It has become a challenge to run three blogs at the same time. So I decided to merge them all into one. Make It Better can now be found at Angry African on the Loose. Think of it as something gained and not lost. You will get more from my merged blog - everything that has been part of Make It Better, but my life story and broader views and rants thrown in as well.
Hope to see you on the other side.
HenkC - The Angry African on the Loose.
The UK and Europe is so far ahead of the US when it comes to Corporate Responsibility. If I only had a penny for everyone who said this. I hear this every single day. And not just from those in England who have a slightly superior attitude when it comes to corporate responsibility. I hear it from people here in the US just as often, if not more. The truth is that we are comparing apples and oranges. Is cricket better than baseball? Only if you are from England. Although you wouldn't know that from recent results. And you would only like cricket more if you enjoy sitting in the sun and rain for five days and still not get a result. But I digress. They are both ball sports but they are vastly different. They might even share a common history, but that is where it stops.
In the US they believe in Corporate Citizenship and in the UK they believe in Corporate Responsibility. More or less the same, but different just the same. Corporate Citizenship is about what you do in your community. How you interact and how you support them. Corporate Responsibility is about how you run your business - it's about operations and how you work. The impact is important to both, but in Corporate Citizenship you look at your community and their needs first and the way you work in your community might have something to do with the way you operate, but does not have to. In Corporate Citizenship you focus on your role in society through your operations and the impact you have, and then you improve on these. Through these operational changes you will have a more positive impact on society. Both benefits society, but they have slightly different points of departure.
The reason why the community focus is so central in the US is because there is less of a safety net in the US than in most of Europe. People do not expect government to solve their problems or protect them from every single little thing in life. No, people do that themselves and they tend to look after themselves and after each other. They expect to solve issues themselves. Americans like the idea of less interference by government and more control by themselves in taking responsibility of their own lives. It might have something to do with the open spaces, but Americans do not like people telling them what to do. They want to be masters of their own destiny. Less government and more power to the people.
In the UK and much of Europe there is much more of a reliance on government to interfere in daily life. People expect government to take more control of their daily lives and maintain the rules of how society engages and organizes themselves. The rules of engagement. And they want government to identify the common areas of good that will help improve society. Government will tell you what is bad and help you to become better. All that is left for companies to do is ensure they do their best through operations and compliance to government regulations.
That brings me to a second point of difference - regulations and compliance. Corporate behavior is managed through regulations and compliance in the UK and Europe. Everything you do is regulated and not left to the company to try and innovate on their side. Any leadership position you develop is very quickly turned into a government requirement. (Your window of opportunity will stay open for a very short period). It helps that there is a strong central government in Europe. It makes it easy to push through new regulations. And it is even easier in Europe where the European Commission is hardly held responsible by 'the people' and have an almost free ride in bringing in new regulations. No wonder that Europe brought out regulations to define what a banana is - up to the curve it needs.
And it is also easy to bring in new regulations in the UK. It is a small island with a central government that runs the rule over everyone. Yes, Scotland and Wales have some autonomy, but the UK is still pretty much ruled from London. It is easy to understand the drive towards more regulations with so much power in the hands of a central government. It is in the nature of government to try and rule their way. And each new government want to leave behind a legacy. And what is easier than to bring in new regulations that can be sold as 'for the good of everyone'.
It is different in the US. States control their own destiny much more than any regional authority in the UK. The federal government do not have the power to control everything. Even taxes are different from state to state. And some states like Massachusetts might regulate more towards the protection of people than those in say Texas, but it is up to each state to decide what is most relevant for their state. Federal government can provide guidelines and try and push through federal laws, but this is generally fought tooth and nail by states. The art of the federal government is to try and keep a balance between inching forward on the regulatory front and encouraging states to take control at a local level. But change happens at state level and not federal level.
This approach allows for companies to take more risk in trying out new practices and to develop a leadership position. They know they can bring in these practices without the danger of it being regulated to death. Yes, it is a fine balance. They still have to tell the truth in advertising and not make claims that can't be backed, but they can be more risky in taking chances. Over in the UK it is slightly different. The aim of regulations is not to bring best practice into law, but to rather identify the lowest common denominator that could be passed as acceptable behavior by companies. I know, both have a place - best practice and lowest common denominator. In the US they lean more towards the former and in the UK more to the latter. It fits their societal and political needs.
Of course the US does have one thing that ensures that the lowest common denominator is 'self regulated'. The I-will-sue-you culture. You make one mistake and the consumer will take you to the cleaners. Yes, it is out of control, but it creates an incentive for business to not do something that can harm the public. There are enough lawyers here to ensure that you will get sued. Businesses in the UK can hide behind compliance of law and it is much more difficult to sue someone if they haven't broken the law instead of suing because they didn't look after the public interest.
And some of the regulations make the way companies act very different. For instance, both the UK and US have regulations regarding how foundations are run. And these are very, very different. US corporate foundations are not allowed to do any work that can directly benefit the company. This was put in place to ensure that companies do not see this as a way to hide money, and to ensure they spend their foundation money on what is good for society as a whole. Very different in the UK. Much more freedom to be strategic in the way they spend their foundation money. They can spend the money on helping suppliers of the company and still write it off under foundation rules. The unbelievable work the Shell Foundation (UK) has done in development would not be allowed under US rules.
The US also likes rock stars and celebrities more than anything else. Man, their news are pathetic over here - give me the BBC please. Every second story is about some celeb and their latest escapade. And that plays out in the way company CEO's act as well. The CEO and Chairman tend to play a major role in the public view of the company. Bill Gates is Microsoft. Howard Schultz is Starbucks. Steve Jobs is Apple. And each one have to make their mark in this world. Not because they want to, but because people expect them to do their thing from the front - lead the way in how and what they give and the way they run their company. They are the people others look up to and aspire to become.
Less so in the UK. Companies are seen as more important that the individual. A few has made it to the front - Richard Branson as one. But they stand out because they are so different from the rest. The focus tend to be on the company and not the individual who runs it. Yes, they play a role, but the company is seen as less dependent on the CEO and/or Chairman than in the US. Another reason why the UK loves splitting this role while the US wants the same person in charge. Two big egos would be difficult to control in the US.
One area where the US is way ahead of the UK is in communicating their corporate citizenship. They tend to focus on the communications part more while the UK tend to focus more on the operational changes. Maybe it is because the UK society is more reserved than the US, but it means that Ben and Jerry's is more respected in the US than Unilever. But in the UK it is the other way around. Of course this can be exploited and can confuse the consumer. A classic example is the current discussions in Washington about 'green' advertising and marketing. But the best tend to rise and consumers do know to take things with a pinch of salt.
In short, the US is different because it fits in with the way their society organizes itself compared to the UK. Both approaches have real value. Both approaches will improve the world little by little. Both approaches will have failures and successes. But the one is not better than the other. Just different. Dealing with their own little peculiarities in their society and political systems. Both work. And both fails. The US is not in any way behind the UK when it comes to the role of business in society. No. They are just different. A US approach won't last a second in the UK. And the UK approach won't survive a second in the US. The real challenge for them both is to adapt when they are outside their own borders, culture and comfort zone. Neither will last long in China or South Africa for example. No, they have to bring the best of their world and merge it with the societal and political expectation in these new countries. And that won't be better either. Just better for that specific country.
Bu the discipline of business in society benefits from this dynamics. Two bug economies bringing different approaches to the table. And it is when these merge and mingle that we move further ahead in this worl dof our. Of course there is one approach that works no matter where you are. The South African approach. But I won't be giving away our secrets just yet. No, I am way to responsible to do something like that.
It was the big football story of the weak - the Premier League wants to go global. Play a few games in foreign cities willing to pay up. Make a few bucks to fatten those coffers. But I am not here to talk about whether this is a good decision or a bad decision. And I won't mentioned how this will exclude all those in smaller and poorer countries who can't afford it. Oh, sorry. I didn't mean to mention that. What I want to talk about is how the Premier League didn't follow basic Corporate Responsibility principles. How they forgot to do the most basic thing - engage their stakeholders.
Who was the bright spark or PR agency who thought it was a good idea to leak the story and tell the world the good news? It seems as if it might not have been such a bright idea after all. People are up in arms about the decision and everyone has an opinion. We knew Sir Alex will have his say as he struggles to keep his mouth shut on anything (sorry, I am a Liverpool supporter). But even Gordon Brown and every other Tom, Dick and Harry had something to say. It could so easily have been avoided if they only followed the basic principles of stakeholder engagement. Let's remind them of a few basic early steps they should have followed and that could have resulted in a very different response to their big idea.
1. Talk to those who affect your business. They should have started by identifying who their key stakeholders are. Generally those who can affect your business. Those who pay you, those who invest in you, those who affect your reputation, those who regulate you and those who work for you (or who you work for). Very easy to identify the key people from this rough outline. Supporters, football team owners, managers, television rights holders, media and governing bodies. So who would be most important. They are all important, but some needs to be consulted earlier than others. I won't tell you who, but it should be pretty obvious (hint, Sir Alex is one and Gordon another).
2. Talk about what matters and be transparent. Again easy. They want to hear your thoughts and they want you to be open and honest about it. People easily translated the Premier League message that they want to expand the game to 'we want to make more money'. And that got their backs up. Why? Because they are suspicious that you want to make more money just for yourself and didn't think through the consequences. They aren't against making more money. Just suspicious about what you will do with all that extra cash. You haven't told them what will happen with the money. Will they benefit or will you keep it to yourself and spend it on a nice new office and a personal bonus?
3. Engage them, it's not just an information session. A big difference here. Are you willing to let them be part of the decision or have you already made up your mind? The way the Premier League came out with the news made everyone think that they have already made up their minds and that they won't consult with others. Or even if they do it won't come to much as they have already made the decision. Be a bit brighter than this. You can easily make sure that people are engaged even if you have decided from your side. But you can learn from being more open and still do what you have to do. Stakeholder engagement is about trying to include people in decision making, but you can still do what you believe is best even if they don't agree with you.
But the Premier League wanted to tell the world the good news. And they didn't think how others will react. Or maybe they just didn't care. Whatever the reason, people will now have less trust in the Premier League and that is not a good thing for an organization that is dependent on others paying them money for a warm and fuzzy feeling. Supporters buy into an idea, they don't actually own anything or get a physical object. It's a strong bond, but there will be nothing to fall back on if the bond breaks.
I once had the pleasure to experience the opposite of the Premier League approach. I was a trade unionist in South Africa and got a call from a very large company who wanted to talk. We went over to their place to meet and we realized that these guys were very nervous. It was odd as we always got along well with them. They stood out as a brilliant employer and a company we always supported. And then they came out with it. They wanted to buy a company in the US, but wanted to talk to us about it first. They are a company that specialized in a very niche market, but the largest in the world. And they would effectively have an 80% global market share if they buy the US company. They stressed that they were not planning on restructuring and that no jobs would be lost. The South African factories were just too effective and too profitable in any case. And they were proud of being a South African company. We were taken aback a bit. Why are they even asking us? We are just the union. And why were they nervous? It came out that they decided that their workers in South Africa and commitment to these workers were more important than anything else, even though they believed that this was something the company should do to expand globally. They made the decision to engage and stick to whatever the final agreement might be. They were nervous that union would say no and that they will then loose the opportunity. So they gave us all the info - details I am sure their lawyers told them not to give to anyone. We all looked at each other and smiled. We would have walked through walls for these guys. Of course we said yes. But man, these guys took stakeholder engagement to a new level.
The Premier League decided to take another approach. Exclude everyone from the decision and believe that people will just see it their way. It's called drinking your own Kool Aid. Let it be a lesson. A good idea is only good if your stakeholders agree.
Okay Sir Alex. Now you can go and give them the hairdryer treatment. They might actually deserve it this time.
My good friend Peter Knight recently argued that he is not in favor of 'giving back'. I agree with his sentiments that the idea of 'giving back' sounds horrible. That companies shouldn't have to give back because companies that uses corporate responsibility to guide them never stole anything. So no reason to give back. I agree. Except to say that we haven't agreed on the price of the rape and pillage of Africa or other old 'colonies'. So better pay up until we can agree on the price. Oh, I don't care much that it wasn't today's companies who did it. Shell is a good corporate right now, but hasn't always been. Still paying for that until we can agree a price.
There is a more important reason why philanthropy should have a central place in the world today. People are still dying in Africa and many other places in the world. We can argue that governments or aid agencies should look after them. But all the arguments in the world won't feed them or save them from death right now. We can argue policy when we have the luxury to do so. It is our responsibility to look after each other on this little earth of ours. It is part of the rules of engagement. We look after each other. And if one of us suffer then we all should do our bit. But it is not what you give, but why you give that really matters.
But Peter is right. we should never do this because of guilt or anything like that. Don't give because it makes you feel better. Or because of pity. People really do not need your pity. And they don't particularly care if you feel better. They just care about today and surviving for another day. That is the hard truth. People don't care who you are. Only that help is on the way.
The principle of Ubuntu in Africa ensures that people look after each other. It is a way of living. Like breathing. We do it because that is just who we are. That is how we are wired. We don't do it because of pity. Or because we can afford it (most people can't afford it). Or because we want someone to be grateful. Or to make ourselves feel better. We just do. We do it because that is the way our society organizes itself. Looking after each other. Someone looks after the kids. Someone else fixes the cars. Someone else bring the food. And someone else does nothing. Ubuntu - I am because you are.
And we want everyone in the world to be like that when they look at each other. To look after each other. Not because of pity or because of feeling good. We want people to do it because it comes naturally. It is part of who they are. No need to talk about it or brag about it. Just do it and don't expect anything back. Not even a good feeling.
Companies are part of this world. They play a central part in our communities. Bringing the goods to us now that we don't hunt or farm anymore. They have a social role to play. And there are rules. You want to be part of this society? Then be part of it just like we are. Not just to get our money. But to pull your weight when we need you. And that includes 'giving' to those in society who can't do it themselves.
I know. I have argued before that business is about business. Making money. And that CSR is about improving the business impact through operational changes that ensures both business benefits and development gains. Philanthropy is not CSR and it is even open for discussion whether it should at all be part of CSR. Remember, CSR is not everything about a business and its role in society. It is only part of the story. Business and it's role in development and society are much bigger than CSR. And CSR doesn't take away from their broader role and responsibilities in society. There is a price to be paid to be part of this society. The whole global society.
But I do hate philanthropy. I don't like the idea that we need people's money to save lives and feed the hungry. I hate philanthropy because of what is done with it. Helping people. People shouldn't be helped. People should be celebrated. People should be allowed to be people. No matter where they are. But we don't live in that society and until we do we better be part of a society that looks after each other.
Some of these things can be addressed through CSR - better working conditions, human rights, environmental practices, etc. But for someone in Sierra Leone or Chad this won't work. There is no 'big business' that operates in these societies. So CSR will never reach them or impact them positively. And neither would the governments of those countries. Or the aid agencies with their strings attached. It is not a perfect system, but all we can do is support those who fight for these people. Fight to feed them and save them.
This type of philanthropy isn't that strategic either. And it shouldn't be. A simple rule. If there is a place with people in need - act. Treat it like you treat any emergency - tsunami or New Orleans. People are facing disasters every day. Some natural and some not. But treat it like a disaster because the people who suffer do not suffer any less than those in disasters. They die every day from an illness, hunger or war.
Oh, do I hate those pictures of poor African kids and the pleadings by Oxfam and the gang of non-profits. They do it to make people feel guilty. And they don't look at the people themselves. Those proud and poor. Poverty doesn't define who they are. It is but a small part of who they are. It's like saying Peter is an addict because I saw him drink a beer once. No, Peter is much more and much better than that. He gets Ubuntu. Maybe more than he sometimes actually knows. Peter, you are right. We shouldn't give because of any reason. We should just give - like breathing.
Peter, we actually agree. We both hate philanthropy and the story behind that philanthropy - from giver and receiver. It's how you give, not why you giveBut it's all we have to offer some of those who suffer most in this world.
Food and beverage companies had a long time to try and sort this out themselves. It's what business always ask for - self regulation. But they missed the opportunity. It's not a new issue and they had their chance to put it right. Yes, there are some info at the back of the containers, but consumers are confused. They just don't know what all this information means - how much salt is too much salt. And it is even worse for parents who do not know the limits for their kids (http://www.foodnavigator.com/news/ng.a
Some companies have tried this on their own. And good for them. They have taken the leadership position and reaped the initial benefit of doing what is increasingly expected of them. The problem is that they were never going to keep their unique approach alive on their own. Not when the world expects all their competitors to do the same. They will always be held back by those competitors who do nothing and who fight labeling. So this leadership was on borrowed time from the start.
The nature of the beast is that a leadership position today is an industry standard tomorrow. And the time for that has come. It was inevitable. The challenge will be for those who have shown leadership to find the new leadership position and lead the way again. And that is not a bad thing either - there is always a new opportunity for them tomorrow. It is in their nature to find new innovations. Always moving forward - the way business has always been. Find the edge and capitalize on it before everyone else catches up. For the others who lag behind - don't fight it, it will become the industry standard. Whether you like it or not.
Tangible business benefits are ultimately realized through operational efficiencies (CSR strategy) and effective communications (CSR communications), through PR, advertising, brand, online and other ways to bring the benefits to the consumer and other stakeholders. What is needed is an integrated CSR strategy and communications approach, that is aligned with brand identity and positioning, to effectively engage target stakeholders, especially consumers, and build brand trust, loyalty and affiliation. By working across a company's different functional areas, understanding and working within the commercial realities of a company, and making stakeholders key, CSR can strengthen and improve the businesses of companies.
CSR strategy development, which is informed by business objectives, market realities and stakeholder input, provides company direction for risk minimization, operational improvements and future growth. This strategy should be informed by and aligned with brand identity and positioning that helps position the company to stand as a responsible and leading corporate citizen – thereby building brand trust, loyalty and affiliation.
CSR communication strategies positively engage stakeholders, specifically consumers, and create on-going dialogue and interaction with the company. This engagement is in turn used to continuously inform strategy, refine brand identity and positioning, and propel continuous improvements creating a cycle of CSR leadership and business benefits.
This integrated approach provides companies with tangible benefits targeted at their own and their stakeholders' commercial, social and environmental needs as well as the methodology to continuously improve their business, ensure CSR leadership and business benefits, and strengthen brand trust and value – now and in the future.
So, what's my beef with PR? They play a central role in all this, right? Yes they do. A key role. But my problem is that almost all of them see this as vanilla PR. Yes, they'll talk about how important it is and say all the right things - remember, they are in PR. But then they will focus on all the philanthropy work of the company - not the operational impacts. They'll write CSR reports full of beautifully crafted stories of how the company has helped some poor family in Ethiopia, and hardly ever talk about what is material to the company. They'll pitch the good stuff to the media, but not engage with stakeholders on the bad stuff. They'll devise participatory employee volunteering schemes, but not talk about the lack of union representatives of the 5% of the workforce that got cut in the last round of 'streamlining'. And they won't mention that some workers in the supply chain might be just as bad off as that family in Ethiopia. They'll talk and talk about the good stuff, because they don't actually know how the company operates. It doesn't help that they always talk to corporate communications/public affairs or corporate affairs (take your pick) and hardly ever to product development, HR, manufacturing, logistics, supply chain management or H&S.
One of the experiences that I despised the most while at the International Business Leaders Forum was the PR agencies constantly running to us to help them in their communications of their clients CSR practices. And this 'advice' can range from helping them write a CSR report to just telling them what CSR actually means, or just 'engaging' stakeholders. But when it came to the client or public, they acted as if they knew everything. Man, they can tell you in so many ways how they can bring the CSR of your company to life - whether you actually have CSR practices or not is irrelevant.
The problem is that PR agencies are geared towards communications. Yes, it might be aligned with the brand or corporate values if you are lucky, but PR agencies know zilch of operations. They will spin you stories on how important operations are, but they know very little of the actual dynamics of business outside communications. PR agencies are good at the communications bit, and consultants are good at the operational bits. But they talk different languages and have very different views on what brings value to the company. PR agencies see the value of CSR as how they can 'PR' it. Talk about it, blow it up bigger than what it is and pull off a few gimmicks. But CSR will remain outside of the company and remain without value if you have a PR approach to it. Yes, PR agencies all of a sudden have CSR departments and talk the talk. But have a close look at the people they employ at the CSR unit - PR or political campaigning backgrounds. Not those who have an understanding of operational improvements or even global developmental backgrounds. CSR will remain meaningless if we allow it be driven by PR. It must be driven by both communications and operations. And we need people to understand both. If not, well then we will continue to not bring business benefits AND development gains.
Just look at what consumers believe - they believe everything is spin. And they are not far off when it comes to the role of PR in all of this. And the examples like Wal-Mart and their online strategy is not good stakeholder engagement. But it happens when you drive your CSR through PR communications. PR has a role to play, but they need to get their house in order before they kill off CSR completely.
But don't worry. PR is not the only guilty one from an agency side. Those consultants. They know nothing of communications. Or actual business benefits. They'll do your CO2 emissions whether you make cars or plant trees. And design new eco-friendly offices whether you are a financial institution or farmer. No, they'll sell you anything as long as it can relate to something in your operations. Don't get me started on them...
Sir Mark makes a strong case that the rich should not be excluded from taking responsibility. Them paying a higher tax doesn't bring responsibility to their lives, it just proves they have money to dodge responsibility. And he makes an even stronger argument when pointing out that coal fires were banned for all in London. Not just for the poor and the rich paying a 'luxury tax'. No everyone had to stop. That was what was good for society as a whole.
I want to throw in a few more examples where bad business practices were regulated whether they wanted it or not. For instance, slavery. Many businesses argued that they wouldn't be able to afford paying for the labor and that they need slaves to keep the economy going. Should this have been left to voluntary guidelines or self-regulation? No, it was a immoral business practice and needed government interference. It didn't end slavery (we still have that going on) but it did make it unacceptable and changed the way society looked at this business practice.
Let's try another one even closer to current business practices seen as standard - accounting and financial reporting standards. It wasn't that long ago the world was in accounting chaos (and if you know any accountants - you know how crazy that sounds). Investors didn't always know what was going on and governments lost millions due to loopholes and lack of clarity. Only in the 1960's did the world start looking into international standards. And it is still developing. The EU is aligning financial and accounting standards. And the world is moving towards bringing international accounting standards into country-specific regulations. Give it a few more years and you won't know the difference between something reported in France and something reported in the US - except for the language of course!
Yes, there are self-regulations out there. But the trend is always for it to move towards government regulations. And it is partly to make the world more competitive - not the opposite. For instance, the Extractive Industries Transparency Initiative started off as something that was very open and focused on providing guidelines. But business themselves realized that the only way that this will work would be for governments to regulate to level the playing field. And Sir Mark played a key role in that as well.
We are regulated everywhere - from labels to safety belts to sourcing principles. All to protect society at some or other level. Not all businesses like this. But it is inevitable. We need to regulate in order to set basic principles and standards. And remember, those subsidies that car manufacturers and oil companies receive are all by law - regulated. If you want self-regulation then don't accept money from government to help you drive up profits. Do it all by yourself or accept that you will be regulated - it is to protect you and society as a whole.
The lesson for business? Don't fight it - it is inevitable. Good business will rather see this as an opportunity and try and get ahead of the pack. It is inevitable that car manufacturers will be forced to improve fuel economy. The world just can not afford to either pollute our atmosphere any more and we can't afford the world running out of oil either - not until we have better alternatives. It is therefore in the interest of society that you come up with better solutions - starting at fuel efficiencies. For those who lead - grab the chance to get ahead of the pack. The others will pay later when they will be forced to comply. That's just the nature of our world - regulate to bring the late-comers in line with best practices. But by then you will be even further ahead and best practices will be just standard business.
You go Sir Mark. Keep on showing the world where we have to go. And take the world of business with you - some kicking and screaming. But we will get there. It is in the nature of business and in the nature of humans - organizing how we interact and live together. It is inevitable. The questions is not if they will be regulated, it is about when.
Well, Liverpool was bought out by two Americans last year - George Gillett and Tom Hicks. And like most (mergers and) acquisitions, everyone started out happy. The fans loved them. Especially after they promised to give Rafa Benitez some money to spend on the transfer market. And remember, Rafa is god at Liverpool. He gave us our first meaningful trophy in many, many years - the European Champions League. The top club trophy in the world. And we did it in a way that made all Scousers proud (and us foreigners) - coming back from the dead at 3-0 down to win it on penalties. He brought back hope and pride as the most successful English team ever. (Sorry, stats and trophies don't lie).
Hicks and Gillett were the guys who was going to provide us with the finances that will give us that last bit of edge we needed. Bring a few more quality players in and build a stadium that can hold 30,000 more supporters at a venue that reflects our superior status within English football. Hail Hicks and Gillett.
But then things started going a bit sour. Gillett and Hicks scaled down the plan for the new stadium. Then they started talking badly of our manager. They even went to talk to another potential manager behind our backs. And they refused to give Rafa the financial support for the January transfer window. To make things worse, they had to go and refinance their own ownership of Liverpool.
And the fans reacted badly to all this. Everything that was promised was being scaled back. And the new owners was so different from what we had before. Yes, our previous owners didn't have the money to take us to the next level. But they were Liverpool fans through and through. They would have sold their grandmother to support this great club. Hicks and Gillett saw it as the next big moneymaker for them. Their cash cow to fund their next acquisition in sport - maybe somewhere else in the US or an expansion into Asia.
Liverpool fans didn't like it at all. This is their club. This is their life. (Yes, I know, we are a sad bunch). They wanted their club back. So they decided to buy the club and bring it under fan ownership (http://news.bbc.co.uk/2/hi/business/72
Rule one should always be to keep everything that made it a great buy in the first place. Keep the consumer that is committed and build on that. Don't turn that consumer away. Keep them happy as they are the core consumer that will keep you going. And from this foundation you build a broader consumer base to expand the business.
To do this you have to know the cultural differences and nuances. Your business model in the US might not work in the new country. Even if the companies look more or less the same on paper. The cultural differences is vast and it is up to you to learn the new cultural peculiarities and adapt to new requirements. They don't have to because you need their money more than they need you. Owners come and go, but consumers go and don't always come back.
Once you adapt to the new surroundings you can take the next step and add your own insights and best practices. But that doesn't mean all of your old practices. Only bring what will work in the new surroundings. And what will keep the local consumer and community happy. If you don't - just say goodbye to those profits and see the company go down the drain.
Hicks and Gillett didn't get it. And it is a long way back for them to try and bring their investment back into line with the consumers - and their own expectations. Remember the Liverpool motto, 'You never walk alone'. That only counts for Rafa and the club. Not Hick and Gillett. Come on. You are 3-0 down, what are you going to do? Call Rafa, he knows.
I don't know how often I hear US companies say that they don't need or like trade unions. That it is their business and they will make the decisions. Or that they like to develop a personal relationship that is more like a family. That people working for the company are not workers, but rather partners or associates. 'Unions are not for us thanks. We look after our workers and believe in the personal relationship between us and our partners' - standard responses by businesses in the US. And these are good businesses. Not sweatshops or the companies you would put on your black list. No, these are companies I, and most people, admire and like most of the time. Companies we want to work for or have as clients. Companies we hold up as leaders in the field of development, environment, stakeholder engagement and everything else you want to throw in the hat. Companies that inspire us. And I just don't get it.
Yes, unions in the US might not be the friendliest of the bunch. But the world is different the minute you step outside these borders. You might have strong feelings about unions and their role in the US. But they are viewed differently outside these borders.
You run the risk of killing your business if you believe that Europe is a key market and you still believe that trade unions have no role to play in your business. Go to Germany and France and people love their unions. People are proud of being a member and unions have huge influence on communities and politicians. Hey, they even participate on the board in many companies.
In most Scandinavian countries unions are part of official political alliances on national and local levels. They help decide what money goes to what programs and they support union movements all over the globe. The local political leader will most likely be a union leader as well. In these countries unions are seen as key to development and foreign policy. Remember, we are talking about social democracies here.
And political alliances between governments and unions are also common in places like South Africa. Here the largest trade union federation COSATU is also an official ally of the ruling ANC government. In fact, they played a key role in electing Zuma as the new ANC leader over current President Mbeki. They didn't like Mbeki's economic policies and selected someone they felt they could control a bit more. And union members are part of the official Ministerial WTO team of negotiators. They are embedded in the government. And South Africa has unionization rates way above 80% just to make things a bit more difficult in case you decide you don't like them.
Also, why would you want to tell your suppliers that their workers should have freedom of association in places like India, China and Mexico when you don't want that back home? Yes, unions are mostly limited or controlled in these places, but the principle of freedom of association should be consistent for both you and your suppliers. Your suppliers won't feel that committed if you don't walk the talk.
And to make things even more difficult they use a a different language when you leave these borders. It's not brother and sister anymore - it is comrade. Again - no comment from me whether this is right or wrong - you just have to live with it. And learn to celebrate 1 May as Workers' Day - a global celebration of workers and their rights, just not in the US.
So, if you decide that you don't want unions there you might just as well close your shop and walk away from the global market. You have to think and act like a global player if you want to play oas a global player. Love them or hate them, but you can't operate efficiently in these countries without them. Remember that, and you might become trusted and build a loyal workforce - become the 'comrade boss from the big office'.
The easy way out was for Starbucks to close the store and expand to other locations. One store won't damage their business - not with over 12,000 stores globally. But what did they do wrong? The mere presence of Starbucks in the Forbidden City was seen as an insult to Chinese culture and history. It was not about what they were doing or not doing. Everyone agreed that they were a good company, doing good things. But they are not Chinese. Similarly, in many places in Africa, people are starting to complain that Chinese companies are exploiting them and not respecting their culture and history. But don't think that this just occurs in the developing world or in emerging markets. Remember the US stopping a certain Middle East company investing in the ports in the US a few months ago? This is one of the key challenges facing companies in a globalized world. How do you become local and global while expanding your market?
Are you a multinational or a US/UK/Chinese (fill in whatever country might be disliked in the marketplace) company that operates globally? Too often companies claim to be multinational, but they are driven by the culture of their origin. Very, very few companies are actually MULTInational in the way they operate and are managed. To become multinational they need to ensure that both the 'numbers' and the people make sense. It is fine to say that 90% of the people in their African/Asian/etc. offices are from the host country, but this still leaves two questions: (1) the 10% left - are they mostly senior management, and how senior are they? (2) Is the head office comprised of mainly western (mostly white males) or do they reflect where they operate?
How do you bring these cultural influences together to make your company truly MULTInational? It may require melding the Western model, which is largely focused on the individual with say an African or Confucianism culture of East Asia. What is the best way to manage the company, and interact with employees, communities and customers? At the moment, companies are not asking these questions as they think 'diversity' is a numbers game about ethnicity and not the way you do business. Until we start seeing ourselves as global AND local in the way we run our business, the idea of being a Chinese company, an American company, or an Arab company will continue to divide businesses and customers.