.The Heart of Business

Yes, I’ve already posted this picture once, but my kids are really impressed by it now that they know who Misty May-Treanor is.  So I post it again here, hoping that Heart of Business readers will also be newly impressed.  Please ignore the torch growing out of my head.

Did it work?

There is an interesting explanation of the difference between philanthropic spending and social investments, and the implication of the shift, in the “Tactical Philanthropy” blog.   Check it out.

Often on the Heart of Business blog we talk about the fact that Lenovo wants to be engaged in social investments, not classic philanthropy.   But I often wonder, if we are “investing,” what exactly is the return we are expecting?  Am I really managing a portfolio of investments?  Does our strategy truly lend itself to being viewed as a part of our financial picture, rather than an expense?  In many ways I think it does.

If we were engaged in classic corporate giving, we would be looking for the biggest bang for our buck, the lowest price that would deliver, for example, the most impressions of our brand.  We might give to a performing arts center,  in exchange for naming rights.  Or we would give to very large nonprofits so that our wagon would be hitched to the best-known philanthropy brands.  Another approach might be to concentrate our spending in areas where we have lots of employees, so that our employees would derive benefit from our spending.

We don’t really do mcuh of that (which is not to say they are bad ideas).  In all of these cases you would want to minimize cost because you are buying something; impressions, brand association, employee benefits.

By contrast, our approach has been to partner with innovative small organizations rather than established giants, in the interest of efficiency and in supporting great new ideas.  It’s a lot like investing in small startup companies, getting in on the ground floor of some disruptive innovation, rather than investing in GM.  We hit a home run in finding kiva.org, for example, a great innovation in the poverty alleviation space. We got lucky there.  Either that or we’re really good at this.

The point is, we wanted to identify a startup in which our donation (or “investment”) would make a big impact and catalyze their growth and impact.  Sort of a “buy low” strategy.  So in this way, I’d say yes, we are making “investments.”

We also have chosen work in regions of great need (we call them “distressed communities”) rather than in areas where we have a high concentration of employees or customers.  Once again this is in the interest of greater potential impact.

On the other hand, is it really “investing” if we don’t have any equity or any possibility of financial return?   Yes, we hold something of a portfolio.  And yes, we consider the nonprofits we support to be our “partners.”  (I think I’m setting a record here for the most frequent use of quotation marks in one “posting”).

But investing is undeniably an act of self-interest; you invest in order to get a return, and that return is always financial.  What we call “social investing” is different.  There might be a long-term financial reward (for example I have argued that in holding business plan competitions we are creating our future customers) but it is highly unlikely that it could ever match the investment.

Maybe the modifier “social” is enough to distinguish this kind of investing.  But that implies social benefit returned to the investor, and I’m not sure what that would be either.  So it seems that another word, another analogy might be called for.

Don’t worry, I’ll think of something.

I’ve told this story before:  When Lenovo was just getting its act together as a global company I recommended to our CEO Bill Amelio that we dedicate 1% of our earnings to philanthropy. It was an easy sell.

This week an article in Business Week suggests that, unless you meet that 1% threshold, you aren’t taking Corporate Social Responsibility seriously.

Quoting from the article:

To reverse the downward trend in corporate giving, we need a cadre of self-motivated and sensitive CEOs to lead the way. We need men and women who will match actions with words by carrying out combined corporate contributions and community-relations initiatives that are supported by adequate resources and time, rather than by more chest-beating ad campaigns and press releases.

Indeed.

Lenovo’s CEO Bill Amelio wrote an Op Ed piece in the International Herald Tribune today, talking about the rise of a global middle class and the challenges and opportunities it presents.  Clearly Mr. Amelio has been reading the Heart of Business, as he says, “it is difficult to accept that we should deny others a chance at prosperity because it may challenge our own comfort.”  Here here!

But I do think the more people climb out of poverty, the more we who are already wealthy by global standards (that’s basically everybody reading this) will need to re-evaluate how we live.  Everybody wants to live like us, and the earth can’t support that.  Maybe innovation will solve that problem.  And maybe good old-fashioned noble sacrifice will also have to be employed.

To see how many earth’s we would need if everybody lived like you, play this game on American Public Media’s web site.  Very eye-opening.

There is something about this article that I find very interesting.  Roger Kay talks about how the computer industry players have launched recycling programs to improve their margins.  Henry Hicks calls it one of Lenovo’s growth strategies.  Yet there is only a brief mention of the environmental benefit.

The end-of-life problem in the computer industry is not new.  But until relatively recently many computers were simply tossed into landfills.  This means we as a society have literally been throwing away gold.  And silver and platinum and copper and plastic and glass and all sorts of other valuable materials.   Why was all of that EVER thrown away?

We are waking up to the concept that McDonough and Braungart have been writing and talking about for years, that we really need to rethink the idea of waste.  In their words,”waste equals food” in nature, and waste should also equal “food” in industry.  As in this example, the computer industry is planning to make money by sorting through this “waste,” and turning some if it back into “food.”  This also means keeping harmful materials out of landfills, ensuring customer data security, refurbishing some systems and reclaiming materials from others.

So in what other ways are we as a society throwing away gold?  Can we envision a day when we approach zero waste, when nearly all products at the end of their lives can be used as industrial “food?”

An interesting discussion going on at the Tactical Philanthropy site.  Check it out and comment.

In addition to the reasons outlined on that site, I also think giving helps to reduce the bad influence money and possessions can have over your life.  Giving it away asserts your power over money.  A wise man once said “the things you own wind up owning you.”  In some strange way, giving stuff away puts you in control.

We have thousands of employees in Asia, so the natural disasters that occurred over the last couple of weeks caused my voice mail light to blink wildly and my email account to clog up with people asking different variations of the same question: what can we do to help?

(I would like to think that this would have happened even if we didn’t have thousands of employees in Asia, but the closer something hits to home the more people feel compelled to respond).

It’s a difficult question for any CSR / philanthropy practitioner.  You have your plans, your budgets, your programs, and suddenly there is a great and immediate need that forces you to set aside your best-laid-plans and respond.   But should we  respond to such an extent that we cripple our ongoing programs, in Lenovo’s case those which help people work their way out of poverty?  Isn’t extreme poverty also an emergency?

Fortunately our employees didn’t wait for us to philosophize about this question, but jumped into action.  Within hours hundreds lined up to give blood, and donated over $100,000 to relief efforts.

On a corporate level we made an additional financial donation of 10 million RMB (about $1.5 million US) and set up a web page, with the help of our friends at Triangle Community Foundation, to collect donations from anybody interested in helping to rebuild after the rubble is cleared.

Often in a crisis like this people give money immediately to help with relief efforts, but donations wane later when rebuilding efforts commence.  So our intent is to find a way to use individual donations to help build a school to replace one of the many that collapsed during the earthquake.

If you would like to join in this effort, you can donate by credit card at the Lenovo Hope Fund donation web site.   Be sure to choose “Lenovo Hope Fund” from the drop down list if you want to contribute to the school project.

Several people sent me a link to this recent article in the Wall Street Journal, which describes a study by researchers at the University of Western Ontario on consumer choices and price tolerance for “ethical products.” The article is certainly worth reading, so go ahead; I’ll wait here.

For those of you who prefer a summary, here it is: Research shows that you might be able to make more money if you are ethical. What a relief! I have been looking for a good reason to be ethical. Without this research who knows what I would have done?

I am very glad that the authors found that people will pay more for products produced with ethical standards. That is undoubtedly good.

What is not good is the suggestion that in order for businesses to behave ethically, there must be some kind of payoff.

There is too much discussion today about the ROI (return on investment) of corporate social responsibility. It’s as if we need a financial reason to not use child labor, to not be a detriment to the environment. I think it is a bad trend to teach business leaders to think this way.

Another manifestation of this trend is the plethora of books and articles and marketing campaigns which tell us that stopping global warming and saving the environment will be easy. Consider these book titles, gleaned from a cursory search on Amazon:

Easy Green Living: The Ultimate Guide to Simple, Eco-Friendly Choices for You and Your Home

It’s Easy Being Green: A Handbook for Earth-Friendly Living

It’s Easy Being Green: One Student’s Guide to Serving God and Saving the Planet

Gorgeously Green: 8 Simple Steps to an Earth-Friendly Life

The Lazy Environmentalist: Your Guide to Easy, Stylish, Green Living

Living Green: A Practical Guide to Simple Sustainability

Simple Prosperity: Finding Real Wealth in a Sustainable Lifestyle

I particularly like the last title… not only is a living a sustainable lifestyle “simple,” it can make you rich! Fantastic news!

I’m not an expert, but I am pretty sure that “reversing” global warming, or even halting or slowing it, is not going to be anything like easy. I am pretty sure it will require huge changes in the way we live and do business. But that’s not what these titles lead you to believe.

I suppose a book title like “The Huge Changes You Need to Make in the Way You Currently Live to Have a Snowball’s Chance of Slowing Global Warming” wouldn’t sell.

This is a bad trend. It seems to say that people will only do the right and sensible thing if (1) it is easy and (2) if they can make money doing it. Is this really what we’ve become?

What if this study had shown the opposite, that consumers don’t care, that they won’t pay more for “ethical” products? Does that mean anything goes? If there is no financial reason to be ethical, should we not?

Consider these rather obvious statements:

1. It is easier, more efficient, and less expensive to be unethical.
2. If we are concerned only about maximizing shareholder value, we will not be socially responsible.
3. You can reduce your labor costs by paying less than a living wage, using child labor, or even better, slave labor.
4. Generally speaking, it is cheaper to exploit the environment than to protect it.
5. In all cases it is more expensive to give to charity than to not give to charity.

Yes, you will benefit by being unethical. Otherwise, why would anybody do it?

I have a friend who is fond of saying “A firm can’t go out of business being socially responsible.” My response is, of course it can! If a business is so poorly conceived and badly managed that it can’t survive without child labor, then it deserves to go out of business, and nothing should be done to stop it.

Also, am I the only one who is bothered by the finding that people are still willing to buy unethically-produced products, they just expect to pay less for them?

To commemorate Earth Day last week we had a digital photography exhibit called “Our Amazing Earth” created by employees.  I was impressed.  Click below for a slideshow of some of my favorites.  Feel free to also download the photos, use them as a screen saver, etc.

I love the earth. I’ve lived here almost all of my life.

Lenovo really pulled out the stops on Earth Day this year. We installed birdhouses around our new campus, several employees signed up to purchase renewable energy from NC GreenPower, several more committed to support a local organic farmer by joining a Community Supported Agriculture cooperative, we started an “Adopt a Highway” team, and about 100 employees pledged to join the Climate Savers Computing Initiative. We also had a water-free car wash service and collected tons of old household electronics for recycling from Lenovo employees and others in the community.

Many of these things were pulled off by the “Green Team” I help to lead at Lenovo. So now I am suffering from an Earth Day hangover. I was out of control celebrating the earth, so for the last 48 hours I’ve been nursing a headache, staying indoors, and contemplating the real meaning of being green.

Perhaps it’s the fair trade organic coffee talking, but I am realizing that when it comes down to it, I really only love the earth because she keeps me alive. I drink her water, eat food that she grows, live in a home built from materials she provides, etc. I also enjoy referring to the earth as “her” and “she.”

Sure, I enjoy swimming in the ocean or fishing in the mountains while on vacation, but I can only enjoy the sun on my face, sand in my shoes, and catching my own food for so long. Nice to do for a week, but not a life I covet or would like to sustain long term.

Speaking of fishing in the mountains, once I caught a baby boy in a river in Alaska, took him home and raised him as my own. True story.

I flew over the Arabian desert once, and it was stunningly beautiful from the plane. I couldn’t take my eyes off of it. But I seriously doubt that I’d enjoy living there. The same is probably true of the Arctic Wildlife Refuge, or any place that begins with the word “Arctic.”

I used to claim that I enjoy the outdoors and camping and whatnot. I was just kidding myself. I’ve come to realize that I actually only enjoy the IDEA of camping, not the actual act of sleeping on the ground under a thin sheet of cloth. Or NOT sleeping on the ground under a thin sheet of cloth, which is more typical.

I go camping when my son’s cub scout troop requires it. Almost every time we go it rains, and I find that extremely not fun, so our family policy is now to stay home if there is rain in the forecast.

And yet with all of this derision for living “close to the earth” I consider myself to be something of an environmentalist. But not because I love spotted owls. Rather I want to protect the environment because my life, and the lives of my children and their children, and people all around the world are completely wrapped up in the health of the earth. This should be obvious.

I mention this because I suspect that I’m not alone. A co-worker sent me an irreverent but quite sensible Earth Day article in Salon.com that convinced me that at least one other person, the author, agrees with me.

This is nice to know.