Book Summary- The Responsible Business
I am not sure what prompted me to read this book by Carol Sanford; probably a recommendation from a professor. I am really glad I read it. It was a little heavy towards the end but I think the fundamental message of the book is very clear and important. The author tries her best to make the reader understand the difference between a responsible business and Corporate Social Responsibility as a division or department in a business.
According to her: Corporate Social Responsibility (or CSR) could be considered a first step in the right direction, but usually CSR initiatives are, “responsibility projects” that seek to be responsive to external expectations, standards or goals.
Here’s a one line summary- “A business that starts at the beginning with the lives of its customers looks very different from one that starts at the end with investors.” – Carol Sanford
Other key points the book embodies are:
Definition of a Responsible Business: IS-“A co-creative partner ensuring the vitality and health of all the communities to which it belongs” and IS NOT “A set of metrics to be tracked or behaviors to be modified”.
Being a Responsible Business: “Responsibility isn’t a set of metrics to be tracked or behaviors to be modified. It has to be central to both the purpose and the prosperity of a business and must be pervasive in its practices.”
The book has plenty of case studies which focus on a handful of companies. My favorite story relates to the catering company HerbanFeast. Early in the book Carol talks about how the founder of the company just by really being customer focused was able to make his business a huge success story by listening to their customers and understanding what they were going through to give each customer a unique and authentic experience vs. just asking a set of standard questions to give them a standard experience. What was even more unique was sharing this customer story with all their employees. As a senior staff having worked in the industry for 13 + years I see this scenario happen often in the real world. Great decisions are made in the boardroom that seldom gets translated all the way down with the same excitement and message. In the end, that’s where the magic happens.
Five recurring themes that turn companies into responsible businesses:
Reality – connecting to the real lives of stakeholders;
Systemic Effects – as the only measures of success;
Systemic Wholes – to combat fragmentation and promote integration;
Self-Direction – the redesign of work to “evoke self-directed people doing self-directed work that is self-evaluated within the context of a business strategy”
Capability Development – building critical thinking skills for internal and external stakeholders.
Introducing the Pentad:
According to Carol, “we are more used to think of organizations as machines, but it would be more accurate to see them as living organisms that adapt to and transform their environment.” Thus, she proposes a systemic framework to integrate all the relevant stakeholders, through which the responsible business can contribute and receive value. The framework is what’s referred to as the Pentad
The pentad depicts a chain of logic that begins with the living image of a customer and flows organically through co-creators, Earth, communities, and investors. This flow results in improved health and vitality for all stakeholders. This according to her and the examples given in the book (from DuPont to Seventh Generation) is a recipe not only for responsible businesses, but profitable ones. The five stakeholder groups of the pentad are:
The customer is the “foundational shareholder”
The co-creator, “all the people and organizations who contribute to the creation of a product or service”;
The Earth, “the original source and infrastructure without which human activities would be impossible”
The community the “business needs to partner [with] in order to source its materials and workers, manufacture its goods, sell its products or services, and recycle or store its waste” and
The investor, “without whom a company’s dreams would be difficult or impossible to realize.”
The book has over the years received several awards including Top Fifteen Business Books by CNBC. Her book is required reading at Harvard Business School and MIT Sloan, among others. So please go read the book or at least add it to your reading list!