Virtualization: Where is your CSR strategy?

Maybe the question should have been “What is your CSR strategy?” I think most corporations have some sort of CSR “thing” going on. What is CSR: Wikipedia says this (although this definition is still under review for its neutrality):

Corporate social responsibility (CSR) is a concept that suggests that commercial corporations have a duty of care to all of their stakeholders in all aspects of their business operations. A company’s stakeholders are all those who are influenced by, or can influence, a business’s decisions and actions. These can include (but are not limited to): employees, customers, suppliers, community organizations, subsidiaries and affiliates, joint venture partners, local neighbourhoods, investors, and shareholders.

CSR requires that businesses account for and measure the actual or potential economic, social and environmental impacts of their decisions. In some cases the application of a strong CSR policy by a business can involve actions being taken which exceed the mere compliance with minimum legal requirements. This can sometimes give a company a competitive/reputational advantage by demonstrating that they have the interests of society at large as an integral part of their policy making. CSR goes beyond simple philanthropy and is more about corporate behaviour than it is about a company's charitable donation budget.

CSR is closely linked with the principles of Sustainable Development which argue that enterprises should be obliged to make decisions based not only on financial/economic factors (e.g. Profits, Return on Investment, dividend payments etc.) but also on the social, environmental and other consequences of their activities.

That “thing” could be something run by a trapped philanthropist (“lone ranger effort”) amidst the capitalist “winner-take-all” group. It could be some group within your organization, which you might (wrongfully, in my humble opinion) mistake for insubordination while it was a new entrepreneurial move, trying to strike a cord with the local group with strong affinity to the social, economical and environmental factors. OR it would be a cosmetic answer to the social groups to silence them. So pretty clearly the outcome of such initiatives, call them Ad hoc Corporate Social Initiatives (ACSI), unmeasurable and unquantifiable. Whatever the response, the outcome remains very shady. There could be corporations who even spend huge amounts to achieve the CSI with a clear cut strategic intent. But still the outcome is pretty much unpredictable. Why? Because the business and society are seen as two different entities. This has to change.

Let me give you an example of what I mean. My last travel to Africa revealed several things. Good and bad for both CSR ready organizations and the ones who are wasting time in not investing in it. I was speaking to a supplier about virtualization and what this technology actually could mean for the society. He really was looking at me like “are you nuts?” I was talking about issues like WoW (World of work) and how we need to mobilize the younger generations to gear up for the local businesses and activities that will start by affecting the local, and then penetrate on a national-, regional- and (in many cases) global scale. He had totally lost me and all he thought was:

• I need to get out of here!

• I need clients

• I need to meet my deadlines

• I better think of an excuse to split!
  

And in that process he lost a potential client. Me! But maybe we should back up a little bit and see from their perspectives. Larger firms like Microsoft and others have been doing this in education and universities or years. But somehow (no matter what the other socio-, politico-, and economical factors may be) they have not addressed this social responsibility issues in regions like Africa, India and China adequately. This is not my opinion but some fact finding that I did while trying to establish contacts with several MNC software vendors, speaking to local authorities, both government and business sectors.

Virtualization vendors like VMware, XenSource and others are currently focusing on the markets where enough capital is conquerable. But who says that there are no gains in markets and societies where all that capitalization is, apparently, not present? Apparently because these capitals are hidden therefore unidentified. I was happy to see in the webcast of VMworld 2006 about the energy friendly and to some extent even the “conscientious software initiative” from VMware when they spoke about organizations reaping financial benefits should they move into the consolidation with the virtualization software. But again what about the undeserved and the forgotten? What about those far fetched schools and organizations who need to understand this when starting from scratch?

Do you have a CSR strategy?

It is not easy to start talking about it in your board rooms when consolidation (meaning merger-acquisitions) is the target and no one has time to play the saint in some poor downtrodden place. But let’s rephrase this question and try to bring some more dynamics to it, picture this:

You’re recruiting some professionals in Ghana. You are almost done with the questions and it’s the candidate’s turn to ask questions and he asks “Do you have some sort of CSR strategy in place?” A question coming from the “other side” is already enough for us to know that maybe we are a tad bit too late in implementing a CSR initiative successfully. If those questions are emerging at grass root levels then there is something wrong with our strategy. It is not just the R&R (Recruit and retain) factor that will cause us enough headaches but also the “license to operate”.

I do remember asking a local Telecom giant to participate in the project in Uganda and they seemed to talk a lot in terms of CSR and realized that it is the education sector (which I was representing) that should eventually provide them the talent they need in order to operate and also compete in the increasingly fierce market. And this market is, through it essence of “Highly Optimized Local Context”, will find its way into the global space. This they did acknowledge as the danger. And especially when I said that they could keep waiting by if and should their local government open up its borders and allow for international Telecom firms to operate, then this competitive advantage they have will disappear.

In fact according to a study by IBM, in which many top CEOs fear that most of their current core businesses will not exist in the coming years. Gartner has already predicted that Microsoft’s Vista platform is the last of the major monolithic operating system release. They are (at least I hope for them) banking on other developments and CSR, if tackled smartly, will help them operate seamlessly across the globe. I have spoken several times of the GDM (Global Delivery Model) and also the TNDM (TransNational Delivery Model) and technologies like Virtualization which can give the sourcing model (in-, out-, near sourcing) a whole new dimension. But this will certainly mean that market leaders should be “absolutely conscientious” about their increasingly responsible role in the social arena as well.

What are the dangers?

In Asia, South America, Africa there is an immense rise of Linux. There is strong resistance from the local businesses and installations to adopt Microsoft. They feel betrayed by the negligence and expensive offerings are barely justifiable. Gartner has touted the year of 2007 to be the “year of open source”. No wonder, given that proprietary vendors are suffering from serious issues and simply don’t have the time to address social issues. That is why Microsoft is stepping out of this. They are not the only ones. It is time to go seeking the ones who are or at least feel neglected. It may be too late but unfortunately Linux community is simply not operating on a corporate agenda, it has more a “community” tilt to it. You may say that the community is good as we are into the “village model” but if you look at the adoption of GPL3 against the existing GPL2 then you will understand that they might eventually lose out on the head start they have today. Microsoft might in the coming years soften its image. And Bill Gates move to gradually board the “philanthropic boat” has a rock solid strategic intent. I can see Bill Gates coming back to Microsoft’s rescue, much like Steve Jobs for Apple, by 2010.

VMware might be facing the same dilemma as Microsoft. Although the disruptive tactic of releasing the product for free may have bought them some time but if they don’t address the CSR then some day some low cost and highly configurable vendor will steal the show. A good example of a market leader can be that of Intel. They have invested hugely in the WiMAX. They are doing it in India and have also done this stint in Brazil. They shipped a 300 foot WiMAX tower and planted it in the middle of Amazon. And voila the schools and local businesses were connected! And Intel has got its “strategic CSR” in place.

So what should the corporate model look like?

Well I have been toying with this idea for quite some time so here we go. We have to learn to stop pretending that we are successfully compartmentalizing our work and private lives. We live 24 hours a day. All of us! You could be a high flying CEO or a low profile manager. You could champion the “fast leadership” or instill “slow and easy” philosophies in your corporation. But we cannot just get away from the ever demanding corporate needs even if we are on vacation. But anyways it's time to rethink our roles within our corporations. Bill Gates or Scott McNealy doesn’t have to take a “philanthropic break”. If you are a start up firm I will propose a new role model:

CSO instead of CEO: Chief Spiritual Officer, A leader who not only invokes great passion but also social and spiritual values in the employees. He/She can further this role and profess it across organizations and corporations.

CHO instead of “catbert like Evil HR Executive”: Chief Humane Officer: This needs a serious attention as well. R&R is very crucial. You need to address the issues adequately. If you are an educational institution you will need to carefully dissect the needs and aspirations of your employees, if you are a consulting firm you will need to help your employees conserve their energies and not do the "100 hour a we" mad rush. What ever the case a “humane approach” will help them open up. They must identify themselves are part of the society. Or else a (so-called) sound CSR might get lost.

CUO instead of COO: Chief Understanding Officer, CTO instead of CFO: Chief Truthful Officer etc (I will talk about the “Changing Roles of Executives” in another post).

I know, this may all sound a little comical but we have to seriously consider our roles in the society. I remember after having a discussion with a FCC like body in one of the developing countries we met an older gentleman (who I later learnt happened to be a teacher) at the entrance of the building. He looked at me and said “Don’t forget to think from your heart. Do not abandon the spirituality, which is the core of everything”. And these kinds of expressions came across from walks of life.

So what else do we need to do to revitalize our CSR?

• Dividing business and society is the biggest blunder that any corporation can commit. They are interdependent and cannot survive without the other. They need to find a common ground. They need to develop a shared responsibility.

• Don’t ever stop talking. Some call it evangelism. You need to strengthen and reconfigure your competitive context. Reconfigure as it changes over time. And if you are operating on a global scale (who isn’t these days) then you must realize that the social values change over time as technology progresses and if you have not had your CSR sensitive lieutenants sensitized enough, you will have an old version of CSR which is totally out of date.

• Address relevant social issues but don’t mingle too much. You can’t change everything overnight. I remember I was chatting with a good school friend of mine (who has that 100 hour job and sleeps on a airplane) and he suggested that Indians need to learn from Chinese on “service oriented thinking” and we also discussed sexuality and what role it plays in the these two societies. I said “These are old civilizations; I don’t think we need to bring such drastic changes.” That was very lightly said but such changes can play havoc in societies. So bottom line: play in the playing ground!

• Collaborate with existing players: Enough NGO, Universities and other such foundations have solid footprint in these areas. That will not say that these organizations are total experts in those areas. It is very well possible that many organizations do just what is expected of them. But in any case they have a history and have certainly learned something from such philanthropic and exploratory ventures.

• Develop a true role model. That will eventually help achieve socially justifiable reputational advantage. This must address both short term goals without exhausting the resources that may have adverse effect in realizing the long term goals. Thus promising sustainability to the society. Pretty much like the Hollywood movies where we have to protect the planet from danger so our kids can have a better future. A good honest example can be yet again VMware’s slogan by not only promoting the “cost and energy savings” above the “consolidation and server virtualization” slogan. Here cost will address the direct short term needs while energy will address long term environmental savings! The first one is a salesman’s pitch while the second is a hint at the “shared values”.

Older style: VMware helps reduce server costs!

New Style: VMware the same earth as you!

I’m sure there are several other tips available on the CSR imperative but from my understanding these will put a lot of ailing corporations back on track. The key lies in the identification of relevant societal problems which do not deviate from the collective path envisioned for the firm. This way a hard coded CSR can be developed that will help the firm protect itself from possible reputational damage. This meaning that the business thinking and work ethics will have to change dramatically. Somehow honesty and not lying anymore may soon be hip with the increasing success of an “effective CSR”.