For the past few weeks, I was writing about quantum physics and business research to explore the correlation between the science of consciousness and patterns in the business world, to suggest innovative ways of using this wisdom to lead and succeed in a business environment that is constantly evolving at a rapid pace. When we understand the degree to which we are connected with each other, we’ll pay more attention to what we do for each other. This is called Creating Shared Value, or CSV. The shared value model is based on the idea that corporate success and social welfare are interdependent. A business needs a healthy, educated workforce, sustainable resources and adept government to compete effectively. For society to thrive, profitable and competitive businesses must be developed and supported to create income, wealth, tax revenues, and opportunities for philanthropy.
It is fascinating to see the emerging scientific research revealing the connectivity between us humans, as well as our bond with other living beings. The evidence of physical connectivity that has been proven to exist between separate beings is undeniable, and the proof of a connected memory that we all share is compelling.
Exploring the sciences of cosmology, biology and genetics help us to better understand the deep human connection to nature. Cosmologists explained how being human is an extension of the original energy that emerged from the eruption of light that occurred nearly 14 billion years ago in our universe. As the universe expanded and cooled the actual components of our bodies emerged. These components exist throughout the planet in various species and forms ranging from water to rocks. Biologists discovered that all complex life developed from an original symbiosis of four different bacteria. Three of these bacteria were incorporated into the first nucleated cells, and the fourth was the one that gave them mobility. These nucleated cells eventually fused into more complex forms including plants, fungi and animals. Biologists also described how all higher eukaryotic organisms, which are organisms containing one or more cell with visibly evident nuclei and organelles, from flowering plants to insects to humanity are thought to have descended from a single ancestral population that lived about 1.8 billion years ago. A genetic comparison between humans and other primates highlights the similarities. The typical human protein has accumulated just one unique change since chimps and humans diverged from a common ancestor about 6 million years ago. Geneticist David Suzuki speaks about how humans literally are our environment. The air that we breathe; the water that we drink; the sun that generates energy in plants that we eat; and the soil that grows these plants; all exist as elements within our physical bodies. The components of nature all exist within us. We, humans see through our eyes that plants, animals and even rocks are separate, but if we look into a magnifying glass all of nature exists in an energetic molecular dance of chemical reactions and recombinations. We are connected to all aspects of nature, we are one being, so what we do to others literally is what we do to ourselves. Let’s extend this pattern to business research to see a connection, if any.
There is an amazing amount of research that shows when a business engages in positive action in the form of practices that benefit society; it receives positive rewards in the form of profits. And it’s revealing that conventional researchers have not been able to determine why. By definition, a business must provide some value to society or it wouldn’t be able to generate revenue. But I am referring to benefits that go above and beyond, such as altruistic missions, environmental responsibility, and community involvement. “Social performance” is a commonly used term to indicate the degree to which a company benefits society.
Companies must take the lead in bringing their business and society together. But, most companies remain stuck in a “social responsibility” mind-set in which societal issues are at the periphery, not the core. The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center.
Here is an example of corporate social responsibility done right. Tyson Foods, a major company tying its corporate social responsibility (CSR) efforts to its core mission has committed to relieve and ultimately end childhood hunger, and in the past few years been integrating social media into its hunger relief efforts. Tyson connected with the Social Media Club and began a string of extraordinarily smart and effective efforts to enlist the community. For example, it launched a campaign in Austin in which it agreed to donate 100 pounds of chicken to the Capital Area Food Bank of Texas for every comment posted on its blog. They received 658 comments in two hours and loaded up two trucks filled with chicken for the hungry. They repeated the success in Boston and San Francisco, launched a user-generated video contest in Minnesota and sponsored a day of service for its social media team. It’s noteworthy that with this philosophy, Tyson Foods was always more profitable than its competitors.
Pepsi’s Refresh Project funded 238 ideas for improving communities. The company’s “human right to water” program pledged more than $15 million for safe water across the world. Wal-Mart has pledged $2 billion in cash and food donations to food banks and, in 2009, it unveiled its Sustainable Product Index. Like Pepsi and Wal-Mart, many companies engage in a spectrum of corporate social responsibility initiatives and invest heavily in publicizing them. While the intrinsic satisfaction of doing good is important, CSR programs tend to be meaningful and sustained only when they align corporate financial needs (profit, revenue, growth) with social needs (people, community, planet).
Several cross-sectional studies spanning firms across different industries have correlated CSR performance with financial performance. The correlation is often positive, but there are also several negative and insignificant effects.
However, reviewing individual examples such as above can be confusing. But by using the technique of ‘meta-analysis,’ many studies can be statistically analyzed to determine collective results. A meta-analysis on CSR and its link to profits won the famed socially responsible investing, Moskowitz Prize in 2004. The study, compiled by researchers Marc Orlitzky, Frank L. Schmidt and Sara L. Rynes yielded encouraging data suggesting a positive link between CSR and increased profits. Their meta-analytic findings suggest that corporate virtue in the form of social responsibility and, to a lesser extent, environmental responsibility, is likely to pay off… CSP [corporate social performance] appears to be more highly correlated with accounting-based measures of CFP [corporate financial performance] than with market-based indicators, and CSP reputation indices are more highly correlated with CFP than are other indicators of CSP. This meta-analysis establishes a greater degree of certainty with respect to the CSP-CFP relationship than is currently assumed to exist by many business scholars.
This deduction has far-reaching implications, not only for business but also for us as individuals and nations. In business we hear so much about the need for sustainable practices, and there is a ton of effort spent trying to demonstrate the financial payback through physical means. Yes, I do believe that social performance can improve financial performance through physical means such as reducing operational wastes, building a positive image in the market, and attracting the highest caliber employees. However, I believe the most compelling reason that will convince business leaders to embrace social performance is found through looking at what new scientific research is telling us about how we manifest our world. The science and the business research both corroborate that what we do for others we literally do for ourselves.
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