Marcia Stepanek | Thursday 4th February 2010
The World Economic Forum has come and gone, but oh, what a difference a year makes. Last year, the air in Davos was so thick with gloom over the convulsing economy and the global financial meltdown, that many CEOs leaving the Swiss resort last year "bore the harrowed looks of survivors of the Donner Party," according to Newsweek columnist Daniel Gross.
This year? It was all about dusting off, standing up -- and talking "social." Indeed, the "Rethink, Redesign, Rebuild" 2010 conference theme was not chosen lightly, nor seemed to be taken so lightly by resident CEOs. Just so the message isn't lost, let me replay the exit spin again here: Social enterprise and "social innovation" are no longer considered annoying niche concepts by Establishment Business. From the way many folks talked in Davos, they are the acknowledged tail wagging the dog -- if not soon to be the dog, itself.
Here's why/how:
* Stakeholders matter. Amid lots of back-channel mumbling over whether even the Davos conference, itself, has become irrelevant, Establishment Business (represented by the likes of Pepsi, Proctor & Gamble, Carrefour, Nike, etc.) now clearly endorses the stakeholder model. Truly. Establishment CEOs at Davos appeared this year to favor moving away from Milton Friedman's view that the only social responsibility of a business is to make a profit. This year, many CEOs acknowledged that there needs to be more -- that business has the power (and, increasingly, the will) to help move social change and catalyze social problem-solving in ways that can also be profitable. And it didn't land this time as lip service. Caring -- aka social engagement -- sells, attendees agreed. "The greatest competitive advantage for business will be social," said Michael Porter of the Harvard Business School. "We used to believe there was a trade-off between profit and social issues. Now we know differently. We thought workplace safety and environmental stewardship were expensive but the highest return on investment comes from zero accidents and re-engineering the supply chain to make you more efficient. Companies which understand complex social issues will turn them into competitive advantages." Indra Nooyi, CEO of Pepsico, called this shift in the business zeitgeist "performance with purpose." Josef Ackermann, chairman of the Management Board and the Group Executive Committee of Deutsche Bank, Germany, said, "In terms of shareholder value or stakeholder value, at the end, it is an interdependent system. If you lose the support of society, you are not going to realize your corporate objectives in the long run." (No dah, right?)
* Sustainability sells. Really. Many CEOs, for example, seemed to finally get passionate about the idea, talking throughout the week about the importance of water-for-all and new ways to turn waste into profit. Case in point: Mark Parker, CEO of Nike, urged companies to take on the case for the environment because there is money to be made from "reusability." Parker said at one point: "Consumption has been seen as linear, from 'Buy to Use to Throw-away' (but) we have to recapture the value in reuse. We have to tell our investors how we are saving money and creating a sustainable business model."
* Emerging market consumers are golden. Honest this time. "The consumer in developing world is seeking to trade up while the consumer in developed markets is trading down," according to a Boston Consulting Group study released during the conference. In the developing world, 85% of purchases are made by women, who go to 3-5 stores as "deal hunters." The CEO of Carrefour said "these women value affordability, aspiration and availability. They are smart and empowered." Newly wealthy people in developing nations, besides wanting high-value premium brands, also feel they have a responsibility to use their new wealth to better their local communities. Local and micro-local just got cool again to the global elites.
I could go on, but you get the drill. As the world economy continues to seek strength in its stride, it's becoming clear that the path -- at least for many, if not most attendees -- is changing. Collaboration is suddenly officially intriguing, macho and (for some) mandatory; social enterprise now officially rocks on the innovation radar. The Establishment, chastened, is finally listening.
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