How the Next Generation of Businesses Will Win

On the one-year anniversary of the collapse of Lehman Brothers, President Obama summoned corporate America “to a new era of responsibility.” Considering this year’s low point in values, the growing mistrust of business, and the decline of brand loyalty, we have no choice but to rethink corporate responsibility and discover new ways to get past green washing and lip service and to seize on sustainability as a source of innovation. The costs of not doing better at doing good are too high. 

THE RESPONSIBILITY REVOLUTION: How the Next Generation of Businesses Will Win (Jossey Bass; March 15, 2010. $27.95), argues that for too long, our definition of what constitutes “responsible” corporate behavior has been dangerously timid. To confront the economy’s and society’s daunting challenges, companies must do more than monitor factories, donate to charities, and trumpet efforts to be a little less bad. The responsibility revolution is about reimaging companies from within: innovating new ways of working; instilling a new logic of competing; redefining the very purpose and possibility of business. 

Written by Jeffrey Hollender, co-founder and chairman of Seventh Generation, the country’s leading brand of non-toxic household products and a pioneering “good company,” and Bill Breen, the co-author with Gary Hamel of The Future of Management, this blueprint for CSR 2.0 tells how revolutionary companies – ranging from industry heavyweights like IBM, Nike and British merchandising giant Marks & Spencer to emerging dynamos like Linden Lab and Etsy – are winning customers and driving profits by: 

• Taking on a cause. Revolutionary responsible companies believe that what you stand for is far more important than what you sell. When Organic Valley organized itself around a mission that mattered—saving the family farm—it sparked employees’ imaginations and became a magnet for powerful partners. The result: it’s now the nation’s second largest brand of organic dairy products.  
• Daring to wear the see-through. To be a truly responsible company, you can’t be opaque. So the Danish pharmaceutical Novo Nordisk, the world’s largest maker of insulin, invites animal-welfare activists to tour its labs and improve its protocols for animal experimentation, which were later incorporated in the Council of Europe’s guidelines on the protection of animals in medical research. The drug-maker understands that by acting transparently, it stands a better chance of turning critics into collaborators.  
• Scaling innovation. Green marketing campaigns don’t cut it anymore; insurgent good companies focus on innovation rather than reputation. Nike harnesses the creativity of its designers through the Considered Index, which rates the ingredients for each product and suggests more sustainable alternatives. The 2009 Air Jordan XX3 is the first version of Nike's most celebrated sneaker to marry sustainability and performance—and is expected to sell 500,000 pairs. 

These and many more actionable strategies from the book will help businesses large and small win the race to the future. In fact, a recent study by A.T. Kearney found that during the recession, companies authentically committed to sustainability outperformed their industry peers by an average of 15%, adding an average of $650 million to their market capitalization. As the economy improves, doing good will be the key to doing well. 

Why? Because authentically responsible companies outdo their competitors at confronting the transformational forces that are changing the way business is done today: 

• The growing army of activist consumers and watchdog non-governmental organizations, who expect global brands to promote social well-being;
• A talent war for A+ employees who demand a karmic paycheck in addition to their salary;
• Stakeholders who are pressuring institutional investors to adopt a responsible investing strategy. 
• Global climate change is forcing business to confront a world of scarcer resources and a swarm of new regulations.  

With Internet-savvy customers scrutinizing companies’ activities and organizing boycotts at the slightest sign of misbehavior, “bad” businesses have nowhere to hide. Fringe notions that business should be environmentally and socially sustainable have moved to the mainstream—and the business landscape has been fundamentally transformed. 

In an entertaining and inspiring read, Hollender and Breen show that those companies that effectively commit to a genuine socially and environmentally responsible business and culture will land on the upside of the change curve and create real, sustainable value.