Posts Tagged ‘triple bottom line’

Q28- Recap of KM Virtues and Gaps, or Will KM Disappear?

May 30, 2009

This Q Series had been a successful one; 16,267 hits came in since it started. We end this blog series with this summarizing post. To better appreciate an item that strikes you, I suggest reading the blog which explains that point. The blogs are accessible from this post through embedded links (which appear as colored text). While pressing “Ctrl”, you can click on the colored text to create a new tab to read the previous blog post referred to.

Virtues of KM and OL (organizational learning):

Gaps in KM and OL practice:

What we need next, a new KM or the next discipline after KM:

Q28 cartoon

We will start the new L Series on “Indigo Learning Practices” in the next blog. Stay tuned in!

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Value-Creating and Value-Destroying Social Innovations

April 27, 2009

The term “social invention” was first proposed by Stuart Conger in his 1974 book “Saskatchewan Newstart”. It covers new organizations, laws and procedures that satisfy personal, social or market demand. His examples are:

  1. Organizational social inventions: schools, law courts, House of Commons, labour union, jails, YMCA, Children’s Aid Society, Red Cross, he Boy Scouts, etc.
  2. Social inventions in the form of laws: Poor Law of 1388 in UK, Indenture of Children Act of 1601 in UK, English Bill of Rights (1689), Compulsory School Attendance Act in Russia in 1717, Swiss Unemployment Insurance Act of 1789, and an 1875 US law against child abuse.
  3. Procedural social inventions: language, writing, charity, democracy, labor strikes, professional licensing, training, courtroom oath, probation, testing, psychoanalysis, etc.

I have a reservation with Conger’s use of the word “invention.” According to WIPO (World Intellectual Property Organization), an “invention” has only the element of novelty while “innovation” has both elements of novelty and utility. Evidence of utility is market demand or social acceptance (see my blog on D14- Innovation versus Invention). Conger’s examples fit the term “innovation” and therefore I will use the term “social innovation” instead.

Let us apply the Value Creation Scale from the previous blog post to various social innovations. Below are examples of largely value-destroying or simply resource transferring social innovations:

application-of-scale-2


Boxing as a spectator sport is a strange way to create value. When two people fight to hurt each other and no one is watching, this is just 3 in our Value Creation Scale. However, there are many people who will pay to watch people hurt each other — the value proposition of the boxing industry which is 3 and 6 in the Scale. Gladiatorial “fight to the death” in old Rome, Japanese sumo wrestling (an institutionalized, stylized, protocol-bound and milder form of fighting), fee-based hunting/fishing and cockfighting belong to the same category.

Cartels such as OPEC do three things: (a) extract non-renewable natural resources making them no longer available to countless future generations, (b) appropriate proceeds solely to its elite members, and (c) collect rentier profits through oligopolistic supply-fixing or price-fixing. From the perspective of the Scale, burglary, robbery and thievery are better than OPEC! Why? They do not irreversibly deplete natural resources. We tolerate OPEC more than we do burglars, robbers and thieves. Why? Don’t forget “free riders” of OPEC such as the big oil multinationals who earned billions of dollars during the last oil price spike. We grudgingly shell out more of our money for a pricey tankful of gasoline but do we feel the same with bag-snatchers? Why is institutionalized global robbery more acceptable than personalized local robbery? Strange.

Next, examine below various examples of value-creating social innovations. I inserted motherhood for illustrative purposes only although it is not a social innovation:

application-of-scale-3


The corporation is indeed a successful and widely adopted social innovation (creating value for the few or 6 in the Value Creation Scale). It has several variants. Oligarchic capitalism is where a national economy is dominated by a few business elites. “Regulatory capture” is where powerful businessmen (or “crony capitalists”) tilt the rules of the game in their favor through bribery, collusion (“cronyism”) or outright control of government regulatory agencies. An enclave corporation is one that is isolated and has zero interaction with the local communities in or around which it operates.

I sense new social innovations emerging towards 7 and 8 in the Scale. I wrote earlier about corporate social responsibility and new variants towards the “socially-embedded corporation.” I also wrote on the growing practice of “Triple Bottom Line” — introduced by John Elkington in 1994 — which is 6, 7 and 8 in our Value Creation Scale. A Working Group of the Organisation Internationale de Normalisation (ISO) is currently developing a new voluntary standard on Social Responsibility for corporations; it will be released next year as ISO 26000. The Cartagena Agreement and Costa Rica’s Biodiversity Law combine biodiversity conservation with local rights and community development — harbingers of social innovations combining 7 and 8.

Perhaps we are not hopeless; we are still learning and evolving. There are institutions facilitating innovations towards 7 and 8. Peter Spence from Australia alerted me to Mary Parker Follett Foundation whose program areas are: learning democracy, participatory design of social systems and dialogue as community reflection. Thanks Peter!


(PS to my loyal readers: if my recent blogs seem too “Cloud 9” for you, I promise to write something “Ground 0” or very practical for KM in my next two blogs before going to “Cloud 11” in Q26 and Q27 according to my set schedule. Cheers!)

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From Corporate Disregard to Corporate Embrace of Stakeholder Capital to Socially-Embedded Corporations

April 11, 2009

I flew to Singapore to read an invited paper on Monday April 13, 2009 for the Fifth International Research Workshop on Asian Business sponsored by the Singapore Management University. My paper is entitled “Corporate Social Responsibility and Emergent Models in Management of Stakeholder Capital in Philippine Conglomerates.” That’s a mouthful, so let me share with you the gist in bullet points:

  • The 10 richest Filipinos are mostly Chinese-Filipinos with their own conglomerates and corporate social responsibility (CSR) programs.
  • They are politically and economically influential; and the paper examines indications whether and how they are developmentally influential.
  • Philippine corporations’ attitudes to stakeholder capital (the external component of relationship capital) have been evolving, from disregard in the 1970s to being committed in 2000s.
  • Corporate attention to their stakeholders was basically government-driven in the earlier periods, but the growing CSR practice in the Philippines has been internally-driven; now, corporations better recognize stakeholder capital and its contribution to their value creation.
  • One of the Chinese-Filipino patriarchs, John Gokongwei Jr. recently announced he will donate half of his personal wealth to various charities.
  • CSR is a “retrofit” which leaves the fundamental corporate structure untouched.
  • New models seem to be emerging which may be harbingers of new corporate models driven by socially-responsible goals.
  • The new corporate characteristics are: more networking and partnerships with civil society, bridging leaderships, more innovative and socially-responsible investment (SRI), greater community engagement and reinvention of global supply chains towards “triple bottom line.” Corporations are less and less the enclaves they were.
  • I call this emergent model the socially-embedded corporation.

I end my paper with a teaser question.

If, as many observe, (a) the global economic crisis is a “wake up call” to flaws in the US economic model, and (b) the global economic center of gravity has been moving towards East Asia, then the question is: what, if any, are the emergent economic models in East Asia, and in China in particular?

Click here to get: a copy of my paper (pre-publication draft) and a copy of my PowerPoint presentation.

Cheers!

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Q6- KM for Development: a Triple(?) Bottom Line

January 18, 2009

The Chico River Dam proposed in 1973 in the northern Philippines with World Bank funding was a famous development disaster. The 1000 MW hydroelectric dam would have submerged large areas of Bontoc and Kalinga ethnic ancestral lands, including burial grounds and sites sacred and valuable to the cultural communities. It generated massive local and international opposition. Martial Law President Marcos sent in soldiers. Many died including tribal leader Macli-ing Dulag. The social crisis gave ammunition to the insurgent New Peoples Army. It united the traditionally warring ethnic groups in the Cordillera mountain ranges and triggered the organization of the Cordillera Peoples Liberation Army. After the famous 1986 “People Power Revolution” threw out President Marcos, the next President Cory Aquino completely stopped the project. So much was lost in terms of money, lives and goodwill of the people on the Manila government.

KM is learning from mistakes.

Similar development disasters all over the world led the World Bank to adopt “Safeguard Policies” to protect third parties from negative impacts of development projects (lower right box in the figures in the previous blogpost Q5- Market value and/or? development value). In 1978, the Philippine Government adopted a law requiring Environmental Impact Assessments prior to approval of big projects. The Indigenous Peoples Rights Act of the Philippines requires free, prior and informed consent (FPIC) from communities that would be affected by a project, to avoid, minimize and/or compensate for social and cultural costs [thanks to Ann Lily Uvero for pointing this out]. Finally, in the 1992 Rio Summit, 178 nations adopted Agenda 21 which enshrined “sustainable development” among the universal development values of mankind.

But a lesson has not been learned by the last two Philippine presidents: that military solutions to social conflicts do not work. So the killing continues: killing of people and killing of the goodwill of their kins and communities.

Learning has been slow and costly.

Let us reproduce the diagram in the previous blogpost (Q5- Market value and/or? development value), but replace “enterprise” with “project.”

sub-optimization-3

The social and environmental costs (lower right box) do not enter into project accounts, and therefore they are not part of Go-No Go and other project decisions. This is another example of sub-optimization we saw in the previous blog. It is the source of social conflicts because people who suffer the external costs and who do not enjoy the project benefits will oppose the project.

The lesson is this: development of infrastructure/economic capital should not proceed at the expense of social capital and natural capital, and vice versa — this is the essence, stated in KM language, of sustainable development adopted at the Rio Summit in 1992. It asserts that a purely economic or financial bottom line is dangerous; we must adopt a “triple bottom line” embracing the economic, social and natural value domains.

Does this make sense to you? Tell us what you think (use the Comments link below).

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