs. Jones, implying that if anything the company would have moved more quickly had she not made such a pest of herself.
Mrs. Jones was, of course, outraged. So she came out of retirement (she was retired for maybe 36 hours) and announced that the company’s program was too little too late and she would continue the fight. All future company expenditures on noise abatement are arguably attributable to the company’s failure to give Mrs. Jones the credit she deserved. By stealing her credit, the company in essence snatched defeat from the jaws of victory. It should have been the Mrs. Jones Memorial Noise Abatement Program. Management should have asked her to cut the ribbon.
Years later, I told this story to a London railway company that was under pressure by an activist to refurbish one of its stations. When the company completed the refurbishment, it did ask him to cut the ribbon. And he became a proud supporter.
Here’s another example. A company that manufactured heart pacemakers had a recall. (And you think you’ve got problems.) Largely because of the recall, the U.S. Food and Drug Administration decided to inspect the company’s manufacturing plant, where it found a few small but real quality control problems. So the company and the FDA negotiated a consent decree. The company agreed to shut down its plant for six weeks or so in order to reengineer its quality control, so that when it reopened it would have leapfrogged from mediocre QC to superior QC; in the interim it was permitted to sell from stock.
A consent decree isn’t an enforcement action. Despite the implicit threat of enforcement, it is technically voluntary. (It’s like your boss giving you till Tuesday to resign; otherwise you’re fired.) Taking advantage of the technicality, the company’s announcement explicitly pointed out that it was under no regulatory compulsion to improve. “We have temporarily shut our plant because we want to have the very best quality control in our industry. We have simply decided that for our company, good enough is no longer good enough.”
How do you think such an announcement sounded to the FDA regulator with whom the consent decree had been negotiated? This was probably her biggest achievement that month, maybe that year. She was proud of making the company improve. And she was outraged at its pretense that it was improving all on its own.
So, whether consciously or unconsciously, she got even. She dragged her feet on the reinspection. When she finally got around to reinspecting, she dragged her feet on the paperwork. When she finally issued the paperwork, lo and behold, she had found a few tiny new QC problems, necessitating another round of reengineering, reinspection, and paperwork. She turned what should have been a six-week shutdown into a seven-month shutdown. The company ran out of stock and went into bankruptcy. She put them out of business.
Don’t focus too much on the regulator’s revenge. Ponder instead the company’s motivational confusion. Here’s a pretty big company with its entire future in the hands of a regulatory middle manager. And yet instead of writing a release that made her feel good, management wrote one that made themselves feel good – and made her furious. Perhaps they couldn’t have predicted that her response would be to put them out of business. But they had to have known that not offending her was an important business priority.
Again and again I have encountered companies that went out of their way to keep regulators and activists from looking good – and then wondered why those regulators and activists seemed to attack them with ever greater animus.
Back in the 1960s, I thought the main thing wrong with corporate capitalism was excessive preoccupation with profit. Forty years later, I now think the main thing wrong with corporate capitalism is insufficient preoccupation with profit. Faced with a choice between two different strategic options, one of which maximizes profitability at the expense of management’s comfort and self-esteem, and the other of which maximizes comfort and self-esteem at the expense of profitability, most corporate executives at every level pick the one that feels good. And then they tell themselves stories about how that’s really the way to maximize profit too.
All this applies also to government agencies. Achieving the agency’s mission should play the same role for government that profitability plays for companies. And so it does – but mission is generally weaker than profitability (even weaker than profitability) as a source of discipline. So agencies are even likelier than companies to snatch away credit that properly belongs to their critics. It is commonplace for agencies to make changes that critics demanded. It is rare for agencies to publicly attribute those changes to the critics.
Once in a while, perhaps, it makes business sense to offend a critic by taking credit yourself for an improvement that critic has long demanded. Usually it makes business sense to give the credit to the critic. What stands in the way isn’t profitability or mission. It is chiefly your ego.
It is also your own outrage. It’s hard enough (for ego reasons) to share credit with colleagues. Giving credit to critics – to the people who have attacked your integrity, questioned your competence, undermined your reputation, and generally made your life hell – is profoundly unnatural. Insofar as outrage is a zero-sum game, you get to choose between two goals: catering to your own outrage at your critics versus reducing your critics’ outrage at you.
Or as I often put it to my corporate clients: Do you want to get even or do you want to get rich? If you want to get rich, it makes sense to give your critics the credit.
Reason #4: To save capitalism
Of my four reasons for giving away the credit, this one is the most abstract, the most pompous-sounding, and the hardest to explain. But I believe it is ultimately the most important of the four reasons, although it applies only to the private sector, not to government.
Every week, thousands upon thousands of companies pretend they did voluntarily things they were actually pressured into doing. In effect, thousands upon thousands of companies claim they stopped polluting the stream because they love fish more than profit. In the vast majority of cases, the public doesn’t believe the claim.
But the public isn’t usually terribly offended by the claim either. More often than not, we see it as a conventional white lie – almost as if we didn’t really think the company expected us to believe it in the first place. It’s in the same category as “I can’t go out with you because I have to wash my hair” and “We really loved the fruitcake you gave us for Christmas” – a transparent lie that is shrugged off without much resentment.
That’s a good thing. Imagine for a moment that we all actually believed the XYZ Corp. loved fish more than profit. That is, imagine that we believed the XYZ Corp. was earning lower profits than it could otherwise earn in order to protect the fish. I’m not talking about forgoing some short-term profitability for the sake of long-term profitability. I’m not talking about protecting the fish because it will forestall future regulation or earn goodwill with stakeholders and thus prove profitable in the end. Imagine a company that accurately says: “No, nobody is demanding that we protect the fish. Nobody will soon be demanding that we protect the fish. Nobody will ever reward us for protecting the fish. We will lose money, now and forever, by protecting the fish. We have no legal obligation to protect the fish, and no business reason to protect the fish. But we choose to do so anyway, because we love fish more than profit.”
Such a company would be malfeasant. Companies have a fiduciary responsibility to their shareholders to maximize long-term sustainable profitability within the law. That’s true not just in a bastion of cowboy capitalism like the United States, but even in more socialist-leaning but still capitalist societies in the rest of the world. Individual shareholders may well decide to spend the profits from their XYZ Corp. investment on fish protection. Government may well decide to reduce everybody’s profits by requiring fish protection. But if the XYZ Corp. voluntarily reduces its shareholders’ profits for the sake of fish protection, without expecting any payoff for doing so, it is failing in its legal and moral obligation to those shareholders. It is vulnerable to a shareholder lawsuit. At the very least it is ripe for a takeover attempt by a less misguidedly philanthropic competitor.
The relationship between profitability and fish protection, in other words, is a curve. A company that provides less fish protection than the society wants will lose money – through regulatory enforcement, reputational damage, etc. A company that provides more fish protection than the society wants will also lose money – the money it wastes on excess fish protection. Companies can earn the most money by giving the society as much fish protection as the society is prepared to reward. Actually, there is a strategy that is still more profitable: to anticipate how the curve is likely to change. If the society will soon be demanding more fish protection than it demands now, getting ahead of the curve should prove advantageous. But not too far ahead of the curve – just-in-time fish protection.
So it’s a good thing nobody believes them when thousands of companies claim they love fish more than profit – that is, claim they’re protecting the fish because they want to, rather than because we want them to.
Here’s the problem. Thousands of companies claim they love fish more than profit. In each individual case, we know they’re lying. Either we assume they’re protecting the fish because somebody made them, or we assume they’re protecting the fish because they decided it was good for business, or we assume they’re not really protecting the fish at all. But the cumulative effect of thousands of companies claiming they love fish more than profit is that the public begins to believe that companies should love fish more than profit. That is, we come to believe that corporations should be responsible rather than responsive, that they should do the right thing because they want to rather than because we made it mandatory or made it profitable.
And once we start thinking that companies should love fish more than profit, we stop sending clear signals. We stop making sure that fish protection is either required or rewarded. Companies notice that, of course, and cut back on their fish protection. More fish die. Then the public gets angry at the companies. The belief that companies should love fish more than profit is thus bad for companies, bad for profit, and bad for fish. And it's bad for capitalism.
Most companies do a pretty good job with that curve between profitability and fish protection. They get it right, providing about as much fish protection as the society wants (or will soon want). And then they screw it up by lying about their motives. They claim they love fish more than profit; they claim they're responsible instead of responsive; they claim for themselves the fish-protection credit they should be giving to their stakeholders. In the process, they confuse us all about how capitalism works.
Little by little, the public is beginning to think that corporations should be autonomously virtuous, rather than diligently obedient to our will. If we keep moving in this direction, pretty soon we will stop doing what we need to do to make sure corporations behave properly. We won’t send clear signals about what we want. We won’t require it or reward it. Instead, we’ll passively expect it – and we’ll be shocked when it doesn’t happen. Worse yet, we may start judging companies by their motives rather than just their actions. Do you have friends or relatives who won't ever tell you what they want for their birthdays – who seem to feel that the real gift has to be reading their minds, that it's not worth getting a present they have to ask you for? The public is starting to expect companies to read its mind.
Every time a company claims it is doing the right thing simply because it wants to, not because it’s mandatory or because it’s good business or because its stakeholders have made their wishes clear, that company is pushing the society one more step down the road toward confusion about capitalism. Sustainable capitalism, I believe, must be grounded in responsiveness, not responsibility. Weakening the link between societal demands and corporate behavior – claiming that companies to do the right thing simply because it’s right – endangers capitalism. Strengthen that link and preserve capitalism by giving away the credit for your good behavior.
I feel pretty passionate about this fourth reason for giving away the credit. But that doesn’t necessarily make me right. Some of those who disagree with me don’t much want to save capitalism; they want to replace it with something they think will be better. But there is also a worldwide movement to reform capitalism, a movement led not just by activist groups but also by some corporate executives. More often than not, this movement marches under the banner of Corporate Social Responsibility – a label sufficiently well-used that it is routinely abbreviated.
The CSR movement tends to see responsiveness as a way-station on the road to responsibility. CSR leaders usually agree with me that it takes pressure to change corporate behavior; in fact, they are in the forefront of the effort to apply that pressure. But their ultimate goal is for companies to internalize the pressure – to learn to do the right thing without pressure, because they want to. I’m not sure this CSR goal is achievable; I’m not even sure it’s desirable. I think companies are intrinsically self-interested and will behave altruistically only when it is in their interests to do so. And I would rather live in a world in which we all jointly decide what’s right and then make sure companies do it than in a world in which companies decide what’s right and do it on their own (whether the rest of us agree or not). If you’re interested in this responsibility-versus-responsiveness debate, check out a 1999 exchange between me and two world CSR leaders, John Elkington and Chris Marsden.
Even if you agree with Elkington and Marsden that corporate responsibility is the right goal, please notice that corporate responsiveness is at least a way-station. Maybe capitalism really will morph into something autonomously responsible; maybe it needs to. But it’s not there yet. For now, at least, companies can be relied upon to do the right thing only if the society makes it clear that they’d better do the right thing or else. We need to keep the pressure up. And companies need to keep being clear that the pressure is what moves them.
If you don’t buy that either, focus on my other three reasons. Whether or not I’m right that giving away the credit will help save capitalism, it will surely help you avoid infuriating your critics, make your improvements credible, and document your accountability.
Pirates, caged beasts, and why “voluntary” is a bad word
Suppose you run a mining company. Your mining company, we’ll assume, is one of the good ones. You try hard to do the right thing. Naturally, you want people to know it. How do you make this convincing? You have a choice between two alternative postures.
You can argue that you’re a virtuous mining company – the Mother Teresa of mining companies. You do the right thing because you want to. Maybe you could get away with polluting the environment (for example) if you wanted to, but you don’t. You hate pollution. You can be trusted to do everything possible to protect the environment.
Or you can argue that you’re a constrained mining company. Maybe you can’t be trusted to make environmental protection a higher priority than profitability. But you don’t have to be trusted. Regulators and activists and neighbors, critics and gadflies, are watching every move you make, and your profitability depends on keeping them all reasonably satisfied.
The second argument, I believe, is both truer and more credible than the first. The way we get mining companies to run more cleanly is to make sure it is less profitable to pollute than to run cleanly. The way they convince us that they are running cleanly is to show us how successful we have been in making pollution unprofitable.
My two favorite metaphors for all this: pirates and caged beasts. I urge my clients to concede that they just might have the soul of a pirate (rather than channeling Mother Teresa). “Yes, perhaps we haven’t quite lost our taste for plunder. But the days of plundering are behind us. Whether we like it or not, we just can’t get away with that stuff anymore.” Alternatively: “Yes, perhaps we are a bit of a wild animal. You wouldn’t want to let us run free and then turn your back. But there’s no real danger of that. The cage has strong bars. The leash is tight. We’re not free to prowl.” (For an unsympathetic but pretty accurate account of my “caged beast” argument, see “Packaging the Beast: A Public Relations Lesson in Type Casting,“ Bob Burton’s PR Watch article on a 1998 speech I gave to the Minerals Council of Australia.)
A key word here – a word to avoid – is “voluntary.” What does “voluntary” mean? It means you don’t have to do it; if something is voluntary, it’s up to you. Now consider this sentence: “The XYZ Corp. has voluntarily decided to stop emitting deadly dimethylmeatloaf gases.” That means XYZ is allowed to keep right on emitting dimethylmeatloaf if it wants to. There’s nothing stopping it from doing so; it just doesn’t feel like it right now. Sound reassuring? I don’t think so. Even if people believe that XYZ really isn’t emitting dimethylmeatloaf anymore (a big if), they’re left worrying that it might decide to start again. There is nothing between the neighborhood and deadly dimethylmeatloaf gases except the generosity of the XYZ Corp.
XYZ’s management should expect its neighbors to start demanding stricter dimethylmeatloaf regulations.
If you don’t think “voluntary” is an alarming and off-putting word, try this experiment. When you get home from your next business trip, tell your spouse that while you were on the road you voluntarily decided not to have an affair. Odds are your spouse has supposed you had an agreement (it’s called the marriage contract) not to have affairs, with substantial penalties for violations. How will he or she react to the information that you see being faithful as something you voluntarily decide to do each time you go away?
Yet industry “voluntary codes” are all the rage – and are typically promoted in the language of virtue (responsibility) rather than the language of constraint (responsiveness). Consider the gold mining industry’s International Cyanide Management Code. The main impetus for the code was a huge (and hugely publicized) cyanide spill at a gold mine in Rumania. The 2000 spill, along with a number of smaller incidents, led to serious talk in the European Union and elsewhere about really strict cyanide regulation. Afraid of being regulated literally out of business, the gold mining industry thought a code of self-regulation might forestall more draconian government action.
The new cyanide code is a real improvement. It is more credible, not less, once people realize that it’s a last-ditch effort to preempt government regs. Many in the gold mining industry know that the code had better achieve significant reductions in cyanide emissions and spills or the days of cyanide extraction may be numbered. It would reassure the public to know that as well. But that’s not what most mining companies emphasize on their websites or in their communications with activists and neighbors. What do they emphasize? That the code is voluntary.
Why clients get it wrong – and why they think I get it wrong
I have already mentioned the two big reasons why companies and government agencies so often fail to give the credit to their stakeholders: ego and outrage.
It feels good to claim to be both powerful and virtuous. When companies and government agencies take credit for their good behavior instead of giving the credit to their stakeholders, they are in effect saying: “I can do whatever I want. Fortunately for you, I want to do the right thing.” This doesn’t feel so great to hear, but it sure feels good to say! The alternative claim may be more accurate and better risk communication, but it’s a lot less ego-satisfying to the speaker: “I might want to do the wrong thing sometimes. Fortunately for you, I’m weak and I’m carefully watched.”
Just to make things even worse, the stakeholders you probably ought to give the credit to aren’t usually people and organizations that have been especially nice to you. They’re your critics. They’ve been harassing you for years, attacking your competence and your integrity, costing you hundreds of hours and millions of dollars, intermixing valid complaints and concerns with exaggerations and maybe even lies. They have been freely voicing their outrage at you. Maybe you’ve been squelching your outrage at them, but it’s there. And now you’re supposed to give them the credit!
Several times in my career I have had senior executives tell me they simply couldn’t stomach giving the credit to some particular group – invariably the group that most deserved the credit, the group that had most successfully forced the company to change. Each one threw some version of the same outraged temper tantrum: “After what they did to me, I’ll be damned if I’ll give them the credit for this. I’d rather not do it at all! I’d rather keep fighting and hemorrhaging money than say something flattering about them!”
Aside from ego and outrage, clients often offer two other arguments why they shouldn’t give away the credit. Both come up virtually every time I give this unpalatable advice.
1. “We're building a culture of responsibility here.”
The first argument is the CSR argument. It is grounded in internal morale and organizational culture. “We work hard to develop a culture of responsibility at every level of the workforce,” my clients tell me, “from the CEO right on down to the shop floor. You’re telling us all that is crap. You say we’re irredeemably bad guys who do the right thing only when we must. That flies in the face of everything we’re trying to build here!” I can’t count how many times an irritated client has pulled out a corporate values statement – or pointed to one framed and posted on the meeting room wall – to rebut my claim that companies ought to be responsive, not responsible.
It’s a sound point, and it usually compels me to moderate my claim. Okay, I concede to my client – and I concede it here too – I went too far. It’s not fair for me to say companies don’t have any values, and it’s even worse for me to say they shouldn’t have any. Responsibility and responsiveness can coexist.
Oftentimes responsiveness really does lead to responsibility. At first maybe you’re just giving in to pressure, wishing you didn’t have to do whatever your critics are making you do. But it works out well. It costs less than you thought; it improves your reputation and even your self-image. Pretty soon you’re proud of it. This results from a healthy psychological phenomenon called cognitive dissonance resolution. When people (or organizations) do something for reasons they’re not entirely comfortable with, they seek out “better” reasons – and they usually find them and adopt them. They resolve the dissonance, the uncomfortable feeling, with new information and new attitudes. I have been a consultant long enough to have seen cognitive dissonance and dissonance resolution at work in many clients. They’re genuinely proud of improvements that were forced on them a few years ago, having pretty much forgotten how strenuously they resisted at the time. Now they’re resisting a new generation of improvements. If they lose again, they’ll soon become proud of the new improvements too.
Other times, perhaps, responsibility really does come first. Assume you’re doing the right thing voluntarily – really voluntarily. But mistrust is high. Activists and neighbors, accustomed to being critical, may have trouble noticing how well you’re behaving. They may feel uncomfortable depending only on your virtue; they may wish you had to do the right thing. In such a situation, it is in your interests to add responsiveness to your preexisting responsibility – that is, to find someone to hold you accountable for doing what you’re already doing, so outsiders will find it easier to see that you’re doing it.
Having conceded that responsibility and responsiveness can coexist, I need to concede also that there is a role for both in your communications.
For internal consumption, it may even be appropriate for the responsibility message to predominate over the responsiveness message. I still think it’s important to give employees good business reasons, not just good values reasons, for what you’re asking them to do. (See Selling Safety: Business Case or Values Case for a specific example of why I think so – and why not everyone agrees.) But even I believe that organizations need to build a culture that wants to do what we've asked them to do even when we’re not watching. It’s a good thing when companies internalize external demands. I’m not campaigning to take the values statements down off the walls.
For external consumption, I think the responsiveness message needs to predominate, at least when stakeholders are hostile or skeptical. But the responsibility message can be there too, as long as you don’t lean on it too heavily. Here are two hypothetical examples:
As some of you may remember, we opposed these emission reductions. We argued that they would cost too much and do very little good. The new standards were enacted over our objections, mostly because of the hard work of Citizens for Change Now and the State Department of Environmental Protection. Now I’m here to say that they were right and we were wrong. Once the regs were in place, we found cost-effective ways to comply. Some of these new methods have actually become profit centers for our company. And there were other benefits as well – employee morale and recruiting both improved, for example. Even though we’re a little embarrassed about having fought it initially, our company is proud of what we have accomplished since the new regulations were passed.
As a company with operations in many countries in the developing world, we feel strongly about adhering to international human rights standards. We apply these same ethical principles in every country in which we do business, even in situations where governments may not require us to do so and may not even be in compliance themselves. For us, this is a fundamental value. But we recognize that some stakeholders do not trust our values, and many prefer not to rely on our values alone. That’s why we have signed onto four different human rights codes, administered by four different international Non-Government Organizations. These NGOs watch us carefully, with full access to our operations. When we adhere to their codes, they certify our performance. When we fall short, they tell us so, and they tell the world.
Bottom line: By all means work to build a responsible corporate culture, to inculcate good values throughout your workforce. But don't count on the rest of us trusting that you have done so. Feel free to mention your values. Just make sure you also give us other reasons for thinking you’re probably doing the right thing.
2. “Why should I contribute to the clout and credibility of my worst enemies?”
This argument, too, is universally advanced by clients who are dubious about my advice to give away the credit. “Maybe it might make sense to give credit to regulators,” they say, “or to the public at large, or maybe even to a moderate activist group. But the last thing we want to do is strengthen and embolden an extremist opponent by handing them a victory on a silver platter.”
If you find this argument persuasive, go back and reread the Dow-versus-Greenpeace story under “Reason #1.” Do you really think Greenpeace was strengthened and emboldened by Dow’s decision to describe the company’s dioxin reductions as Greenpeace's achievement?
Groups like Greenpeace actually aren’t all that crazy about being given the credit for a company’s improvements. Such groups flourish best in an environment of polarization. They’d love a clear-cut victory over the Big Bad Corporation – but not the sort of halfway “victory” that comes from the company’s acknowledgment that it improved thanks to them. In terms of membership recruitment, fundraising, and media attention, whipping the Big Bad Corporation is a good outcome for them. Staying pure, fighting the good fight, and losing to the Big Bad Corporation is almost as beneficial. Appearing to have cooperated and compromised with the Big Bad Corporation, on the other hand, is dangerous. And when the company gives a group credit for its improvements, that looks a lot like cooperation and compromise.
In many ways, activists are strengthened by corporate stonewalling, not by corporate concessions. (This is especially true of the sorts of activists companies tend to call “extremist.”) As long as the situation remains polarized, they’re in good shape; every battle they lose brings them more volunteers, more contributions, and more coverage. What happens when the company starts making concessions? If they respond positively, they risk being coopted, especially in the eyes their more radical volunteers and staff who want them to stay ideologically pure. If they rebuff the company’s concessions, they risk being marginalized, especially in the eyes of their more moderate contributors who want them to accomplish something practical.
There is of course a sense in which any victory, even a halfway victory, strengthens opponents. But giving “extremist” groups credit for your improvements strengthens them in a specific way. It increases their credibility to moderates (they accomplished something) while diminishing their credibility to radicals (they abandoned their ideological purity and actually helped a company). It thus tends to push them toward moderation.
Despite all this, giving the credit to more moderate groups isn’t such a bad idea either – and it's a lot easier on corporate egos and corporate outrage.
You get to decide who to give the credit to – activists (moderate or extremist), regulators, neighbors, politicians, unions, whoever….
- One obvious criterion for this decision is who deserves the credit, who actually was the source of the pressure that got you to improve.
- In choosing among those who deserve the credit, you can employ a second criterion: How different organizations and individuals will respond to being given the credit. Sometimes it makes sense to give it to an extremist group, hoping that the group will lose steam, or look compromised, or get more moderate. Sometimes it makes sense to give it to a moderate group, hoping that the group will pivot on the compliment and become a supporter, leaving you alone for a while as it pressures others to come up to your standard. Sometimes it makes sense to give it to a highly outraged individual, hoping that it will reduce his or her outrage. (Outraged people and organizations escalate when they feel they’re being ignored and calm down when they feel they’re being heard. In the late 1960s, I was on the fringes of the movement to get the U.S. out of Vietnam. Several U.S. presidents in a row thought it was important to pretend they were ignoring us. Like my corporate clients, they feared that if we realized how influential we were, that would give us a victory and embolden us. They succeeded in convincing us that they weren’t listening. That didn’t make the movement go away. It made the movement more radical.)
- The third criterion is how your own organization will respond. If giving the credit to your most hostile opponent is a nonstarter internally, so be it. There are lots of other candidates for the credit.
The important thing is to give it to somebody other than yourselves.
Copyright © 2006 by Peter M. Sandman