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Wednesday, October 31, 2012

Strategic CSR - Value

How should we value things? How far should we allow the commercialization of life to intrude? How much does it diminish life if everything has a price? The article in the url below revived these thoughts in the run-up to the Olympics this summer:

SOME marketers are spending tens or hundreds of millions of dollars on Olympic sponsorships. Then there is Hanson Dodge Creative, an advertising and design agency in Milwaukee, which spent $11,100 to perch on the shoulder of an Olympic athlete.

The ad agency placed the highest bid on e-Bay for the right to place a temporary tattoo on the shoulder of Nick Symmonds who needed the money to finance his pursuit or Olympic glory. While needing the money, Symmonds (an 800m runner) also used the fundraising effort to criticize what he sees as his lack of freedom to cash-in on his moment in the spotlight:

Mr. Symmonds, known for being outspoken, was seeking to make a point about what he has described as the outdated policies governing athletes’ endorsements that are enforced by organizations like USA Track and Field. To underline that point, he wears white tape over the @HansonDodge tattoo each time he runs — it is visible the rest of the time — to draw attention to the policies that prohibit sponsor logos and branding from being displayed.

So, my question is, Does this matter? Does it matter that Symmonds is willing to deface his body (albeit temporarily) in order to secure a relatively small amount of money (the winning bid was $11,100). Would it be OK if the tattoo was permanent? Is it OK if anyone is allowed to sell advertising space on any part of their body, as long as they were happy with the price the company that wanted to display its logo was willing to pay? If so, is it OK for people to sell, rather than donate, blood? What about parts of the body for transplant (a kidney, say)?

Many of these, and other, issues are taken up by Michael Sandel in his book (What Money Can’t Buy). Sandel fails to arrive at a satisfactory answer, however; partly because he never argues from a point of principle, merely pointing out that things have gone too far. In other words, he never allows us to draw a line in the sand and say this behavior is OK and this behavior is not OK. Instead, his arguments are more along the lines of ‘these things represent slippery slopes and things have gotten out of hand.’ This is not a criticism of Sandel; these are very difficult questions, to which I do not see any easy answers. As the article in the second url notes:

Money is not essential to a market. After all, economics is about maximising welfare, not GDP. But the absence of a price to allocate supply and demand makes it harder to know whether welfare is being maximised.

At present, monetary value is the best way we have of capturing welfare maximization. The price of a product and the profit of a firm incorporate a significant amount of the social value encapsulated in market transactions. What is important to remember, however, is that markets are far from perfect and people are far from rational. As such, how big is the gap between economic and social value and how do we make it up? In Strategic CSR, we argue that approaching market decisions through a CSR Filter and embedding those decisions within a set of guiding values gets us most of the way there. Quantifying the gap, however, is extremely difficult. If we only had a good way of measuring the CSR profile of a firm, we would have a better indicator. Until then, we need to be conscious of the imperfections of the market system, while also recognizing the value inherent in the tension between demand and supply.

BTW; in London, Nick Symmonds qualified for the men’s 800m final, finishing fifth overall:

In the greatest 800-meter race in history, Oregon Track Club Elite's Nick Symmonds placed fifth with a lifetime best of 1 minute, 42.95 seconds at Olympic Stadium on [August 9]. Kenya's David Rudisha won the gold medal by lowering his own world record to 1:40.91. … Symmonds' time makes him the third-fastest American at that distance.

Take care

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A Bet (and Tattoo) On an Olympian
By Stuart Elliott
July 5, 2012
The New York Times
Late Edition – Final

Game, set and match
October 20, 2012
The Economist