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Friday, January 23, 2015

Strategic CSR - Free flow of information

The article in the url below offers an interesting meditation on the loss of control by companies of the debate over their products online (what we discuss in Strategic CSR as "the free flow of information," Chapter 4, Figure 4.5, p161):
"The digital revolution has dramatically shifted the balance of power from companies to their critics. Although big firms deploy armies of PR flacks, anyone with a smartphone and a social media account now has the same power to reach a global audience. Whistleblowers once had to photocopy documents and smuggle them out in their underpants. Now they can be shared with the world in a trice, by e-mail or instant messaging."
What caught my eye, however, was a statistic demonstrating the devastating operational effects this phenomenon can have for firms today:
"In the two weeks after the 1989 Exxon Valdez oil spill in Prince William Sound, in Alaska, Exxon's shares dropped 3.9% but quickly rebounded. In the two months after the Gulf of Mexico spill in 2010 BP's shares fell by half (and have still to recover fully)."
Social media increasingly allows small, motivated activists to control the message, spreading bad news ever faster and to greater effect. Whether this shift in power is resulting in better social outcomes is unclear to me at the moment. Either way, companies had better adapt.
Have a good weekend.
David Chandler & Bill Werther
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Beware the angry birds
By Schumpeter
October 11, 2014
The Economist