Monthly Archives: October 2006

Understanding context: How does expertise develop?

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Csr_expertise_mental_model_1 This is the conceptual model I developed (click on the image for a larger version) to illustrate a systems view of how managers might develop real-world expertise in executing socially responsible business practices.

1) A manager engages in a socially responsible activity (e.g., philanthropy, designing sustainable products, providing services to underserved markets, etc.)

2) Their approach to that activity is influenced by the business environment in which they operate and their own mental model of how to perform within that environment

3) Critical factors influencing the manager’s mental model include informal social factors, formal social factors and artifacts (models, tools, measures)

4) The outcome of the activity generates both business and social impact results. These results influence the manager’s mental model (reinforcing it or motivating some change)

The model is intended to be used as both a diagnostic framework and as a framework to design organizational interventions. As a diagnostic framework, it is useful for understanding the conditions and factors behind success cases: What helped “expert” managers become successful? As a design framework, it provides a set of factors through which to influence organizational performance: What type of models, tools or measures can be introduced to improve the conditions for executing socially responsible practices? Are there informal or formal social factors that can be modified or influenced to improve conditions?

Expert model: Social impact and innovation

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Expert_model_2Developing a deep understanding of customer or stakeholder thinking and then using that knowledge to create innovative solutions is a common practice that emerges from case study research of managers with expertise in implementing socially repsonsible business practices.

Managers who participated in the research project shared numerous applications of these practices, including corporate social investment and foundation activities, internal operations, and supply chain mangement. But expert managers who had the most tightly integrated view of business and society had reframed “social impact” as a source of innovations that are more intrinsic to the core purpose of the business.

One way of interpreting this view to see it as an expert mental mode (click on graphic to see a larger version). As explicitly stated concepts, each item in the mental model is relatively easy to understand. In practice, they are concepts based on a great deal of contextual, tacit knowledge and experience that would be difficult to replicate – evidence that suggests these are expert concepts. Each of these distinctive concepts can also be interpreted as relating to one another to form a kind of virtuous cycle. In this interpretation, a strongly-held enterprise identity that incorporates social responsibility may lead to:

  • Seeing the integration of business goals and social mission as source of innovation
  • A focus on socially responsible practices that are more intrinsic to the business
  • Practices which encourage deep understanding of customers-in-environment (or stakeholders-in-environment) to discover and develop new product and service innovations

Defining the scope of socially responsible business

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One of the best academic articles I’ve come across was written in 1991 by Donna J. Wood (“Corporate Social Performance Revisited,” Academy of Management Review).

Wood summarizes a lot of the discussion and competing thinking over the past 30 years on just how to define corporate social responsibility (CSR). She then reframes this historical background into three core principles.

  • The Principle of Legitimacy. Society grants legitimacy and power to business. In the long run, those who do not use power in a manner which society considers responsible will tend to lose it.
  • The Principle of Public Responsibility. Businesses are responsible for outcomes related to their primary and secondary areas of involvement with society.
  • The Principle of Managerial Discretion. Managers are moral actors. Within every domain of corporate social responsibility, they are obliged to exercise such discretion as is available to them, toward socially responsible outcomes.

The Principles are defined in greater detail in the article, and Wood brings each down to a practical application by using examples of how they might impact business decision making re: corporate social responsibility.

For example, the concept of “primary and secondary involvement with society” in the Principle of Public Responsibility would suggest that an auto maker is clearly responsible for building cars that are safe and that resolve air-pollution issues. This responsibility is directly linked to their unique functional role in society and auto makers have direct control over the resources required to meet this responsibility. A “secondary responsibility” might be involvement in driver education programs or public transportation policy.

Moving beyond CSR as just corporate philanthropy

Wood’s Principles of Public Responsibility and Managerial Discretion help resolve one of the most difficult issues in CSR: Agreeing on a scope of “responsibility.” I’ve come to the view that companies can only qualify as understanding CSR if you can see activities and results in primary and secondary areas of responsibility. The more sophisticated the thinking in each area, the more experience (and effort) you know they’ve put into CSR.

This point-of-view is also helping me judge the value of corporate philanthropy: It is valuable only to the extent that it is a tool to help address secondary responsibilities and/or it extends the company’s social impact beyond secondary responsibilities. But if a company has a philanthropic effort — yet is clearly not expending effort and developing experience in addressing primary and secondary responsibilties — it should not qualify as being a socially responsible organization.

The question that is puzzling to me at the moment is: When I ask people to connect me with managers in companies who have an interest in “socially responsible business practices,” why is the near-automatic response to dig up a contact in the company’s philanthropy organization?