Cargill announced plans to spend $1.5 million over three years to scale what the company calls the “Social Gastronomy Movement” aimed at addressing societal challenges through the power of food. As part of this movement, Cargill formed a partnership with Gastromotiva, a Brazilian non-profit organization that provides education and professional training to young people who face socio-economic challenges.
Wall Street took notice when Larry Fink, CEO of BlackRock, one of the largest global asset management corporations in the world, wrote a letter to the chief executives of BlackRock portfolio companies calling for a new model of shareholder engagement and stating that companies must operate with a sense of purpose or risk losing BlackRock’s business.
“Society is demanding that companies, both public and private, serve a social purpose,” Fink wrote. “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”
Resetting the social contract
Executives in corporate America are redefining the meaning of shareholder engagement by using company resources and influence to drive social change. This shift has been the focus of research by Barie Carmichael, a senior counselor at global communications consultancy, APCO Worldwide, since 2005.
Carmichael’s career in corporate America spans 35 years and includes leading communications for major corporations. Two months after Carmichael joined Dow Corning, the silicone breast implant controversy erupted. “I had 12 years of some rather remarkable corporate experiences literally on a global scale,” Carmichael said of her tenure at the company.
Determined to foster some institutional learning from the breast implant crisis, Carmichael invited researchers into the company to write case studies. A team from the Univ. of Virginia Darden School of Business was among the participants.
“The people from Darden were so remarkable in their insightfulness — their School of Engineering came into the company and did a case study because this is a technical company,” she said.
The researchers’ curiosity to figure out what went wrong was very strong and motivated Carmichael to seize the opportunity to become a fellow at Darden’s Batten Institute for Entrepreneurship and Innovation. The program pairs an individual from the business world with a faculty member to “…collaboratively develop new thinking in entrepreneurship and innovation that can advance business,” Carmichael said.
“One of the things that frustrated me on this field called communications — you cannot solve a crisis like we had at Dow Corning…by finding messaging,” Carmichael explained. “It gets at the heart of the business decisions made. For Dow Corning, it was the substantive corrective actions taken to resolve that issue.
“So, I became convinced that the heart of dealing — at least in crisis or seeing issues coming — had more to do with the quality of the strategic decisions at the strategy level, not at the wordsmithing level.”
|Prof. James Rubin co-author of “Reset.”|
In 2005, she and James Rubin, an assistant professor of business administration at the Darden School, researched and developed a concept called “inherent negatives” in business and began writing case studies. Rubin, who taught management and corporate communication at Darden, died in 2016 at the age of 64.
The fruits of Rubin’s and Carmichael’s research is “Reset: Business and Society in the New Social Landscape,” in which the authors argue that companies must balance needs of the business, customers and society. Driving this scenario is a new social ecosystem created by social media, which has empowered individuals who expect corporate America to address social issues.
“Social media is just a tool, but who is a reporter is blurring lines,” Carmichael said. “What is fact, unfortunately, is a matter of debate. Who is an influencer has changed dramatically, and how people consume information has changed dramatically.
“…That whole new social ecosystem married with the thinking that James and I were doing on inherent negatives…and came together at the right time.”
MEAT+POULTRY: What is an inherent negative? You included antibiotic use in livestock as an example in Reset.
Barie Carmichael: This is something that needs to be eliminated. That means that if you don’t take action on that, by definition the more you grow, the more you expose humans potentially to this problem ingredient. And so, some actions need to be taken. What’s fairly new, although not entirely new, is that companies used to look within their company fence line for how they’re running things.
The inherent negative point of view extends throughout the entire life cycle of the business you’re in. So, let’s say you sell chickens to customers. Your responsibility in this new era says you now need to look at your sourcing; you need to go all the way back. In addition to that, sometimes the inherent negatives are shared problems. If one company addresses this, it doesn’t solve the problem, which is pretty big, of having human exposure to antibiotics in poultry.
The inherent negatives of concentrated animal feeding operations need solutions that involve multiple companies, probably multiple members of the supply chain — not to mention a regulatory framework; it requires collaborative solutions.
M+P: You also mention Chipotle and the company’s food safety problems. [In Reset, the authors argue that executives emphasized the brand promise of using only fresh ingredients rather than explaining what went wrong in the supply chain.]
Carmichael: One of the things that we, and a couple of other folks have said is that making a promise is not an action. The proof in this new social ecosystem is what did you do, not what you said. You have to be your own auditors of what your actions are, and what are the actions that it takes to live up to that promise. Clearly there were flaws in their ability to live up to that promise. It was one of these situations where the promise got ahead of the operational ability to deliver on that promise. In this environment, it doesn’t work.
M+P: Is anyone getting this right?
Carmichael: It’s not an initiative. The companies that don’t do it well take on individual initiatives, and think they’re checking the box — which may be unkind to them but is not a way of doing business. The companies that are exceptional really do believe that their purpose is not only to make money but doing it in a way that makes the profits also benefit society.
I would look at Patagonia — they’ve been doing this as part of their culture from the very beginning — Unilever. UPS is another wonderful example. This is different from philanthropy. It’s different than a nice thing to do. It is good for their business.
M+P: In “Reset,” you say executives will need new skills to anticipate strategic surprises. Discuss the skills necessary in today’s business environment.
Carmichael: I’ve lived in the corporate bubble. You should never underestimate the isolating impact of corporate culture. New leadership has to work at getting an outside-in point of view, and it not being just an event — you bring in a speaker, or something like that. How do you get that [outside-in point of view] into the management team at the c-suite level?
When I was at Dow Corning, I think I went through four CEOs while I was there over 12 years. One of them lost his job as a result of the breast implant controversy. But they brought in a person named Keith McKennon [former chairman and CEO of Dow Corning], and I literally went to school on Keith McKennon’s bursting through the cultural bubble there. He brought in somebody that was not at the high level but was a key member on the team that would ask questions that nobody thought about asking; and he would make it safe for people to ask “the un-askable.”
The only person that can lead that way is the CEO; that is the only person that can make politically safe to do that in a corporate culture. It doesn’t come naturally in a corporate environment.
It also means taking a look at what does your executive c-suite look like. What is the responsibility of the people in that c-suite? If they are all operational people or management — and they are also not people involved with talent recruitment, with public affairs and communications whose job it is to understand the outside-in — you’re not likely to get an environment where people will say “Wait a minute; let’s think about this for a while.”
That outside-in point of view just doesn’t come naturally once you get into the bubble.
It also requires leaders with a disposition to be curious, to be comfortable with a 360-degree [view] before making a decision. It takes active intervention.
M+P: If “Reset” has a sequel, what will it be?
Carmichael: Oh my gosh! The first one just got released.
Maybe the best way to answer that is what am I going to be watching for. One of the things I’m going to be watching for is the impact of retiring baby boomers at the rate of 1,000 a day and what that is doing to the recruitment side. The market for talent is as consequential as the market for market share. Companies realize that recruiting and retaining this next generation is not easy, because they’re really driven by values and purpose and they’re very skeptical. A lot of them are into the gig economy, so the whole notion of going to a corporation is different deal these days.
Another thing I’m going to be looking at is board of directors and c-suites. There’s a lot of attention paid to the CEO, but I wonder if there’s going to be the kind of diverse membership that’s really required in the c-suite and will boards of directors also require that.
Let’s talk about new business models [such as social media]: What they don’t have is precedence for this new business model. They can’t look at traditional supply chains and anticipate where something might be coming and voila! You have “fake news” and hate speech and all the things that they’re wrestling with in a world where they’re like the Wild West, because there’s no FCC for social media. How they work that out is going to be fascinating to me. If there was ever a time for a “we” solution, it’s there because social media morphs into the Internet of Things or driverless cars. As technology gets integrated into everyday products and everyday life without a lot of precedent like the food industry and supply chains have, it’s hard to anticipate this because who could have seen “fake news” coming?
At least [the food industry] has got the benefit of precedent. It’s not like you don’t know what the steps are in the lifecycle chain and how the business models work. But it’s incredibly interesting on how that’s going to get rearranged because the expectations have grown on the total life cycle analysis of the food industry.