Aalto EE Profile Magazine 2/2013

Is there money in corporate social responsibility?

MAGAZINE OF AALTO UNIVERSITY EXECUTIVE EDUCATION 2.2013

SUSTAINABILITY IS PAYING OFF FOR A GROWING NUMBER OF COMPANIES. 8

Profit from sustainability has gone up from 23 percent to 37 percent, says a survey by MIT Sloan Management Review.

SUCCESS IS NOT ABOUT SELLING AS MANY PRODUCTS AS POSSIBLE. 13

Strong signs indicate the sharing society is about to trump the ownership society.

SHOULD YOU CHANGE YOUR BUSINESS MODEL? 25

Companies that have made sustainability a permanent fixture on their management agenda have turned it to profit.

The last CSR issue JUNNU LUSA

2.2013

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I have to admit up front that I have some questions about this issue, or not the issue itself, but the theme.

Corporate social responsibility is a big concept, but it is still mostly waffle-thin. All too often it is about loss-making start-ups and beautifully designed PR agendas of huge and polluting conglomerates.

We have even abbreviated the concept to “CSR” to make it is easier to use at the drop of a hat. Very little caution and very little consideration are taken when the three big letters are the definition themselves. This has caused many activist groups and consumers as well as business executives to grow disillusioned, even cynical.

Unfortunately, CSR is often thin in corporate and even thinner in responsibility: the cherished resources are slashed as soon as the first signs of a downturn are on Aalto EE’s websites, the horizon. As fellow scholars postulated, the responsibility and reputation initiatives Facebook page and blog are often bolted-on instead of built-in. They have very thin linkage to the core of the keep you up to date business and are, thus quite rightfully, treated as discretionary minor expenses with on the latest events. little or no strategic gravity. This is neither responsible nor sustainable.

Check out www.aaltoee.fi From Fall 2008, I remember well how all the world-class business schools were and www.aaltoee.sg. busy launching a number of CSR and ethics courses.

This was an easy, but deceptive, remedy once they had to address the growing criticism of farming corporate greed and irresponsibility.

As long as we have these dedicated courses something is still amiss: bolted-on, not built-in. One of the first changes I made as the principal lecturer of a number of core marketing courses was to drop this designated class and start to reflect instead on the ethical questions at each and every session. ”I don’t make movies to make money. I make money to make movies,” Walt Disney insisted. This is a good example of so-called obliquity. Do the right thing and the money will follow. Strategy scholars Porter and Kramer have been investigating the theme of shared value, a.k.a. generating revenue and profit growth and at the same time serving the local communities passionately and with a high Dr. Pekka Mattila, impact.

Currently, it is popular to track carbon footprints or tax footprints of companies D.Soc.Sc., Executive MBA; and individuals. I encourage every single corporation and entrepreneurial Group Managing Director, venture to start tracking their leadership footprints. By leadership footprint, Aalto University Executive I mean the compilation of a number of factors: taxes paid, increase in Education; Adjunct Professor the number of employees and their households, investments in infrastructure, of Practice, Aalto University etc.

The traditional feel-good activities with an air of a marketing campaign School of Business about them have, fortunately, very little oxygen.

Aalto University Executive Education (Aalto EE) offers high-quality executive education services supported by the competence of Aalto University. Aalto EE’s mission is to build a better world through better leadership and to educate a new generation of leaders. The organization’s strengths lie in its global operating model and versatile offering. Aalto University brings to Aalto EE a multidisciplinary approach to executive development along with innovative learning methods.

Aalto EE has two strongholds: the office in Helsinki coordinates operations in Europe and South Korea and the office in Singapore serves as a hub for the Asia Pacific rim. In addition to Finland and Singapore, Aalto EE offers education programs in Poland, South Korea, Taiwan, China, Indonesia, Russia and Sweden.

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FEAR

EXPLAINED

It may require courage and character, but taking responsibility is what makes us human.

Kai Sauer

says that raising sensitive issues in Indonesia has resulted in CSR strategies.

What have you learned about...

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The business of green energy.

The challenges of adopting cleantech.

Hertta Päivärinta

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shares her views on the future of consumption.

MARKETING SUSTAINABILITY

CHANGING THE GAME

PERSUASION FOR SALE

Sustainability is the path to competitive advantage in a global economy.

Welcome to the sharing society. Are you ready to give up on ownership?

What should we make of technology that persuades us to buy without our knowledge?

Toolbox

Publisher: Aalto University Executive Education Ltd Mechelininkatu 3 C, 00100 Helsinki, Finland tel. +358 10 837 3700 www.aaltoee.fi

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We filled the toolbox with tips on how to combine social responsibility and economic success.

We also tell you how to use social media to do good.

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You can also find this material from web sources.

Aalto Executive Education Academy Pte Ltd, Singapore 25 North Bridge Road, EFG Bank Building, Unit 08-03, 179104 Singapore, Singapore tel. +65 6339 7338, www.aaltoee.sg

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HISTORY REPEATED.

Ending

Strandvägen 7A, 114 56 Stockholm, Sweden tel. +46 727 467 467, www.aaltoee.se Editorial office: Zeeland, www.zeeland.fi Producer: Annamari Typpö, annamari.typpo@maggie.fi Creative Director: Miikka Leinonen Printing: SP-Paino Oy, Nurmijärvi, ISSN 1458-2058 Address register: profile@aaltoee.fi

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Responsibly yours Editor in Chief: Pekka Mattila

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The earliest examples of corporate social responsibility can be found in the era of the Industrial Revolution.

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FEAR

EXPLAINED “A hero is someone one who understands the responsibilit responsibility that comes with his freedom.”

Bob Dylan, ylan, American merican singer-songwriter, inger-so rite artist and poet

Stand up and be counted a.k.a.

FEAR OF RESPONSIBILITY

Hypengyophobia [from the Greek “hypengyos”, meaning responsible and “phobos”, meaning fear] is an overwhelming, irrational fear of responsibility.

A hypengyophobic person might be self-indulgent, irresponsible, even at the expense of others, and tend to blame others when their own irresponsibility results in failure.

TEXT: RISTO PAKARINEN

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esponsibility – is there another quality that is so positive yet gets such a bad rap? A good and admirable characteristic, yet some people feel it drags us down and holds us back. You’ve heard the slogans: drink responsibly, gamble responsibly, buy responsibly.

Responsibility is the parent who drops you off at a friend’s house, tells you to have fun, but mutters as you exit the car, “but not too much fun.”

Babies exhibit no sense of responsibility – they just eat, sleep and grow. But the first-time parents feel the full weight of the new responsibility on their shoulders.

They also feel its joys.

Being young is about being rebellious, but there are also concerns that people today are unwilling to take on adult responsibilities or are postponing it. We may just have a few too many self-centered, irresponsible individualists among us.

People tend to fall into three categories: those who take full responsibility for themselves and others, people who never take responsibility for anything, and those who hesitate until they feel pressured to step up to the plate when nobody else does.

Being responsible for one’s actions and choices is the mark of a mature human being and most of us do develop some sense of duty. Even a lazy teenage boy who doesn’t mind letting his parents and siblings do all the work for him can grow up to be an excellent dad (and a servant to his kids in turn).

ARE HUMANS IN FACT HARD-WIRED FOR RESPONSIBILITY? In his book Wild Justice, (2010) Marc Bekoff, Professor Emeritus of Ecology and Evolutionary Biology at the University of Colorado, says that all mammals have intrinsic moral values because without a sense of morals, animals couldn’t live in close-knit groups.

And there is some evidence to support his claim. Vampire bats who need fresh blood daily are known to share it with other bats. In Florida, a group of chimpanzees treat a physically and mentally handicapped chimp named Knuckles with care and READY TO TAKE CHARGE? A 2012 study compassion. In 2003 a herd of elephants commissioned by Ledarna, the Swedish saved a stranded antelope, and dolphins organization for managers, asked over 4,000 have been known to save humans from sharks. Bekoff men and women between 18 and 35 about their attitudes says that dogs also have a sense of fairness. These are all towards being a manager. Some 40 percent of the Finns indications that a sense of responsibility may also exist in and Swedes surveyed said they had no ambition to become other species besides humans. managers, and 84 percent of the rest said they wanted to Maybe we are born to do the right thing. do it later in their career.

It may not be easy and it may require courage and Maybe some people are averse to taking character, but taking responsibility is a quality that makes responsibility if they feel it’s forced on them. us human. In the words of Bob Marley: “Get up, stand Or perhaps they just don’t have the maturity to www.youtube.com up, stand up for your rights.” And the rights of others. stand up and take the blame when things go Bob Marley: Get Up Stand Up (Live) Live responsibly. wrong. Of course, things could go right, too.

“BABIES EXHIBIT NO SENSE OF RESPONSIBILITY – THEY JUST EAT, SLEEP AND GROW.”

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“Charity and alms are a vital part of Islam and local Christian tradition. Companies have a role to play here because the social security network is weak.”

Indonesia’s economy has recovered well from the financial crisis in Asia. What are the opportunities for foreign investors?

In 2010–2012, foreign investments in Indonesia rose from 14.8 billion to 22.2 billion USD. There is a large pool of cheap labor and a huge domestic market. McKinsey estimates that by 2030 the middle class will grow from 50 to 130 million people. The government is encouraging investment through the Indonesian Investment Coordination Board, BKPM, with Special Economic Zones giving tax breaks and other incentives for greenfield investors. There are still problems, though, particularly regulatory and legal hurdles. Recognizing the country’s progress, Moody’s and Fitch in 2011 raised Indonesia’s credit rating to investment grade status.

What is the role of Corporate Social Responsibility (CSR)? Charity and alms are a vital part of Islam and local Christian tradition.

Companies have a role to play here because the social security network is weak. The media, which are perhaps surprisingly free and critical, raise sensitive issues, for example, environmental matters related to problems in the palm oil and other industries that exploit the rain forests. In some cases the resulting publicity has resulted – at least indirectly – in CSR strategies.

top of my

What are some of the leadership challenges a Western company can expect if it sets up shop in Indonesia today? The economic boom has created a more mobile work force with well-educated and skilled workers changing jobs for even small salary increases. That means the best incentives for motivating employees are financial benefits and career prospects. Other challenges are cultural – the emphasis on consensus building and a hierarchical work structure can present their own difficulties. For example, employees are hesitant to report anything unpleasant to the boss and often expect the boss to micromanage the problems. Now that Indonesia is opening up to the outside world, multinational corporations are arriving, and with the increase in executive education and other training, the management culture is likely to change.

Indonesia is going strong. In recent years, its growth rate has held steady at 6‒7 percent.

The McKinsey Global Institute estimates that Indonesia could have the world’s 7th largest economy by 2030, overtaking Germany and the United Kingdom.

Indonesia is booming thanks largely to a combination of domestic consumption and productivity growth.

Taking advantage of this development and supporting companies in seizing the business opportunities is what keeps the Finnish Ambassador to Indonesia, Kai Sauer, on his toes.

agenda

Text: Katja Alaja

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TEXT: SHERALYN TAY, PHOTOS: EVELYN PRITT, KARI SOINIO

out b a d e n r a le u o y e v a What h ergy,

n e n e e r g g n ti a c o v ad

Megawaty Khie?

WHAT ATTRACTED YOU TO SOLAR ENERGY? When I was at HP we had a workshop with the Ministry of Education in Indonesia, which provides education to the remotest areas of the country, where we discussed what technologies were best suited to Indonesia’s size and needs. We quickly concluded that having access to an electrical grid was paramount: without a reliable source of electricity any technology was useless. We realized that the most practical way to provide electricity was solar energy since it could be installed in all parts of the country.

WHAT HAS BEEN THE BIGGEST CHALLENGE IN ADOPTING SOLAR POWER IN INDONESIA? The government’s populist energy policy – the heavy subsidies it gives for electricity and fuel. The result has been waste and environmental degradation. In practical terms, the subsidies help the rich more than the needy poor. If the government invested the money in improving the country’s infrastructure instead of putting it into subsidies it would be a better way to raise the standard of living.

HOW COULD THIS BE ACHIEVED? The government should provide a clear path to renewable energy in providing the right feed-in tariffs and incentives to encourage its use.

I support renewable energy to meet our energy needs because it protects the environment now and for future generations.

HOW CAN SOLAR POWER BE USED TO MEET THE CHALLENGES? Perhaps the most important effect of implementing solar and other renewable energies is that it would hook up people to electricity who are now off the electrical grid and give them the opportunity to improve their lives.

WHAT IS THE BUSINESS POTENTIAL FOR GREEN ENERGY? A Paper on Renewable Energy by Ipsos Business Consulting forecast an increase of over 550 percent in the use of renewable energy in the ASEAN region between 2010 and 2030. This translates into enormous potential business opportunities for us to explore, while at the same time being good for the environment. It’s a win-win-win proposition!

MEGAWATY KHIE spent nearly two decades supporting the growth of enterprise, SMB and consumer segments in the IT and telecommunications industries. She then turned her management expertise and passion for technology to the renewable energy sector and now runs her own business in a field she feels has enormous potential for growth, for connecting people, furthering development and improving quality of life. Her motto is “With Passion, You Can Change the World.”

EXPERIENCE/SHARED Hertta Päivärinta is a journalist and a student of new media, folkloristics, magazine journalism and fashion marketing and a selfconfessed fashion junkie who finds inspiration in everything colorful.

She is the co-founder of the Nopsa Fashion Library in Helsinki, which lends clothing, shoes and accessories on a membership basis.

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BUYING IS SO 2000 SHOPPING FOR (NEARLY) NOTHING. Most fashionistas love to shop, but few can afford to buy new clothes every week, either from chain stores or designer boutiques.

Members of the Fashion Library can indulge in the luxury of shopping for new designer wear every week for just a membership fee starting at 160 euros for six months. They can experiment with different styles and enjoy the pleasure of a new outfit without laying out a fortune or cluttering up their closets.

WHAT ARE SOME OF THE CHALLENGES IN GETTING CORPORATIONS TO BE GREENER?

CAN YOU GIVE AN EXAMPLE OF DATA THAT HAS LED TO ADOPTING CLEANTECH?

Many people try to tell corporations they need to be more sustainable. But getting corporations to look at the wider social implications is difficult because they see these interests not as benefits but as expenses. Trying to scare corporations about the harm that could happen is also ineffective because it’s about long-term events which rarely gets them to change their short-term behaviour.

The Prometheus Institute started The Carbon War Room with Sir Richard Branson and one of our first projects was for the shipping vessels industry.

It was very hard for corporations to understand how efficient and cost-effective different vessels are.

Using the Carbon War Room we came up with a global rating index.

Now there’s a clear paradigm to assess the economic cost as well as the environmental damage.

We demonstrated that more money would be saved if they used the more energy-efficient vessel.

WHAT WOULD BE A MORE EFFECTIVE WAY OF ADOPTING CLEANTECH? People tend to make decisions based on their own interests. This is neither a good nor a bad thing, it is just the way it is. Typically a corporation’s best interests focus on cost-effectiveness, but the problem is that they don’t have a deep understanding of cost-to-value calculations. It turns out that providing a corporation with a sustainability framework that shows the immediate savings, the reduction of risk, or opportunities to increase revenue is a more decisive way of achieving the same objective.

Rather than telling corporations to change what they care about, we give them the data to realize that they can adopt these technologies to achieve the objectives that are important to them.

t u o b a d e n r a le u o y e v a What h , r, e w o p r la o s g n ti o m ro

TRAVIS BRADFORD A former private equity and hedge fund executive

founded the Prometheus Institute in 2003 to address the need for reliable data, analysis and information in the renewable energy industry.

He believes the lack of information limits the adoption of cleanteach, a challenge that can be addressed by “bringing the business language to the push for sustainable technology.” He says that arming companies with clear information that outlines the immediate economic benefits of sustainable solutions can accelerate the take-up of sustainable technologies.

A NEW WAY TO CONSUME. There are no limits to what can be borrowed instead of bought. We at the Fashion Library believe that temporary ownership is the way of the future.

Minimalism is already a megatrend and the younger generations no longer regard owning expensive objects as a status symbol. In addition to clothes there are lending libraries, for example, for tools, toys and works of art. We believe that the practice will expand to other products as well.

p

Travis Bradford?

GREAT EXPOSURE FOR DESIGNERS. Most of the products at the Fashion Library come from Finnish fashion labels. For the designers, the library serves as a showroom and gives them visibility in exchange for a small investment. By borrowing clothes and wearing them out on the town, Fashion Library members give the designers a lot of exposure and free advertising.

Some may even end up buying their favorite pieces to add to their own wardrobes. In that case, the entire amount goes to the designer. We don’t take a commission.

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Marketing a sustainable future iane Martin and John Schouten are avid spokespersons of the business benefits of sustainable marketing. Known for their 2012 book Sustainable Marketing, Martin and Schouten are relatively new faces in the corridors of Aalto University. They moved to Finland from Portland, Oregon in the summer of 2012 and joined the Aalto faculty as Associate Professor and Professor, respectively, in marketing.

According to Martin and Schouten, marketing has to step up and take on new responsibilities. Marketing has the means to play a vital role in creating a more sustainable society. The time has come to rise to the challenge.

Two principles guide Martin and Schouten’s thinking: sustainable marketing and proselytizing sustainability.

This means all marketing must be done in such a way that generates a reasonable 8

profit and at the same time preserves or increases environmental and human wellbeing. Aalto’s new marketing professors would like to see marketing do more to spread the word of sustainability as a mode of operation for all businesses.

As they see it, marketing should use its considerable influence to further a new way of looking at consumption: a world where consumption is based on sustainability.

“Marketing has long been part of the problem. It has helped create an overly consumerist society. It simply cannot be on the sidelines anymore, sustainability is far too important for business,” Martin states.

JOHN SCHOUTEN, Professor of Marketing, Aalto University

TEXT: JOANNA SINCLAIR, PHOTOS: JUHA TÖRMÄLÄ

For a business looking to thrive in the long run, sustainability is really not an alternative, it is the only option.

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“Sustainability is paying off for a growing number of companies: profit from sustainability went up from 23 percent to 37 percent.”

GOOD BUSINESS. One of the biggest misconceptions of sustainability is that there is no business benefit. Schouten and Martin are fast to point out just how wrong this idea is. As they see it, sustainable marketing has a direct connection to both greater profits and long-term business health.

“Sustainability is the path to competitive advantage in a global economy with a rising standard of living and limited resources.

Companies that figure out sustainability first are the companies that will thrive.

They have better access to resources as they will have already figured out how to use recyclable materials. They will save energy and, consequently, save money for other investments. They will have access to better workers as their employer image improves.

Moreover, in order to become sustainable companies are forced to innovate, and innovation is a source of advantage. These are just some of the ways in which becoming more serious about sustainability creates a stronger, more sustainable company,” Schouten lists.

Schouten and Martin claim sustainability equals profit and they are not alone in their claims. The 2012 sustainability & innovation global executive study and research report by The Boston Consulting Group and MIT Sloan Management Review backs their views in many ways. According to this year’s study, sustainability is paying off for a growing number of companies: profit from sustainability went up from 23 percent to 37 percent. Companies that have taken sustainability to heart report even higher rates. The Boston Consulting Group found that 59 percent of companies which have changed three or four of their business model elements report profit from sustainability efforts. Out of this group, companies that also put sustainability as a permanent

D AN DI AN E M MA AR RT TIN N, Ass ssoc oc cia ate e Pro rofe fess fe ssssor o of Ma M rk kettin ng, Aal a to Uni nive ve vers ers rsititi y

Source: MIT Sloan Management Review Winter 2013

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Marks & Spencer’s Plan A fixture on their management agenda reach slightly higher profit rates, over 60 percent report profits from sustainability efforts.

When asked to name a company making profit from sustainability, Martin and Schouten offer a name that might come as a surprise to some: Walmart. This giant by no means gets their full approval for sustainability, but in a number of ways, Walmart is on the right path and pocketing profits on its chosen road.

“There are many stories about Walmart and its efforts to become sustainable, for example, the one about Walmart and its delivery trucks. Walmart saved millions upon millions when they installed relatively inexpensive power generators on their trucks. The auxiliary power units offered truck drivers amenities which allowed them to keep up basic functions even when the motor was not running.

Previously they had to keep the diesel engines on,” Schouten explains.

“After saving millions and shrinking their carbon footprint while they were at it, Walmart then took the money they saved and started collaborations to design even more energy-efficient trucks to save even more. This is the kind of positive cycle that companies can create when they choose to look at their business through a sustainable framework,” Martin adds.

The auxiliary units on trucks alone added up to 25 million US dollars in annual savings for Walmart. Another example of Walmart’s CSR efforts that generate a considerable return on investment came from packaging waste. The company noticed that a reduction in size of the cardboard packaging of toy trucks created a two-fold benefit: it stopped hundreds of tons of cardboard becoming waste and saved Walmart 2.4 million dollars in annual shipping costs.

Encouraged by such results, Walmart lifted the bar. Walmart’s aim is to reduce packaging across its supply chain by 5 percent this year. If they reach their goals, it could equal an environmental savings of 660,000 tons of carbon dioxide and an economic savings of 3.4 billion US dollars.

Walmart is moving towards sustainability 10

Marks & Spencer is transparent when it comes to its CSR efforts. They are all for CSR, for they have found the winning combination, making money while making the world a better place.

Marks & Spencer’s CSR ambitions are substantial. The company plans to be the world’s most sustainable major retailer – and it has calculated that this effort should bring the company a return of investment of 105 million British pounds.

Marks & Spencer’s strategy – coined Plan A – was launched in January 2007, setting out 100 commitments to achieve in 5 years. It broke even in its second year. Now M&S has extended Plan A to 180 commitments to achieve by 2015.

Plan A is bringing considerable financial benefits by accumulating modest gains in various areas of the business.

M&S executives have emphasized that if the company were not viewing its CSR processes as an entire organization, many of these small changes would not have been made or the cost reductions would not have been realized. This notion may well explain one of the main reasons why so many companies feel they do not get the ROI in CSR they seek: chances are they are not calculating it correctly and not looking at the big picture.

Plan A commitments aim to reduce waste and utilize sustainable raw materials, combat climate change, conduct ethical trade, and

and getting a good return on its investment at the same time, but it still cannot be said to embrace a sustainable approach across its business. Asked to cite a company with a truly sustainable approach to its overall business, the professors name an Oregon based clothes manufacturer called Nau. “We have done a great deal of collaboration with Nau. They source natural, renewable fibers produced in a sustainable manner,

help customers to lead healthier lifestyles.

So far, the retailer says it has lived up to 138 of the 180 environmental and ethical commitments and claims that it has become the first carbon neutral retailer, sends zero waste to landfill and uses 26 percent less packaging.

Today, 31 percent of M&S’s products have a Plan A attribute, representing almost a billion individual items and a retail value of 3 billion British pounds.

The company’s aim is to move to 50 percent of products having a Plan A attribute by 2015 and 100 percent by 2020.

Although many Plan A initiatives are bringing in cash, some of the efforts do not show a direct profit but improve CSR without extra cost. For example, in Bangladesh M&S is working with factory owners to ensure workers there are paid enough to support themselves. M&S is adding to the productivity of factories through training and thereby releasing the cash needed to pay the workers more.

Marks & Spencer have every intention of making their plan work. As their Plan A website states: We’re calling it Plan A because we believe it’s now the only way to do business. There is no Plan B.

create designs that are made to last and products that can be cost effectively repaired.

They also donate 2 percent of every sale to the humanitarian and environmental organization Partners for Change and provide free public transportation for their employees.

They also set salary limits; for example, their highest paid worker can only make 12 times as much as the lowest paid employee,” Schouten says with a smile.

Trust is priceless, but CSR also creates a good profit CSR ALLOWS companies to step out of harms way and avoid risks. Considerable savings are made on advertising and PR alone when companies need not spend megabucks polishing an image tarnished by oil spills, unethical employee practices or worse. In a reputation economy, trust is priceless.

Many companies are starting to see clear monetary returns on their investments in sustainability, in addition to benefits that are more difficult to measure. The bottom line is looking better, especially for those companies who apply business sense to their sustainability effort: MIT Sloan Management Review and The Boston Consulting Group’s report, The Innovation Bottom Line, shows that companies with a clear business case for sustainability are three times as likely to report profit from their sustainability efforts.

Another telltale indication of how overall business benefits are catching up with added brand value comes from The Innovation Bottom Line survey where companies ranked the benefits they saw from practicing sustainability:

Improved brand reputation Better innovation of product / service offering Improved perception of how well company is managed Increased competitive advantage Reduced costs due to energy efficiency Reduced costs due to materials or waste efficiencies Better innovation of business models and processes

40% 29% 26% 22% 22% 20% 19%

Sustainable marketing has a direct connection to both greater profits and longterm business health, John Schouten and Diane Martin claim.

THE NATURAL STEP DOES NOT COMPROMISE PROFIT. As a

framework for turning a company and its marketing to a sustainable operation, Martin and Schouten recommend The Natural Step, which they used as a foundation to build their ideas on sustainable marketing.

The Natural Step is based on systems thinking; recognizing that what happens in one part of a system affects every other part. It is freely available online and claims to have helped hundreds of different organizations around the world integrate sustainable development into their strategic planning.

“The Natural Step creates an elegant and accessible framework for moving any organization towards sustainability at

a fairly aggressive, yet optimal pace.

It provides a science-based understanding of what sustainability is and a process by which companies can move towards sustainability in a way that does not compromise profit. With The Natural Step, we were able to show how every marketing decision can be optimized with respect to profits, the environment and social wellbeing,” Martin says.

“Nike is a well-known example of a successful corporation using it, numerous universities have it, municipalities and communities have benefitted from it as well. The Natural Step Framework was applied at Whistler during the Vancouver Olympics with great results,” she continues.

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guides Schouten and Martin’s thinking. The professors, for example, are all for lasting design but they do not see it as a necessity for creating a sustainable world. Limiting the world’s production is not the solution they are after, for even limited production still creates waste and uses valuable resources.

“Our grandmothers’ approach to sustainability was creating products that lasted from one generation to the next. This is a great approach to sustainability and part of the solution, but not the only way nor a solution in itself. We need more companies taking a Cradle to Cradle approach to their production to keep materials moving and creating cycles with virtually no waste in production. This is how new production can be sustainable,” Martin points out.

“The bottom line is it’s OK to produce more stuff if what you are producing is Cradle to Cradle. Using biodegradable and reusable materials, using green power, this is the way to go to make production healthy. From an economic standpoint it is good business, better than what you have now. It allows you to provide more goods and services and higher standards of living for more people – and the added benefit is that it will allow your company to do so for generations to come,” Schouten affirms. y

READ MORE www.aaltoee.fi

LASTING DESIGN AND CRADLE TO CRADLE PRODUCTION. A systems approach

Ben & Jerry’s and Aalto EE team up to find responsible entrepreneurs IN ORDER TO BE economically sustainable, a business also needs to be socially and ecologically sustainable.

Aalto EE has teamed up with sustainability pioneer Ben & Jerry’s to find sustainable entrepreneurs with the Join our Core business plan competition.

The contest is based on Ben & Jerry’s principles. Their story has become familiar, if not the stuff of a business legend. The company was founded by two hippie friends from Vermont who believe in the values of sustainable development and economic and social justice.

Patagonia sets the bar high OUTDOOR GEAR AND CLOTHING company Patagonia is a brand that cannot be overlooked when talking about sustainable marketing. Their mission statement gives a good idea why: “To build the best product, to cause no unnecessary harm, to use business to inspire and implement solutions to the environmental crisis.”

An early leader in corporate social responsibility, Patagonia’s story is the story of its founder, Yvon Chouinard, born in 1938, a rock climber, environmentalist and outdoor industry

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businessman legendary for turning sustainability into a highly successful, 600 million dollar company with more than 50 stores worldwide, six of which are in Europe. Patagonia was founded in 1974 and is widely regarded as a world leader in corporate social responsibility.

Today Patagonia is more than just a role model. It has inspired others, perhaps most notably Walmart. The two companies teamed up in 2009 to help Walmart create a sustainability assessment tool for its supply chain.

A few years later, Patagonia and

Walmart again joined sustainability forces with Adidas to create a sustainable apparel coalition.

The Coalition currently comprises more than 30 annual dues-paying companies and environmental organizations, including Levi Strauss & Co., Marks & Spencer, New Balance and Nordstrom – all working together to develop an industry-wide supply chain index that measures energy and water use, greenhouse gas emissions, waste, social labor practices, and more.

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Join the revolution.

Create new business models. Share.

Change the game.

TEXT: SATU RÄMÖ, ILLUSTRATION: SHUTTERSTOCK

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34-year-olds are more dependent on mobile phones than cars. More important than owning a car is to have access to one. And this is what ZipCar offers to its clients: instead of selling steel with a hood and a trunk, it sells the possibility of using a car only when needed.

Some years ago ZipCar was a hip and cool startup among the trendsetters in Boston. Now, as the biggest car sharing company in the world, it has redefined the whole concept of private transportation. Earlier this year Avis Budget Group purchased ZipCar for 500 million dollars.

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eep an eye on the small businesses.

“A good sustainable innovation should be replicable by other companies, allowing entire industries to move to more sustainable business models. This is what is happening in the rental car industry,” Lovegrove says, citing Hertz as another example.

ave you ever asked yourself why you buy things you seldom use when you could easily have access to them only when you do need them? Incongruous as it may sound this question embodies numerous business possibilities.

Being successful in business no longer means selling as many products as possible. It is all about creating value for customers.

Dax Lovegrove, Head of Business and Industry at WWF-UK, encourages companies to rethink current consumer behavior and ways of doing business.

“I think the value people place on owning a lot of things and investing money in expensive commodities is decreasing. People instead want ease and unique solutions.”

The world’s biggest car sharing company, ZipCar, is a prime example of a company where the necessity of sustainability meets opportunity.

The biggest macro trend shaping the market is urbanization. At the moment 50 percent of the world’s population lives in cities. That figure is forecast to climb to 70 percent in just a few decades. In China alone, approximately 400 million people are expected to move from rural areas to cities over the next 15 years. This mass urbanization will change not only the cities but also the modes of transportation.

The change has actually already begun. ZipCar carried out a survey in November 2012 that shows 18 to

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Dax Lovegrove

“Using a shared car is approximately 50 percent cheaper than using a taxi.”

Hertz is a large international car rental company that not long ago launched a new concept similar to ZipCar. Hertz On Demand car sharing operates in six countries, providing customers 24/7 access to cars by the hour or day, and offering users access to a car when they need it without taking on the costs of car ownership.

A case example from Finland shows how car sharing is changing the way of using a car during the business day.

The business-to-business market is growing fast.

“Using a shared car in Helsinki is approximately 50 percent cheaper for companies than using a taxi. Car share is also a good alternative for a traditional company car. In Finland, employees must pay taxes on their company car, but this is not the case for car sharing services,” says Sami Astala, partner and CEO of Finnish car sharing service City Car Club.

City Car Club has 4,000 users and around 100 vehicles from a Lexus to a Smart in 110 pick-up locations in the greater Helsinki area in Finland.

If a new service is easy to use and creates benefits, it is more likely that people will opt for it. For car sharing it means easy access and fair pricing. People can join City Car Club online. The car doors open and lock with a single call from the user’s mobile phone at a cost of 10 euros per hour, including fuel.

“In order to keep the prices low we have combined the car sharing business and media space by selling advertising space on our cars. The adverts on the cars allow us to keep the hourly rental price at 10 euros,” Astala says.

Apart from the local car dealership, a shared car solution seems to benefit everyone. The biggest challenge lies in people’s minds. Owning a car has been an important status symbol for a very long time.

“This mindset is changing. It will just take some time.”

T

here are strong signals suggesting that at some point the sharing society will trump the ownership society. The first weak signals telling us things are going to change are usually very small and very local.

It pays to keep an eye on the smaller companies since the game-changing business models are typically adopted by small firms first. For larger businesses the paradigm shift usually takes slightly longer.

“Large corporations can learn a lot from small startups, but at the same time the small innovative businesses need to partner with the bigger businesses to obtain further resources and strategic knowledge,” says Lovegrove, from WWF-UK. The power of sharing and sustainability can create profitable business for big corporations.

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Which factors have led to changes in your business model as a result of sustainability considerations?

4,000 managers from 113 countries answered the question: DRIVERS OF SUSTAINABLE BUSINESS PRACTICES t Customers prefer sustainable products/services 41% t Legislative/political pressure 35% t Resource scarcity (increased commodity prices, price volatility) 30% t Competitors increasing commitment to sustainability 28% t Stricter requirements from partners along the value chain 26% Source: MIT Sloan Management Review Winter 2012

Two-thirds of managers think that sustainability is necessary to being competitive in today’s marketplace, according to research published in MIT Sloan Management Review in 2012.

Companies are actively integrating sustainability Sami Astala principles into their businesses, for example, by systematically managing their value chains.

Retail giant Walmart expects to generate 12 billion dollars in global supply chain savings by 2013 through a packaging “scorecard” that could reduce packaging across the company’s global supply chain by 5 percent from 2006 levels.

Caterpillar, a global manufacturer of construction equipment, successfully scaled up a business unit devoted to remanufacturing and repurposing machinery otherwise considered to be at the end of its lifespan. Cat Reman rebuilds and restores worn out Cat equipment back to their original performance and life expectancy levels. It also provides remanufacturing services to other original equipment manufacturers.

One of the largest businesses in Central America – food and beverage company Florida Ice & Farm – took big steps in sustainable practices.

The company succeeded in dropping the average of 12 litres of water per litre of beverage it produced to 4.9 litres of water and at the same time had a compound annual growth rate of 25 percent.

Caterpillar’s clients can minimize their ownership and operating costs. At the same time Caterpillar protects itself against rising resource costs: remanufacturing a component requires 85 to 95 percent less energy and material than manufacturing the same component new.

Revenues increased by 205 percent between 2001 and 2011.

All these examples point in the same direction: sharing based and sustainable business models offer various ways to generate profit.

In this game sustainable wins. y

SHARING IN B2C BUSINESS AND THE PSYCHOLOGICAL FACTOR FACEBOOK, SPOTIFY, FLICKR, AIRBNB. Despite the benefits of sharing-based businesses, they are not a shortcut to success.

In addition to traditional business risks, the sharing economy has one additional problem to tackle: the psychological factor.

Researchers at the Helsinki Institute of Information Technology, social psychologists and PhD candidates Airi Lampinen and Vilma Lehtinen recently published a paper on how the ideal of self-sufficiency puts brakes on the sharing economy.

Fear of owing a debt of gratitude and a reluctance to ask for help are hurdles to the success of online services that facilitate joint use, borrowing and exchange of services.

People worry that they will owe a debt of gratitude if they cannot reciprocate immediately.

“Reciprocity is a strong principle which guides people’s behaviour. People want to reciprocate to maintain their reputation.

16

They fear being labelled a free rider if they accept help or goods from another person or a community without giving back,” says Lampinen.

Lehtinen and Lampinen, together with Coye Cheshire from University of California, Berkeley, and Emmi Suhonen from Aalto University, studied the views of Sharetribe users on indebtedness and reciprocity and different ways of mitigating the discomfort people have about them.

Sharetribe is a sharing economy startup which supports exchange activities in local communities, such as campuses and city neighbourhoods. Their mission is to help people connect with their community and use their assets more effectively by sharing them.

The users can, for instance, exchange furniture, look for renovation help or check out apartments to rent.

“The Sharetribe users we interviewed had

offered small gifts to show their appreciation for the help they received or given a little coffee money for donated goods.”

Providing verbal and public feedback can also be an important way to show gratitude and reciprocity within an exchange community.

“The significance of reputation may become even more pronounced when there is money at stake, such as, with services like eBay and AirBnB.” Lampinen encourages sharing-based businesses to attempt to lower the social friction of sharing. One key is to highlight the value of different kinds of participation for the exchange community as a whole.

“Reciprocity does not always have to be direct and instant. It must be clear that debts of gratitude can be paid over time at the level of the entire community. And sometimes just giving someone an opportunity to help may be a valuable favor in itself.”

WORKING WITH

KNOWLEDGE “The opposite of a responsible investor is not an irresponsible investor; rather an ignorant one.�

Incorporating ESG into socially responsible investing Today’s investors require extensive data to make the right ESG decisions. Portfolio managers are learning to chart the waters to beneďŹ t investors and society.

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Anna Hyrske is Head of Responsible Investments at Ilmarinen Mutual Pension Insurance Company.

She has over 10 years of investment experience in integrating ESG issues into investment decisionmaking. Hyrske has studied this topic academically and has recently co-written the ďŹ rst book in Finnish (Vastuullinen sijoittaminen) on responsible investments.

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Feature 3

The Desire Factory How persuasive technology is shaping our decisions – and how companies are using it.

P

TEXT: THOMAS FREUNDLICH, PHOTOS: SHUTTERSTOCK ERSUADING FELLOW humans is as old as humanity itself.

What is very new is that we have now created machines that are doing it for us – whether for profit, power or the common good. And these systems operate pervasively, globally and with access to vast quantities of data on our behavior patterns and social networks.

Think otherwise? Consider the technology you have so far used today. Over breakfast, you checked in on Facebook and were served a number of ads that were specifically targeted to you. In fact, maybe you used your iPhone – a device that you love because it is so pleasant to use and for which it is so easy to order new apps (how convenient that Apple already has your credit card number on file). You may not have noticed, but you have been very consistently and skillfully persuaded not only to use these products and services but to depend on them.

But wait, there’s more! During the course of your day, did you stop to consider that perhaps the real factor behind the overwhelming success of these two technologies is not simply their simple and elegant design, nor is it the fact that they enable a connected lifestyle to an unprecedented degree. It is, simply, this: they have become a habit in your daily life – yes, perhaps even an addiction.

Be honest now: how many times have you looked at Facebook today? Or checked your e-mail on your iPhone?

START YOUR DESIRE ENGINES. Nir Eyal, who blogs about the inter-

section of psychology, technology and business, has written about what he calls the “desire engine.” According to Eyal, the degree to which a company can utilize habit-forming technologies will increasingly decide which products and services succeed and which will fail.

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Eyal breaks down the mechanisms of addictive technology into “internal triggers” that cue users to take action or use the service without the need for further marketing or other external stimuli. Using the product becomes the user’s own innate desire. Creating these internal triggers comes from mastering the “desire engine” and its four components: trigger, action, variable reward, and commitment. Not surprisingly, many of the basic psychological mechanisms are familiar from studies of gambling addiction – or from rats pushing levers to receive treats in the so-called Skinner box.

Creating a billion dedicated – or better yet, addicted – users is, of course, what any web startup dreams of. Succeeding in this may be great for the business, but not necessarily for the consumer. Even benign but persuasively designed technologies can be very hard to “break out” of.

How many people have you heard of that have actively used Facebook or an iPhone for a few years, and then stopped?

“The thing that makes all this so complicated is that we’re dealing not only with individual solutions and companies, but entire business ecosystems whose value depends directly on the number of people that are actively revisiting and contributing to the service,” notes Harri Oinas-Kukkonen, Professor of Information Systems at the Department of Information Processing Science, University of Oulu, and co-author of the recently published book Humanizing the Web: Change and Social Innovation.

Oinas-Kukkonen points out that on the other hand, we clearly also need persuasive systems. “In this age of the social Web, solutions simply must be designed persuasively if they are to have any chance of success.”

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persuasive (pər’swāsiv; -ziv) adjective good at persuading someone to do or believe something through reasoning or the use of temptation: an informative and persuasive speech.

THE POWER AMPLIFIER. With new technologies come new powers.

The methods of influence range from changing This also means that companies need to pay attention to the way the default selection on a web form to sophisticated that they influence and persuade consumers. As more and more solutions that provide customized persuasion businesses operate entirely in the immaterial realm, the focus of tactics for every individual user. But one thing corporate social responsibility is in many cases also shifting away is certain – persuasive technology is everywhere, from traditional metrics such as environmental sustainability. affecting your choices and decisions.

- New Oxford In a recent essay, security expert and author Bruce Schneier American noted that customers are increasingly seeking redress and judment Dictionary ETHICAL MINEFIELDS. How, then, should we in the court of public opinion on the Internet, augmenting or even – as decision-makers and consumers – approach bypassing the traditional legal process for a more favourable hearing. all this? What should we make of machines that persuade, “The court of public opinion is an alternate system of justice,” influence or nudge us towards some predetermined Schneier writes. “Arguments are measured in relation to reputation. behavior goal?

If one party makes a claim against another that seems plausible, based Suddenly, we need to apply ethical reasoning to on both of their reputations, then that claim is likely to be received behavior that has been part of our human existence for favorably. Reputation is, of course, a commodity, and a loss of reputation thousands of years, but is now done by machines of our is the penalty this court imposes.” own creation. This conceptual shift has left even profesTechnology amplifies the marketer’s ability to persuade, but also sional ethicists and philosophers scratching their heads. customers’ capacity to take action in the face of wrongs – whether real Should consumers and users always be made aware or perceived. Conversely, building a reputation for responsibility and of persuasive efforts? This may be far from realistic. trustworthiness will directly impact a company’s bottom line. Having Is it ethical to use persuasive technology to change a customer’s credit card number on file for one-click purchases is the people’s behavior for their own good? Perhaps – but who ultimate sign of trust and privilege, granted defines that good? Any attempt to tackle these questions only to those who have earned it. quickly descends into a philosophical, practical and ethical maze with no exit in sight.

CHOICE WITHOUT AWARENESS. Some even question the usage of the term ‘persuasive’ N. Craig Smith is the INSEAD Chaired itself. “To me, the word ‘persuasion’ requires that Professor of Ethics and Social Responsibility. the user be aware of the attempt to influence them,” In a recent paper co-authored with Daniel says Harri Oinas-Kukkonen. “If it is not transparent, it G. Goldstein, Principal Researcher at should be called something else.”

Microsoft Research and Eric J. Johnson, “There are basically two main options of how to the Norman Eig Professor of Business at Columbia Business School, approach the ethics of persuasive technology,” adds he points out an interesting historical arc in persuasive technology.

Craig Smith. “The first is a ‘consequentialist’ approach; In 1957, Vance Packard’s book The Hidden Persuaders caused in other words, to look at what is the best outcome. The a sensation by claiming that marketers could manipulate consumers second, very different viewpoint is to focus on the nature through subliminal advertising (e.g., by flashing a single-frame image of the decision being made. For example, in a consumer of a soft drink on screen during a movie). In the subsequent five decades context, it is generally agreed that people should have Packard’s claims have been mostly debunked, but technology and the the freedom to choose. The problem is that there are science of psychology have caught up. many techniques that are very successful in guiding Smith and his co-authors note that “careful empirical research choice without people being aware of them. In that case, has identified a host of psychological and environmental manipulations the consumer cannot be said to have full autonomy.” that would be exceedingly difficult for consumers to detect or resist.

Harri Oinas-Kukkonen proposes approaching behaviorIn short, it is possible to influence consumer choice without awareness changing technology less from the philosophical tradition – and in some quite dramatic ways.” and more from the perspective of systems design, focusing on the practical ways of addressing ethical questions.

However, he points out that software development in itself is so complicated that it may be too much to expect

20

that developers also take into account a host of ethical dilemmas when designing their solutions.

PERSUASION FOR SALE. Social scientist and researcher Maurits Kaptein works at the cutting edge of persuasive technology research.

With his colleague Dean Eckles, he has done some fascinating research in a field called persuasion profiling. This means collecting data on not only what preferences an individual user or consumer has, but also what kind of persuasion they most respond to.

As an example, online bookstores routinely serve up customized recommendations based on the customer’s purchase and browsing history. Kaptein and Eckles noticed that as individuals, we react differently to various kinds of persuasion. Some of us respond to recommendations from authoritative sources, while others will be more apt to grab a hot, limited-time-only discount deal.

Remarkably, though the actual product or service may differ widely, the type of persuasion to which we respond remains very consistent across domains. So the same angle that will lead to that impulse buy at the online bookstore (”12 of your Facebook friends have bought this book!”) could shift your allegiance to a political candidate (”Everyone in your neighborhood is voting for so-and-so”).

On a psychological level, this is, of course, nothing new. Any used car salesman or real estate broker will flexibly adjust their sales pitch for each customer – and can even relay tips on the best tactics to colleagues. But now this information can be collected, aggregated, stored and sold automatically, pervasively and on an almost unimaginable scale.

If the ethical dilemmas of persuasive technology are enough to make your head spin, this is where it really gets interesting.

In the age of persuasion profiling, a company’s core business model might well include not only selling a product (e.g., books over the Internet), but also data on what kinds of persuasion individual customers have best responded to. Since persuasion profiling works best when the user is not aware of it, it does not seem likely that companies would be in a hurry to disclose the use of such technologies.

But should we even care? Is there really a problem?

“The first time Google and Yahoo served up customized advertisements in their e-mail clients, people were outraged,” notes Maurits Kaptein, who is also an entrepreneur with PersuasionAPI, a company offering solutions for persuasion profiling. “Now, it’s standard practice and people actually appreciate it.”

Kaptein continues: “Currently people have too little knowledge of what these technological solutions are about. Once there is a deeper

“There may be merit to having a certain degree of paternalistic technological intervention to help us make better choices.” understanding, the ethical view might well change.”

As for the ethical questions of selling people’s persuasion profiles? “So far, in all of our conversations with our clients, the issue has never come up. Not that I think that’s necessarily a good thing,” Kaptein says.

HERE TO STAY. What, then, does the future hold?

It is not difficult to conjure up visions of Big Brother using persuasive technology to manipulate us to evil ends in some dystopian future. But right now, we may just have our hands full in coming to terms with the latest and cleverest online marketing ploy – or resisting the urge to check our mobile e-mail for the 18th time within the last hour.

On the positive side, persuasive technology can also be used for purposes that are slightly more clear-cut in their ethical implications. Examples could include mobile apps that help quit smoking – or the use of persuasive technology in public health campaigns to nudge people towards healthier lifestyles. In fact, in some cases our inborn capacity to be steered, persuaded – yes, manipulated – could even be for the better.

“People are often assumed to be rational decisionmakers, when such is clearly not the case,” says N. Craig Smith. “There may actually be merit to having a certain degree of paternalistic technological intervention to help us make better choices.” y

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THE BASE OF THE PYRAMID FOUR BILLION RESPONSIBLY –PEOPLE YOURS Improve your own and other people’s lives. Achieve economic success that creates value for everyone.

”ECONOMIC GROWTH IN WESTERN MARKETS is

slowing down. The growing markets are mostly in developing and low-income countries,” says Minna Halme, Professor of Corporate Responsibility at Aalto University.

There are over four billion people with a purchasing power of less than 5 euros a day. That means an annual purchasing power of trillions of euros.

Minna Halme, The poorest but largest Professor of Corporate market segment is often referred Responsibility to as the base of the global at Aalto University. income pyramid, or BOP. People at the BOP are poor, but in need of new products and services to improve their wellbeing.

“For a business venture to be profitable and sustainable in a low-income context, it has to create value for local customers, entrepreneurs and employees,” says Halme.

This means that in BOP business the locals have a strong role also on the supply side – as employees, distributors, producers and business owners.

Halme has recently returned from a Weconomy Start field trip in Sri Lanka. Weconomy Start is

22

a one-year innovation program established to help companies design sustainable business innovations in challenging environments.

It is facilitated by World Vision, one of the world’s largest development organizations, together with Aalto University and Finpro, the national trade, internationalization and investment development organization in Finland. ”I am certain that the best and most effective NGOs are the most professional partners in BOP projects since they are the ones working with low-income segments.”

Expansion to low-income markets can bring various growth opportunities for companies.

The Weconomy Start innovation program aims to boost companies’ growth while finding solutions to social, economic and ecological challenges.

“Among the participants in the program’s first field visit were Biolan, a company that manufactures and sells, for example, organic fertilizers for agriculture.

Other participants included a company that specializes in building cost-efficient houses and professionals from the sustainable energy industry.”

TEXT: SATU RÄMÖ

Toolbox

You can use Toolbox materials at work or when giving a presentation, link them to your blog or forward the entire Toolbox to your colleagues. The background ideas are available in a variety of web sources.

CSR for HR. A Necessary Partnership for Advancing Responsible Business Practices.

Greenleaf Publishing. 2010.

CSR for HR, written by corporate Social Responsibility Consultant and Human Resources professional Elaine Cohen, is useful reading for any HR professional. In her book Cohen redirects traditional HR responsibilities, such as, organizational development and compensation toward corporate social responsibility goals and practices. Read this book to find out what HR managers could do to ensure a CSR-enabled culture and practice in any company.

“One of the most significant corporate social responsibility reporting trends at the moment is the eagerness to go local,” says Maria Sillanpää, the Founding Director of Sustainability Advisory Group.

Conventionally the annually published CSR reports have been geared towards professionals like analysts and investors. At the moment, however, large corporations are seeking out ways to communicate their CSR issues to their customers and spread the message, for example, via social media.

“Companies are beginning to report on their CSR not only on a corporate level, but also on a country level and even on a brand level.

The direction is from reporting to communicating.”

However, the traditional lengthy and detailed CSR reports are not going anywhere. On the contrary, the demand for formal CSR reporting has been growing.

“Responsibility issues influence investment decisions. Especially since the financial crises, international investors are demanding in-depth information on corporate social responsibility issues,” Sillanpää says.

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CSR GOES LOCAL

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As slides: www.slideshare.net/AaltoEE

TIPS FOR MANAGERS Building a profitable venture at the BOP takes years.

How do we interpret and cope with the ambiguities and uncertainties of underdeveloped markets?

5

1. Make an effort to facilitate the recognition and legitimization of the new venture within your organization.

2. Create different, or at least modified, evaluation schemes.

The upper-middle managers, who take the decision to continue or to terminate the innovation process, need a formal basis to justify their decisions.

3. Find committed and determined individuals with a resourceful mindset and entrepreneurial characteristics.

4. Go local. Locally-based managers are well placed to observe the social needs of the people in the area and to engage with local entities to build trust and networks.

5. Keep innovators close. Having close contacts and lobbying power at the corporate headquarters is important.

If innovators are out of touch with the headquarters, it creates problems in mobilizing corporate support and resources for truly novel innovation proposals that BOP markets tend to require.

Source: Halme, Lindeman & Linna. Innovation for Inclusive Business: Intrapreneurial Bricolage in Multinational Corporations.

Journal of Management Studies, 2012, vol. 49, issue 4.

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SOCIAL MEDIA THAT DOES GOOD

Sharewood brings NGOs, civil society and companies closer together.

“SOCIAL MEDIA can be harnessed for doing good,” says Matti Tuomisto, the CEO of Givget, the company behind Finnish charity media Sharewood.

Sharewood.org is a responsible social media with 59 beneficiaries, including the World Wide Fund for Nature (WWF) and the Finnish Red Cross. By clicking on ads, Sharewood.orgg users donate money to a charity of their choice. The money comes from the advertisers and using the website is completely free.

The service’s nearly 30,000 subscribers have directed funds totaling over 70,000 euros from corporations to different aid organizations without making a personal donation.

Around 2 to 5 percent, sometimes even 10 percent, of those who see an advert on Sharewood.org click on it.

The figure is a hundred times higher compared to conventional online advertising.

“The reason is the power of targeted advertising and people’s interest in helping others. Our advertisement planning and management tools enable advertising that is modified even on the individual level. In Sharewood, being social has been harnessed for doing good,” Tuomisto says.

In addition to banner advertising on the website, users are approached via newsletters.

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“Corporate social responsibility is a growing trend among companies.

If I examine the corporate social responsibility issue from the point of view of a media company, I see the role of CSR in firms as being similar to that of digitalization,” Tuomisto says.

At first, it is only of interest to a small group of pioneers within the company. Next, somebody is appointed to examine the issue. That is followed by a nominated business unit. Gradually top management becomes involved and the topic starts to spread to the whole organization. Step by step all employees are aware of the issue, the company transforms its operations and business develops. Eventually there is no firm that would not be interested in the subject. Sharewood’s goal is to bring NGOs, civil society and companies closer together.

“One example of this is volunteer work. Volunteers are extremely committed and passionate about their cause. If a company enters this picture, it becomes associated with the commitment and passion and can then truly stand out.”

TEXT: SATU RÄMÖ

Toolbox

10 READ THIS BLOG The think-tank CSR International’s blog provides leading-edge content to advance progressive CSR thinking.

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www.csrinternational.org/blog/

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1. from the top and 2. Lead integrate the effort. and track sustainability 3. Measure goals and performance. customers’ sustainability 4. Understand perspectives and willingness to pay for sustainable products or services. with individuals, customers, 5. Collaborate businesses, and groups beyond the organization’s boundaries.

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In Netcycler the items you already have become a currency you can use to get things you want.

CHECK OUT www.netcycler.com

WHEN YOU NO LONGER NEED SOMETHING, NETCYCLER WILL FIND SOMEONE WHO DOES! The Netcycler environmental service provides an easy way to minimize shopping while still getting everything you need. It enables customers to use the items they already have to get the things they want. This happens through swapping, donations and trading.

At the moment Netcycler operates in the UK, Germany and Finland.

CREATING VALUE FOR EVERYONE CHECK OUT Watch Porter’s interview: http://bit.ly/ mporter

Harvard University professor Michael E. Porter believes that shared value is a new way to achieve economic success.

A successful business needs a successful community to create demand for its products. The solution lies in the principle of shared value, which involves creating economic value in a way that also generates societal value.

The purpose of the corporation must be redefined as creating shared value, not just profit per se.

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MORE UPDATED INFORMATION www.aaltoee.fi, www.aaltoee.sg, www.aaltoee.se

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Financial Times ranks Aalto EE among the top one percent UPDATE

AALTO UNIVERSITY Executive

Education (Aalto EE) has further strengthened its position in the Financial Times’ annual Executive Education rankings. Aalto EE rose three positions from last year and is now ranked 41st in the world. The result is based on FT’s annual evaluation of the 50 leading executive education providers.

Altogether, some 4,000 institutions around the world offer executive education and MBA programs.

FT evaluates open enrollment and customized executive education programs separately. The overall listing is based on the total rating achieved in these two categories. The ranking is derived from open customer feedback and statistics provided by the schools.

“In three years, we have improved our ranking in the customized program listing by 15 positions, and our overall ranking is five positions higher. This is an excellent achievement in a highly

competitive global market. This development reflects also our increasing investments in customized programs,” says Visiting Professor Pekka Mattila, Group Managing Director of Aalto University Executive Education.

Respondents in the customized program category rated Aalto EE particularly high in value for money, gaining new skills and learning, and comprehensive teaching methods and materials. In the open enrollment listing, Aalto EE’s strengths lay in the aims achieved among the students, and repeat business and growth generated by confidential customer relations built over the years.

The top three leading international business schools in the rankings remained unchanged: HEC Paris, IESE Business School and IMD. Now participating for the 13th time, Aalto EE is ranked under the name Aalto University.

Thirst for Knowledge Award AALTO EE presented its 14th Thirst for Knowledge award to Heikki Lehtonen, President and CEO of Componenta Corporation. Componenta has invested in training through fluctuating financial cycles and harnessed its training projects in concrete, long-term development of the company.

“Componenta, which operates in a cyclical industry, has displayed a long-term approach as it improves the operational capability of its organization and management during both good and bad times,” says Pekka Mattila, Group Managing Director of Aalto EE and Visiting Professor at Aalto University.

The Best Teacher of the Year Award went to Khaled Soufani, Professor of Finance at the University of Cambridge. Professor Soufani is a long-term partner of Aalto EE and has taught at numerous MBA and EMBA programs in Finland and South Korea.

Based on student feedback, Soufani is always positive and inspiring and makes the subjects of finance and economics easily accessible for all.

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ESADE and Aalto EE set their sights on Latin America and Asia AALTO EE AND ESADE, one of Europe’s leading business schools, plan to create a joint International Design Business Management (IDBM) program targeted at Europe, Latin America and Asia.

“Top executives must learn to shift their sights from competiveness to competitive advantage. This requires a variety of perspectives – a traditional focus on business economics is not enough. The International Design Business Management program emphasizes the role of design as the provider of competitive advantage, combining the latest technologies with winning business models and the greatest customer benefits,” remarks Pekka Mattila, Group Managing Director of Aalto University Executive Education and Visiting Professor at Aalto University.

Aalto EE brings a multidisciplinary approach and new, innovative learning methods to the IDBM program. ESADE’s core competencies include executive education in business models and innovations.

The collaboration brings together executive education experience from around the globe. Aalto EE has been operating in Asia for 18 years, and ESADE is a strong executive education provider in Latin America.

The program is particularly aimed at those sectors able to benefit from it most directly, such as, the traditional forestry and chemistry industries, and select service business sectors, such as, health care. The IDBM program will be carried out in Barcelona and Helsinki.

HISTORY LESSON

“No man becomes rich unless he enriches others.”

– Andrew Carnegie

The roots of responsibility A hot topic in the 21st century business landscape, Corporate Social Responsibility is actually a centuries old practice.

TEXT: RANDEL WELLS

THE ROOTS OF CORPORATE SOCIAL RESPONSIBILITY (CSR) stretch back to ancient times, but what we know today as CSR was born in the Industrial Revolution.

A major turning point in human history, the Industrial Revolution was a period of stark contrasts. For some, living conditions improved dramatically, while for others, particularly the working classes, life was often full of misery and hardship.

Yet, out of this era of sweatshops, pollution, disease and squalor, we find the earliest examples of CSR. Known as ‘corporate paternalists,’ industrialists of the late 19th and early 20th centuries used their new-found wealth to help those less fortunate in remarkable ways.

In the United Kingdom, Cadbury is a particularly sweet story. The successful family-owned chocolate maker pioneered employee welfare, establishing a medical department, pension funds and education programs.

Their Bournville factory became an exceptional success.

AT THE TURN OF THE 20TH CENTURY, the Cadbury brothers established Bournville Village to promote housing and environmental reform. They emulated the ideals of CSR and demonstrated the connection between a successful business and a successful community.

The American steel magnate Andrew Carnegie is another outstanding example of early CSR. Carnegie felt it was a duty of

the rich to distribute their surplus wealth and he set up a vast number of charitable and educational institutions to endow libraries, educational trusts, pension funds, music and the arts, and public parks. His social activism was important in establishing the principles of corporate charity and stewardship, seen today in many modern CSR initiatives. The wealth Carnegie acquired from his company, Carnegie Steel, which he later sold to U.S. Steel, was used for great social philanthropy and set an example for many other wealthy industrial magnates.

EVEN IN THE BUDDING COUNTRY of Finland one can find examples of industrial patronage. The Verla mill in southern Finland experienced a renaissance of sorts under Gottlieb Kreidl, and a visit to the museum at the Verla mill shows Kriedl’s concern for his employees and the surrounding village.

He provided his employees with medical care paid by the mill and he established trust funds to cover illnesses, pensions and funerals.

Education was also important to him, and under Kriedl, the mill founded an elementary school for the village which he actively supervised himself in the school’s early years, keeping a watchful eye on the children’s behaviour and seeing that they each received a bag of sweets for Christmas.

Companies today are bigger and more influential than ever before, which is all the more reason THE STORY OF CADBURY for us to emulate the philanthropy of the early industrialists. http://www.cadbury.co.uk/ the-story

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