How (not) to do business like Jack Welch

Since leaving GE, Jack Welch has refused to retire gracefully or quietly. He has continued to stay vocal and keep his profile in the media, especially by writing and disseminating business advice. I suppose one shouldn’t begrudge him this – after all, he was branded “Manager of the Century” by TIME magazine, after nearly a quarter century in charge of one of the world’s largest companies.

But, does he deserve to be heard so much? Especially now that the model of leadership he espoused has been shown to lead to disaster. In my mind he is an example of much of what we don’t want in the future world of work.

An article which put my thoughts into words was published a while back in The Economist. It was responding to reports that Jack Welch will be lending his name to a new online MBA course. It highlights some of the concerns I have with a “winner takes all”, “profit at any price” ruthless leadership style Jack Welch espoused at GE. It also hints at probably the biggest issue that all such leaders have – they leave no legacy. When they leave, the empire they created collapses. When Welch left GE, he was asked what his legacy would be. He said that this was a question best asked after his successor had retired. That is the right attitude for a leader to have – the long term view. Unfortunately for Welch, it currently looks as if his legacy is a bad one!

Read The Economist article at their website, or an extract below.
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Nine Reasons Why You Must Improve the Environmental Performance of Your Business

Whether or not you’re convinced by science and media reports on global warming, there is no doubt that our planet is under pressure at the moment. Things must change, and the governments of the world – not to mention increasingly vocal activists – have started to put pressure on companies and individuals to reduce energy usage and become more environmentally friendly and sustainable. Yet many businesses continue to ignore these issues, relegating it to a low priority task team, or simply paying lip service to it as a PR exercise. This is short sighted and potentially damaging. And it doesn’t make business sense, either.

There are significant advantages for the companies that take energy efficiency and business sustainability seriously. You don’t have to be a do-gooder to develop processes and systems to improve the environmental performance of your business. There is a strong business case for doing so.

Here are nine reasons why you should take these issues seriously, and see business improvement as a result. Doing well by doing good is possible. And desirable!

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Affirmitive Action is Dead in South Africa – or is it?

Sipho Ngcobo wrote an interesting article on Money Web this last week, reflecting on the reality the African National Congress (ANC) faces around service delivery, or lack of it, in South Africa currently. He suggests that the pressure the ANC is under for 2011 local government elections and 2014 national elections will mean them compromising on affirmative action policies in favour of ensuring the right people are in the right places.

I do think he writes as more of a warning to the ANC to get it’s house in order than possibly the reality of what will actually happen. But I also do think that we need to appreciate that in emerging market economies this is a situation we’re all facing. It’s certainly not unique to South Africa.

As Ready, Conger and Hill point out in their Harvard Business Review article, ‘Winning the Race for Talent in Emerging Markets’, there is a severe lack of appropriately qualified and experienced people to fill management positions (at various levels). In the four large emerging market economies, Brazil, Russia, India and China, there simply isn’t enough supply to meet the demand. In countries like South Africa we should appreciate that if these four power-houses are struggling, then it is appropriate for us to be feeling some pain.

In the Harvard Business Review article, they set out their findings in an interesting graph that shows supply and demand for management using a scale that goes from entry level, to middle management, to country leadership, and tops out at regional leadership. Their research suggests that:

• Brazil has no supply to meet the demand from middle management upwards.
• Russia is struggling to meet the demand in all four levels
• India is battling from the first level (entry level) upwards
• China is only slightly better off, but still struggling to meet demand from entry level upwards.

One should be cautioned against assuming that academic qualification equals appropriate skills for management. I mention this because when I bring up the Harvard Business Review article people often query the number of MBA’s in India and therefore the accuracy of the data? Education is but one element that determines management ability. Those who fill management positions will certainly confirm this.

Sipho Ngcobo, in my opinion, is on the money with the challenge that the ANC faces. What the ANC does to avoid this crisis will be interesting to learn from? When the pressure is on for delivery and performance, especially in emerging markets in a world with a skills crisis, a compromise is certainly worth exploring between affirmative action policies and ensuring the right bums are in the right seats on this bus called service delivery.

The Bruno Movie – unhelpful cultural analysis

OK, so maybe the title of this post is a bit over the top. But the new movie from Sacha Baron-Cohen (aka Ali G, aka Borat), which portrays him as a gay Austrian television presenter, has the stated aim of providing cultural analysis. His goal is to shed light on inconsistent prejudice. Lofty goals indeed. Unfortunately, he fails to do so. In fact, he may do the opposite of his intention.

Probably the best review I have read of the movie comes from Toby Young of The Spectator. See what you think…

Status Anxiety
Toby Young
Wednesday, 8th July 2009

As funny as Bruno undoubtedly is, Baron-Cohen’s film is fundamentally dishonest

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Can I help you pack Sir?

An amazing article appeared in the Business Day on the 8th July 2009. It was a Business Day interview with the former Anglo American deputy chairman, Graham Boustred, 84. It was an interview at his request in order for him to share his views on the current state of Anglo American. What follows has one suspiciously looking for the candid camera equivalent of the print media! Boustred states that Xstrata’s proposed bid for Anglo American is simply a mechanism for getting rid of current Anglo CEO, Cynthia Caroll who he goes on to describe as “hopeless”and implies that she is sexually frustrated. The then illuminates why it is difficult to find a female CEO: “It is because most women are sexually frustrated. men are not, because they can fall back on call girls, go to erectile dysfunction clinics. If you have a CEO who is sexually frustrated she can’t act properly”.

Boustred talks about the possibility of having an exit strtaegy should the wheels come off in South Africa. His prefered safe haven? The Isle of Man. His reason being that on the Isle of Man “there are no Muslims, no blacks”. There were compelling other reasons such as a good health care system but these are all too sane to be taken seriously.

The tone of Boustred’s ranting as reported is self-centred, arrogant, dogmatic, bigited and plain insulting. He represents a perplexing case study in past leaders grown old and begs the question of just how much of the present characteristics and opinions were in evidence during his leadership reign? He is aptly described in the interview as an “old man of South African business” where his world is “an anachronism that is growing smaller all the time”.

Oh yes, and the answer to Anglo’s current “disaster”? Well, for Boustred to return of course! reading to full article will have you queing to help the pensioner pack.
 

The 100 Euro Note

Received this via e-mail today. Would anyone care to comment…..?

“It is the month of August, on the shores of the Black Sea. It is raining, and the little town looks totally deserted. It is tough times, everybody is in debt, and everybody lives on credit.

Suddenly, a rich tourist comes to town.

He enters the only hotel, lays a 100 Euro note on the reception counter, and goes to inspect the rooms upstairs in order to pick one.

The hotel proprietor takes the 100 Euro note and runs to pay his debt to the butcher.

The Butcher takes the 100 Euro note, and runs to pay his debt to the pig grower.

The pig grower takes the 100 Euro note, and runs to pay his debt to the supplier of his feed and fuel.

The supplier of feed and fuel takes the 100 Euro note and runs to pay his debt to the town’s prostitute that in these hard times, gave her “services”
on credit.

The hooker runs to the hotel, and pays off her debt with the 100 Euro note to the hotel proprietor to pay for the rooms that she rented when she brought her clients there.

The hotel proprietor then lays the 100 Euro note back on the counter so that the rich tourist will not suspect anything.

At that moment, the rich tourist comes down after inspecting the rooms, and takes his 100 Euro note, after saying that he did not like any of the rooms, and leaves town.

No one earned anything. However, the whole town is now without debt, and looks to the future with a lot of optimism.

And that, ladies and gentlemen, is how the United States Government is doing business today and the main reason thatthe rest of the world is now ‘messed’ up!”

The Meaning of the 21st Century

One of the most important books I have read in the last year is James Martin’s “The Meaning of the 21st Century” (Buy it at Amazon or Kalahari). The subtitle explains: The Megaproblems of the 21st Century.

You can hear me talking about it on a ClassicFM book review show.

I recently came across the author’s website, and found this excellent summary of his book. From James Martin’s own website:

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How to cut costs and keep your employees

The million dollar question I hear you sigh as you see the subject of this blog. Let’s face it, there are no easy answers, no silver bullets and certainly no one-size-fits-all approach to cutting costs and keeping a high people-morale during an economic un-boom, such as the one we’re wading through at the moment.

But there are some stories worth hearing, if not for anything but simply to celebrate that someone may be getting it right in their context. They know their people and their culture, and they’ve successfully created a solution that snugly fits both.

Click here to read a short article of some of these stories. The one that most impacted me was the ‘Ricardo Semler‘ type approach of the opening story in the article:

Go to the people and ask them! Sounds so simple. But so very difficult to execute.

PWC “Millennials at work” survey

The “Millennials at Work” research to be published by PricewaterhouseCoopers later this year is based on survey responses from over 4200 graduates in 44 countries (click here to see last year’s survey). The headline results include some interesting insights into how this younger generation thinks about ethics and their company.

Young members of staff especially want ethical employers and training, and will work for less pay if treated well. While 61% of employers worldwide say they have challenges recruiting and keeping young employees, new research shows that the young – far from being the self-centred job-hoppers employers depict them as – are idealists who want ethical employers.

In a key finding, 88% of young staff say they want employers with corporate social responsibility (CSR) values that reflect their own. Additionally, 86% would consider leaving an employer whose CSR values no longer reflected theirs. An employer’s policy on climate change is seen as important or very important by most graduates globally (58%).

Reducing carbon by charging companies in the UK

Are you prepared for the Carbon Reduction Commitment? This is the title of an article about Britain’s plan to force companies, organisations, institutions and authorities to reduce their energy usage over the next few years. Many organisations don’t know that they will be required to report to – and pay significant amounts of money to – the CRC fund.

Very simply, if the organisation you are part of – including all subsidiaries, locations and facilities COMBINED – use more than 6,000 MWh per year of electricity (that’s about £ 500,000), then you’re part of the scheme. NOTE that this applies to all parts of your organisation. So, it applies to a local authority, which must total up all buildings, schools, etc. It applies to universities, which must total up all buildings, residences and facilities. It applies to companies that have mutliple branches or multiple locations. This is a crucial aspect of the scheme!

If this is an issue for you, please read the original article here, or below. I consult to a company called SEDS (Sustainable Energy Design Solutions) that can provide more information and assistance on this issue. Contact me if you want more info.

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A billboard made of money – it cost a billion dollars!

Zimbabwe has been so messed up by Bob Mugabe that their currency is worth nothing. Literally. For the last year or more, bank notes have had expiry dates on them. When these expire the money is useless. Actually, because of hyperinflation, the money is mainly useless anyway.

A Zimbabwean newspaper used a billion of these dollars to create this billboard. It’s a great way to make a point. If only the international community would do something about the man who has singlehanded destroyed a nation!

How can this happen in the modern world?

Incorrect Thinking in the Financial Crisis

The current economic crisis has seen a deluge of woolly thinking. At TomorrowToday we work hard to bring clarity in the midst of such defective views of the world. Here are just a few of the nonsenses being perpetrated on logic and reason:

There are many statements about consumers being “impacted by the credit crunch”. I have read this phrase in particular with reference to houses and cars.

House prices are currently in decline in most parts of the world – and most journalists (probably fuelled by estate agent press releases) perpetuate the nonsense that this is “bad news”. It’s about as much bad news as petrol, food or beer prices falling, isn’t it? There are a number of reasons why this could be a nonsense statement. For some people, their house is still worth more than what they bought it for (and more than they have borrowed in mortgage to pay for it). So, they are mourning the “loss” of an estate agent’s valuation, rather than any actual monetary loss. For others who overstretched themselves to buy their house, they are now in a “negative equity”. But unless they have to sell their house in the next few months, this should have no real impact on them. The only people for whom this crisis is, in fact, a crisis are those who have multiple properties in the “buy to let” market, and now have empty properties with no rental income but mortgages due.

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The day I saw the future of the News

This is synchronicity. I had just finished posting my previous blog about Bernie Madoff and the biggest fraud of the downturn (although that’s debatable, really). Then, I watched the recording I had made of Jon Stewart’s Daily Show from earlier this week. Two things struck me.

Firstly, how the whole financial system is sick. The SEC failed. The directors and Board members of companies failed. The central banks failed. Governments failed. Financial media failed. Investors were gullible, greedy and foolish. And now honest, hard working people like myself have to struggle for survival and fear for our homes and our children’s futures! And a lot of them in the system are still thieving and lying! During the last Great Depression, the bankers were hailed as heroes and seen as the pillars of society. How times have changed. And the future will not be anything like the past.

But the second thing that struck me was that I had witnessed a moment in history. I have put the clips below, so you can witness it too.

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The other side of the Madoff scandal

This past week, Bernie Madoff pleaded guilty to one of the largest frauds ever perpetrated. It is estimated to total $ 65 billion. Thousands of people have lost millions of dollars each, and many have lost their life savings. Even as he read his guilty plea, it seems as if Madoff was more intent on covering his tracks than truly coming clean, as he tried to ensure the safety of his family and close associates. And the fact that he says that he knew for over a decade that he was one day going to be caught makes his continued fleecing of investors even worse! If you don’t know the story to which I am referring just Google Bernie Madoff fraud and you’ll have pages and pages of media reports to read through.

Yet, there is another side to this story that the media seems to be ignoring. Most of the people who invested with Madoff directly (including individuals, trusts, banks and brokers) were driven by greed and invested foolishly. Now I am not saying they deserved to be ripped off. And want to be clear that I believe Madoff is an evil and disgusting human being who deserves to be locked up for the rest of his life and have every cent he owns taken away from him. But this does not change the fact that most of the people who were sucked into his Ponzi scheme were greedy and foolish.

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Learning from History

I am a student of economic history, and love seeing the patterns that a study of history reveals.

Amadeo Peter Gianini was born in 1870 in California, the son of Italian immigrants. His first occupation was as a produce dealer for farms in the Santa Clara Valley of California. He found established banks unwilling to take on his or the farmers business. When his father-in-law died, he was persuaded to take his place on the Board of a small bank. His intention was to influence banking from the inside, but after many rows and ructions, he found it impossible to persuade his fellow bankers to change their practices.

He left, and in 1906, founded a small bank, “The Bank of Italy”. His express intention was to lend money to small businesses and the emerging middle class. Up to that time, they had had no access to banking. On April 18, 1906, San Francisco was devastated by an earthquake and fires. His bank building collapsed, but because of his personal intervention that previous night, he still had all of his bank records. Other banks’ records were destroyed, and their bank vaults to hot to open, and they were not lending.

The next morning, Amadeo went to the harbour, and ran his bank from the side of a wharf. Giving every cent of his $ 87,000 capital in loans to small businesses aiming to rebuild the city. He encouraged ships to go north and buy lumber and bring it back to North Beach, for example. Hundreds of people, who had been hoarding their money, saw his skill and confidence, and invested their money with him. This gave him more capital to continue lending. North Beach was rebuilt faster than any other part of the city. And every single one of these loans was later repaid!

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A question of Trust: Most Trusted Brands – really?

Honesty, integrity, trust, respect and probably customer service. Ask any corporate company what their “company values” are and you’ll almost certainly get this list (assuming the person you ask even knows). It’s so generic as to be useless, and certainly does not guide the behaviour or attitudes of the staff on a day-by-day basis. Of these values, “trust” is the most difficult to define. What does it mean to trust someone? Is trust earned, or do you choose to trust? These are not questions that will be discussed in the halls of many big companies. Yet, this elusive issue of “trust” continually raises its head.

For example, every year the Reader’s Digest polls it’s subscriber base to find out the “most trusted brands in Europe”. Whilst historically a UK based survey, it is trying hard to grow into Europe. Details can be found at their website here.

I am not a fan of these types of surveys. Best Company to work for, Best company to start a career, Best company to… – they all start out well, and then quickly become victims of their own success. Most of them require companies to subscribe to participate, most are run on a for-profit basis, and most have spurious sources (I have been part of roadshows that go from office to office announcing pay increases with big razzmatazz events, top class speakers and cash prizes, timed perfectly the day before questionnaires are distributed to staff – and, I promise you, I am not making that up!).

This survey of “trusted brands” has not just Reader’s Digest readers as it’s data base, but Reader’s Digest subscribers. Well, that will be representative of the general population, won’t it? On their website, they carefully explain how they weight their data sample to “accurately reflect the general population”. I am not going to argue, but an eyebrow is raised.

A bigger eyebrow is probably around the definition of “trust”. Again, their website provides detailed explanations of what they mean by this illusive concept. But, for me, as with many of these types of “empirical” studies, the proof is in the eating. Whatever the data says, does the end result make instinctive sense and does it explain some part of reality.

In a year when British Airways took over Terminal 5, and then proceeded to lose literally hundreds of thousands of passenger’s bags, and continue the decline in on-time schedules, the fact that they top the list of most trusted airline brands (and were number 5 overall) must surely indicate that there is a problem somewhere.

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Cancer free baby is born

The first baby in the UK tested before conception for a genetic form of breast cancer has been born. For some time now, we have been predicting that it will become the norm to attempt to use our growing understanding of DNA and genetics to control the genes our children inherit. Instead of just leaving it to nature and the genetic lottery of life, we believe that parents will make important decisions on behalf of their unborn children.

If there are genetic diseases in your family ancestry, why would you not take the opportunity to break the chain of inheritance? Do you really want to pass on Alheizemers, cancer and other horrific diseases to your children? There is a natural fear of the unknown here, but those people who oppose all forms of genetic modification (GM) are missing the fact that we’ve done this all along. My mother took me around to a friend’s house as a child precisely because that child had chicken pox, and my mother wanted me to catch it. That was a (primitive, but effective) way of modifying me. One of the reasons, for example, that non European people are more prone to getting AIDS is because their ancestors were not exposed to the Black Death plague a few centuries ago. Those of us descended from the survivors of the Plague have different genetics and a closed genetic receptor that makes us less susceptible (although not immune) to AIDS.

So, this type of GM adaptation is both natural and normal in human history. The fact that we are now beginning to understand it, and can programme it is an advance, not a danger.

Read the full BBC report of how this family, with a history of breast cancer in their 20s and a foetus which showed an 80% probability of having the cancer creating altered BRCA1 gene, went ahead and altered the gene in their unborn baby. It was successful, and this form of breast cancer is now firmly in their history.

Not everyone agrees, and there will be abuse of this technology. But, I for one, am all for it.

It does raise an interesting issue in about 24 years time, though. When this girl grows up and starts dating and falls in love, will her parents insist on a genetic screening of her potential husband? I mean, what’s the point of spending all this money to remove breast cancer from the family tree when you allow it back in again through a husband who is a carrier? Is this the beginning of new forms of class distinction – between Human Being 1.0 and HB 2.0? Now, there’s a thought…

Is there value in sharing strategy consultants with your competitors?

McKinsey is one of the most prestigious and respected management consulting companies.  They help solve strategic issues that keep senior management awake at night.  Their audience is generally the movers and shakers of corporate leadership who play a fundamental role in shaping the global economy.

Research reveals that they consult with 147 of the top 200 companies in the world (74%).  Two-thirds of the Fortune 1000 has hired them as strategy consultants.  80 of the world’s top 120 financial firms use McKinsey.

Wikipedia says, ‘Knowing that a competitor has hired McKinsey has historically been a strong impetus for companies to seek McKinsey’s assistance themselves’. 

I have been reading a book called ‘Re-energizing the corporation’.   The authors make an interesting point – if you are using McKinsey’s services, and so are your competitors, what are the chances you will gain long term competitive advantage?  Can companies acquire truly lasting innovation, direction and strategic inspiration, that will set them apart from others, if they are all hoping to get it from exactly the same source?

Managers, ethics and a commitment for the future

In the wake of the world financial crisis, the analysis of “what went wrong” has started. Not surprisingly, one of the first groups of people singled out is managers. Here are some excellent thoughts from The Economist and the Harvard Business Review.

First, do no harm

Oct 7th 2008
From Economist.com
Do bosses need their own Hippocratic Oath?

ALREADY the managers of many of the world’s leading financial firms have been found wanting. Now, as the world’s economy slows, attention will turn to managers of non-financial firms, to see if they are any better prepared for the rainy day that was bound to come sooner or later.

It will be no surprise if soaring bankruptcies demonstrate that their risk management was just as inept, and just as focused on maximising short-term profits (and their pay packets) without thinking too hard about what would happen when the good times ended.

Why is this failure so unsurprising? In a new article in the Harvard Business Review, Rakesh Khurana and Nitin Nohria, who teach at the Harvard Business School, argue that the problem is literally a lack of professionalism. Contrasting corporate managers with doctors and lawyers, the authors title their article with their argument: “It’s Time to Make Management a True Profession”.

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Put that in your iPod and er, listen to it

Here’s an interesting battle going on in the music industry, with Apple ‘threatening’ to close doors to iTunes, the dominant force in sales of digital music. (BBC has the full story)

If word gets out that music publishers are trying to stick it to consumers, and Apple is fighting to keep prices down on their behalf, well, there’s liable to be public backlash against the labels.

The Power of Imagination

JK Rowling gave the 2008 graduation address at Harvard. You can read and watch it here.

I think it’s excellent, focusing on the benefits of learning from failure and imagination.

This section is the best for me:

Unlike any other creature on this planet, humans can learn and understand, without having experienced. They can think themselves into other peoples minds, imagine themselves into other peoples places. Of course, this is a power, like my brand of fictional magic, that is morally neutral. One might use such an ability to manipulate, or control, just as much as to understand or sympathise. And many prefer not to exercise their imaginations at all. They choose to remain comfortably within the bounds of their own experience, never troubling to wonder how it would feel to have been born other than they are….

If you choose to use your status and influence to raise your voice on behalf of those who have no voice; if you choose to identify not only with the powerful, but with the powerless; if you retain the ability to imagine yourself into the lives of those who do not have your advantages, then it will not only be your proud families who celebrate your existence, but thousands and millions of people whose reality you have helped transform for the better. We do not need magic to change the world, we carry all the power we need inside ourselves already: we have the power to imagine better.

Aleksandr Solzhenitsyn

I was sent this short email about Russian writer and Nobel laureate Aleksandr Solzhenitsyn who died on Sunday, aged 89. I thought I’d share it.

His outspoken criticism of communist totalitarianism earned him many years of imprisonment in Stalin’s infamous Gulags and many more years in exile. His rare courage was underpinned by an unshakable commitment to truth and a deep sense of life purpose.

He was, however, also no advocate of the Western model, believing that Western society was eroding due to its whimsical pursuit of material well-being, its valuing of rights over obligations, and its misguided granting of destructive & irresponsible freedoms. Here are the closing words of his famous address “A World Split Apart” at Harvard University, 30 years ago. His questions are hardly less relevant to us today:

“Our lives will have to change if we want to save life from self-destruction. … Is it true that man is above everything? Is there no Superior Spirit above him? Is it right that man’s life and society’s activities have to be determined by material expansion in the first place? Is it permissible to promote such expansion to the detriment of our spiritual integrity? … We shall have to rise to a new height of vision … No-one on earth has any other way left but upward.”

Activists and companies can co-operate

The Economist recently ran a fascinating little piece on how activists and companies need to work towards a common outcome and goal. Read it here (subscription may be required) – or an extract below. It may be idealistic, but it is a wonderful goal to have, and certainly is a requirement if we are really going to change the world.

Strange bedfellows

Companies as activists
May 22nd 2008

LAST month Tom Katzenmeyer, vice-president of investor relations at Limited Brands, met representatives of the government of the Canadian province of Alberta. Limited Brands is an American apparel firm with sales of $10.1 billion last year; its best-known division is Victoria’s Secret, which sells lingerie. And what was the topic of discussion? The firm’s worries over threatened caribou habitats.

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Good with Money

Our global research has long been indicating that companies who concentrate more on who they are and less on what they sell will gain the competitive edge over their competitors.

The “who you are” is defined by the values a company lives by and how effectively the company’s values connect with the talent staff that work for them and the valuable customers that continue to shop with them.

One of the values that companies need to be demonstrating today is that of being ethically conscious. And this means more than just changing to efficient green light bulbs! It means living by the value…making business decisions, both strategic and operational, against the value even if it hurts the bottom line.

I came across a company that is doing great stuff in this sphere. Have a look at their marketing campaign The Co-Operative Bank is really promoting who they are and what they stand for, and most importantly their claims are back by some substantial meaningful and significant claims. They have turned down over £700m in revenue based on ethical decisions… now that is putting your money where your mouth is and living by the values they subscribe to. Impressive!!!

I’ll be reviewing this campaign and the company’s operations over the next few weeks and trying to find out more about their results, but I’ll stick my neck out here and make a prediction that their values based campaign is having a fantastic response from the Millennial, Gen X and Boomer generations, a unique achievement.

Olympics, controversy and you

The Olympic torch has left Athens, Greece on its traditional torch run around the world until it eventually arrives at the Beijing Olympic stadium during the opening ceremony. Right from the first day, it has been met with something that the Chinese officials did not anticipate: protestors. In an unprecendented move, the torch was actually extinguished in Paris so that it could be loaded onto a bus and rushed away from growing violence amongst the protestors. TV news scenes from London, Paris and San Francisco show police beating protestors, dragging them into prison vans and frog marching them away – none of these are scenes that add to the Olympic brand and mythos.

This is becoming a major news story – a BAD news story. It’s China Inc that’s on the receiving end. But it could be you and your company next. We have been saying for some time now that there is a new generation of young people and global citizens that are going to rise up and become activist customers and ethical consumers. This Olympics needs to be YOUR company’s wake up call that this can happen anytime, anywhere. You have been warned – get your act together, and ensure that all the skeletons in your closet are well sorted out!

Personal Ethics in the Corporate World

How do you confront the moral tensions inherent in corporate life and come out with your ethics intact? Elizabeth Doty writes for S+B (Strategy and Business), and has written an excellent articles on the topic, followed up by an online forum discussion and an extended Q&A article. Read these excellent articles here:

• Winning the Devil’s Bargain
• Discussion forum after the article – webinar held in October 2007
• Extended Q&A – Personal Ethics in the Corporate World

I think you need to register to read them, but it’s free and there are some brilliant articles at the site.

The world’s worst products

The world’s worst products, as voted for by Consumers International.

• Coca-Cola – for continuing the international marketing of its bottled water, Dasani, despite admitting it comes from the same sources as local tap water.
• Kellogg’s – for the worldwide use of cartoon-type characters and product tie-ins aimed at children, despite high levels of sugar and salt in their food products.
• Mattel – for stonewalling US congressional investigations and avoiding overall responsibility for the global recall of 21 million products.
• With the overall prize going to: Takeda Pharmaceuticals – for taking advantage of poor US regulation and advertising sleeping pills to children, despite health warnings about pediatric use.

Richard Lloyd, Director General of Consumers International, said:

“These multi-billion dollar companies are global brands with a responsibility to be honest, accountable and responsible. In highlighting their short-comings Consumers International and its 220 member organisations are holding corporations to account and demanding businesses take social responsibility seriously.”

See a newspaper report with some details and commentary here.

Why Ethical Consumption is Taking Off

Dr Graeme Codrington’s latest presentation is called “Hannah’s Rules” which alerts companies to an essential emerging trend: the ethical consumer. In this article, he explains WHY ethical consumption is such a growing trend.

Why Ethical Consumption is Taking Off

By Dr Graeme Codrington

Today’s consumers are not just looking for a good product at a fair price. They are looking beyond the product or service to the ethics of the company that supplies it. The symptoms of this shift in focus by consumers is evident in the concerns that these customers have about the companies they purchase from. There is growing interest, for example, in labour practices, diversity quotas, environmental policies, social responsibility, and even CEO salaries are under scrutiny.

So-called “triple bottom line” reporting, which gets companies to present not just financial results, but also social and environmental results and impact, too, is one way in which corporates are trying to respond. And they need to respond because are voicing their concerns, in everything from boycotting stores to suing corporations. Companies like Ford, Gap, Nike, Walmart and KfC have all experienced the wrath of ethical consumers in recent years, and have been forced to respond quickly to protect their reputations and their very existence as companies.

This growing emphasis on ethical consumption is a trend that cannot be ignored. It is not going to go away. There are some important changes in the world that provide indications that ethical consumers will continue to be a growing force in the next few decades. Companies would do well to understand this trend, and be proactive in dealing with it.

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Home Depot pays out big time – for what?

This isn’t new news, but as I was doing research into Executive pay packages, I picked up this info from earlier this year.

On 3 January 2007, Bob Nardelli (once in line for GE top spot) left Home Depot, where he had been CEO for 6 years. Just four months earlier he had said (to AP) he would not consider leaving the company. During his years, there was a 6% drop in share price, during the time of a fairly rampant market, and the steady increase in competitor’s shares (especially Lowe’s). To be fair there was a massive drop after he joined, and the last 4 years have seen a slow and steady climb, but nevertheless, he has underperformed against the market. Home Depot, which has 345,000 staff and is second only to Wal-Mart among US shopping chains, and the world’s largest DIY store.

Nardelli had come under fire for his massive pay package (he earned $228m in his 6 years) while at Home Depot, especially since the last set of results he had presented were anything but spectacular. He had infuriated shareholders in May 2006 by refusing to take any questions during the company’s annual meeting – at which he was the only board member to turn up. He had angered unions, who were scathing about him – one sent activists dressed as chickens to Home Depot’s annual meeting to highlight the board’s lack of accountability.

But, amazingly, on leaving the company he received a $210 million compensation package that includes $20 million in cash severance and $32 million in retirement benefits. Nardelli has agreed not to compete with the company for one year, not to solicit employees or customers of Home Depot for four years, and other conditions – if he complies he could be entitled to a further $18m or so. (Although, as one blogger points out, surely with his record, you would want him to go to a competitor).

CO2 Neutral products are becoming “fashionable” but are new product launches enough to target the “ethical consumer”?

ibuyeco, a new eco-friendly car insurance scheme that offsets 100% of customers’ CO2 emissions for the duration of their policy, was launched in the UK at the end of April 2007. The company has just started a strong above the line advertising, including television and other national media.

Created by the Budget Group, one of the UK’s leading insurance intermediaries, ibuyeco is one of the first car insurance products to offset 100% of a car’s carbon emissions. Customers pay an additional amount to their premiums. Payments are calculated on the type of vehicle and the estimated mileage, details provided by customers. Using this method, the typical family car travelling a mileage of between 10,000 and 12,000 would require an offset fee of roughly £20, for example. ibuyeco buy carbon credits through The Carbon Neutral Company who in return puts the money towards projects that reduce carbon emissions. These projects fall into different categories including: increased energy efficiency, forestry projects and renewable energy, and are based in both the UK and overseas.

The launch of ibuyeco is the result of a social trend that TomorrowToday has been researching for sometime and which we are calling the “rise of the ethical consumer”.

In November 2006 Barclays announced the first carbon neutral debit card and we’re expecting a large number of companies to follow ibuyeco and Barclays. The important issue though is, are these companies jumping onto the global warming marketing bandwagon or does carbon reduction form part of the company’s values and long term strategy? Another question is why did Budget need to launch a new company and why doesn’t it position the Budget brand as an ethical brand? Hiding behind a new brand for marketing reasons will not pay dividends unless the company itself changes.

When it comes to targeting the “ethical consumer”, made largely out of Generation Y, companies had best practice what they preach. If they don’t, this generation who is highly connected via the web will spread the word and ruthlessly weed out the pretenders.

Companies need to do more than launch new products and advertising campaigns professing to support initiatives that reduce global warming. Companies need to be taking steps towards reducing their own carbon emissions and communicating their efforts, in carbon friendly ways! Carbon reductions need to be part of the company’s day-to-day strategies and way of work. It has to become integrated into the company’s culture and demonstrated in a number of ways, from the way they employ recruits to how they run their meetings and sell their products. There is no point a company asking consumers to buy its product so that they, the consumer can contribute to carbon emissions, when the company itself is contributing to carbon emissions by making clients fill out massive application forms and accept loads of marketing mailings.

Our advice to companies thinking about targeting customers using carbon reduction schemes, is to first integrate carbon reductions into the fabric of their company’s culture before they launch new products. The new ethical consumer will buy from your company because of who you are (your company’s values) and not because of what you sell.