Stakeholder engagement drivers – Part 4: enlightened self-interest

In the last post in this series we looked at enlightened self-interest, illustrating the concepts with examples of Walmart’s sustainability initiatives. This blog explores McDonald’s journey towards sustainability.

McDonalds is one of the many companies that have embarked on a journey towards sustainability following negative publicity. In 1990 a group of protestors in London distributed What’s wrong with McDonalds? pamphlets leading to the “McLibel” case that was finally resolved in 2005. Over the last two decades McDonalds has been criticised for contributing to obesity, destruction of the rain forest, animal cruelty and human rights abuses.

Towards sustainability

McDonalds philanthropic initiatives started well before the McLibel days, with the establishment of Ronald McDonald House charities in the 1970s. In the last decade, the company has moved from philanthropy to broader sustainability aspirations. Two initiatives of note are the Weight Watcher’s partnership and Rainforest Alliance coffee.

McDonalds now offer meals that have WeightWatcher’s point ratings, providing customers with choices other than their traditional fare. They have taken other initiatives to improve the health of their offerings – sugar levels in buns have been reduced and healthier oils are used for deep-frying.

Promoting and selling Rain Forest Alliance coffee is a sustainability initiative that has multiple benefits. Growers are guaranteed better prices for product. Their families benefit through the provisions of social initiatives such as schools, and growing systems are more sustainable and environmentally friendly. As companies like McDonalds make products such as certified coffee available, they enable consumers to help contribute directly to the well-being of those that grow the product, thus creating virtue and connection throughout the value chain.

 Local engagement

The McDonalds store near where I live has been frequently upgraded and provides an attractive, clean and comfortable environment for customers. Free wi-fi is available. With its sustainability initiatives and in-store experience, McDonalds positions itself for improved customer engagement.

Any large company is easy prey for criticism and if you want to find fault, you will find it. But I believe that it is important to acknowledge their good efforts and encourage more.

When I look at McDonalds through the three drivers lens, there is sufficient evidence that they are operating in the enlightened self-interest zone. Another way to check perceptions is to compare them to other fast food chains. Where I live, I don’t see much evidence any of McDonalds competitors moving into this zone. What do you see?

This three level model is a useful tool for a broad assessment of a company’s engagement and sustainability drivers.

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Stakeholder engagement drivers – Part 3: enlightened self-interest

The first part of this series of blogs outlined three three drivers for stakeholder engagement, self-interest, enlightened self-interest and altruism. In this blog we will look at enlightened self-interest using Walmart for illustration. Such companies want to make money and be more sustainable. They attempt to operate in ways that are not just financially sustainable, but also factor in the well-being of others and care of the environment. They look for synergy in these aspirations.

The sweet spot

The emergence of sustainability as a major driver of business decision making is now undeniable. Companies that attempt to privilege their own self-interest over broader societal and environmental concerns will become increasingly irrelevant. Smart companies pursue the “sweet spot”, of synergy between self-interest and creating value for society and the environment. In the sweet spot self-interest becomes meritorious.

 Walmart as an example of enlightened self-interest

First some disclosure: I live in New Zealand – we have no Walmart stores so I rely in the media for my knowledge of Walmart. Much has been written about former CEO Lee Scott’s crucible experience in Hurricane Katrina and the company’s work to rectify negative publicity. Given its sheer size, Walmart still attracts negative publicity, but there is an increasing amount of evidence that they are a great example of enlightened self-interest.

In part one of this series, factors that indicate enlightened self-interest are:

  • engagement focus
  • creating value chains
  • sustainability aspirations
  • values driven decision-making

And as they embed these practices evidence of altruism starts to emerge and the organisation becomes more driven by the greater-good. Here are some examples. They explicitly illustrate the creation of value chains and sustainability aspirations, and we can infer they require an engagement focus and values decision decision-making.

Creating shared value with suppliers

In each trans-pacific journey from China to Walmart, the massive Emma Mersk transports 15,000 containers. With 60,000 suppliers, it must be difficult for Walmart to achieve intimate engagement with each, but the company can have a huge influence in ramping up sustainability expectations. With larger suppliers, such as Peterbilt, Walmart are working closely in pursuit of its sustainability aspirations. Peterbilt recently delivered eight hybrid trucks to help Walmart achieve its goal of 100% increased efficiency by 2015 from a 2005 baseline. In this video Hunter Lovins, of Natural Capitalism Solutions, states “Walmart may now be the centre of environmental responsibility on the planet”. By combining improved aerodynamics, auxiliary power units capturing energy from breaking, improved rolling resistance in tyres and improved load management Walmart has already achieved 60% reductions. Walmart’s aspirations reduce costs and pollution, delivering on self-interest and benefits for customers, suppliers and the environment.

Learning from criticism

If Walmart was motivated solely by self-interest, it would choose suppliers based mainly on cost. In a recently announced initiative, the company revealed plans to double what it buys from businesses owned by women by 2016. The initiative will support women’s economic development both in the U.S. and other supplier nations and promote greater gender and minority presence through the entire value chain. Earlier this year, a class-action lawsuit by some of Walmart’s female workers was dismissed by the US supreme court. Whether or not these issues are linked indicates that Walmart continues to respond to and learn from public perception.

Public health – towards altruism

Walmart’s recent initiative to require suppliers to reduce sugar and sodium in foods, and to eliminate transfats is another great example of enlightened self-interest – the company has been criticised for being part of the American obesity culture. This initiative has potential to generate huge good, as Walmart supplies 25% of the nations food. Those suppliers and others will now be rethinking their role in public health. As Walmart ventures more into this territory, is it on the cusp of altruism? I welcome your thoughts.

image credit: http://www.politicalravings.com/everything-else/677-wal-mart-ship-from-china.html

Stakeholder engagement – what are the drivers

If you want your organisation to engage better with stakeholders take some time to understand why. This blog explores three levels of commitment to stakeholder engagement – self-interest, enlightened self-interest and altruism. As with any classification system, these levels are arbitrary and could be endlessly debated – they are simply offered to stimulate thinking about your motives and drivers.

Implementing an initiative, such as stakeholder engagement is more likely to be successful if there is congruence between your thoughts and your actions. According to Sue Knight, our behaviours (what we say and do) are driven by the sub-surface factors of purpose, identity, beliefs, values and capabilities (see The heart of sustainability for more detail). So, for example, if you are just desperate to make money, and for your business to survive, your behaviours will reflect this.

Self-interest, enlightened self-interest and altruism

Self-interest: These are businesses that want to make money and survive – and that includes most business. But those who pursue this solely, will use any means within their ethical and legal boundaries (most of the time). Broader considerations are sublimated to the profit motive.

Enlightened self-interest: Businesses that want to make money and be more sustainable attempt to operate in ways that are not just financially sustainable, but also factor in the well-being of others and care of the environment. They look for synergy in these aspirations.

Altruism: These organisations are either established with altruistic missions or develop those as their owners turn from business-success to deeper motivations.

In this diagram, these levels are presented in a matrix. Notice that the self-interested motive persists in the other two levels – all organisations want to survive. And enlightened self-interest is compatible with altruism – successful businesses have more resources to give. Following blogs will look at examples of each of these levels of business and the behaviours they engender.

What drives your organisation?

Here is a series of statements based on the factors in the diagram above. They can be used as discussion starters, or for a quick evaluation of your organisation. If you want to add numbers:

  • 0 = my organisation is not like this
  • 1 = my organisation is a little like this
  • 2 = my organisation is like this
  • 3 = my organisation is a lot like this

Singular focus on profit: Our primary motivation is to contribute to a better world.

Transactional relationships: The success of our organisation depends on our ability to create great relationships with our stakeholders.

Public relations focus: Good public relations are important to us, but more important is open and transparent engagement.

Engagement focus: We see engagement as a core organisational competency that underpins our success.

Value chain:  We work with staff and suppliers to add value for both parties, valuing long-term relationships.

Sustainability aspirations: We are driven to maximise the triple-bottom line, for prosperity, people and the planet.

Values driven decision-making: Our values guide our decision-making – if an opportunity doesn’t sit well with our higher values, we won’t pursue it.

Driven by the greater-good: Our primary motivator is to contribute to the well-being of humanity.

Results:

  • 0 to 8: At the low range, your organisation has a singular focus on profit, if you are at the higher, perhaps your organisation is on the cusp of enlightened self-interest.
  • 8 to 16: Your organisation shows signs of enlightened self-interest and could well be on a trajectory towards sustainability.
  • 16 to 24: Your organisation is manifesting altruism.

There are clear examples of organisations in each of these three categories. We will look at them more closely in following blog posts. And I would love to hear of your organisation’s journey towards altruism.