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Wednesday, September 26, 2012

Strategic CSR - Scale

Toby Webb of Ethical Corporation Magazine has a great blog (The Smarter Business Blog, and uses it to bring an innovative and progressive perspective to cutting-edge issues regarding CSR and sustainability. In the article in the url below, Webb raises the issue of scale—that is, rather than focusing on good ideas alone, he criticizes the CSR community for ignoring the importance of how to scale-up those good ideas to make sure they have a large enough effect to matter:

In preparation for reading Tim Jackson’s book Prosperity Without Growth, I’ve been watching his “economic reality check” Ted talk from a couple of years ago. What worries me about this talk, especially given the popularity of Ted lectures, is the paucity of practical solutions within it. … Jackson’s Ted talk, as with so many, seems to present various options without discussing how they might reach scale to the point where they can make a difference. And this goes for many causes championed in the name of sustainability and putative alternatives to conventional capitalism.

The trouble is, of course, that many of the ideas offered to revolutionize capitalism may not be scalable. That, like the market for socially-responsible, ethical, and/or sustainable consumer products, their reach is limited because most people are not yet persuaded of their inherent value. As such, while Webb is correct to push for more practical approaches to reforming our economic model, I can’t help feeling that the issue of scale should not be the primary focus of debate:

The key question to address is whether social entrepreneurs, B corporations and community interest companies can be managed in a way that enables them to reach scale. And how should they do so – is it best for each one to become big, or for small organisations to be replicated by the dozen?

Surely, the more important question is: Do we need to invent new organizational forms, ones more effectively grounded in CSR principles, or can we fix the model that already has scale—our current corporate structure and small and medium-size businesses? I have looked a fair bit at B-corporations and I am struck by how little they differ (in organizational structure) from ‘regular’ firms. They promise to act in the interests of a broader range of stakeholders, but that is also a promise that regular firms can (and should) make within the current legal and governance structures. In other words, it is not the organizational form that is preventing firms pledging to be more socially responsible, but the willingness of executives to make such commitments. The B-corp structure is a solution to a problem that I am not sure exists.

In general, however, if the answer to the question of revolution versus reform is “revolution” (i.e., we cannot fix the current model and have to invent something new), I think we are in trouble. The more important focus (and realistic goal) is to reform what we have (that is, by definition, already to scale). Centuries of economic and market-based interactions have generated the dominant economic model for a reason—it works given the huge constraint we face (human nature). As such, my sense is that reform, rather than revolution, is more likely to produce results that will work.

Will those results be enough? Well, …. that is another question.

Take care

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Alternative capitalism: What’s the big idea?
By Toby Webb
June 4, 2012
Ethical Corporation Magazine