"What is good for society is good for business."
-Jack Welch
Trust is declining in most industries worldwide. Mistrust in an industry or company leads to higher transaction costs, including larger lobbying and advertising budgets, increasing customer-acquisition costs, and climbing litigation fees.
Business must get back into society to stem the rapid decline of trust in globalization and capitalism in general. Management must ask itself, Is our business a microeconomic transaction organism, or does it have a much broader role as an agent in civil society?
Where global groups fail to see themselves as part of society, they are very soon under attack from public opinion. Businesses have the opportunity to set their own standards before the state intervenes by acting as a regulatory body.
No matter what causes mistrust, businesses must adapt to mistrust in ways that are not traditionally seen as being part of globalization. To the extent that the mechanisms of disenchantment and resistance to globalization are at least in part valid, business behavior may fuel the forces of mistrust contrary to its own interest.
Neither convergence nor divergence in a globalized society is necessarily bad for business. Only wrong adaptation is, and business is far less prepared for divergence than for convergence.
Multiple Modernities in Business and Society
The tensions between company and society are, strictly speaking, tensions between companies and societies. Many cultures outside Europe and North America regard Western (capitalist) universalism as a threat to their cultural identity. Today we can say, The more modern the world, the less universal and less Western it is. Managers have to get used to this changed environment.
The goal of this project is to gain a thorough understanding of the drivers and implications of the phenomena of different cultural perceptions in modernity. For this purpose, we first explored the academic world, set up a workshop in Berlin in May 2001, and invited 12 sociologists, historians, and economists from leading universities-scholars known for their expertise on multiple modernities. This term is academic shorthand that describes a world with a multiplicity of cultures, as well as common modern economic and political features.
In the future, economic thinking will not suffice for the formulation of sound business strategies. The fate of business strategies will increasingly be determined by social and cultural factors of the environment.
The workshop papers are collected in Reflections on Multiple Modernities: European, Chinese & Other Interpretations, published in 2002 by Brill Academic Publishers. The issues covered range from academic perspectives on divergent forms of capitalism to the possibilities for intercultural dialogue.
We discussed our evolving ideas with senior executives during two symposiums and found that we should aim to find solutions that ensure that different cultures are not uprooted by globalization. Our task is to come up with ideas for tapping globalization's productive capital.
Publications on Metaphorical Thinking
Size Obliges
In this article, which followed the Business and Society project, Bolko von Oetinger and Martin Reeves discuss why size obliges and how management can learn to take on social responsibility by making the following considerations:
Adapting Self-Conception. Key drivers for regaining trust and ensuring future economic success include anticipating the regulator by applying self-restrictions, developing codes of conduct, having the clearest foresight for taking on environmental problems, and taking charge in modernizing training systems and work structures.
Responding Faster-Strategically. The more companies are in the limelight, the more difficult it is for boards-especially in Europe-to correct errors that have a strong social impact, without being criticized publicly. For this reason alone, low-key (early) changes are always more cost effective than noisy (later) ones.
Understanding Problems of Trust-in Detail. Problems of trust are complex, elusive, and emotional phenomena. To defuse them, managers have to fractionalize them. In the food industry, for example, what in particular is being criticized? Can parts of that problem be solved? Such questions require responsible managers to respond specifically and individually on behalf of their companies.
Setting Standards. Many solutions do not depend solely on an individual company's good will: solutions must be industrywide, all companies cooperating together. A top manager has to support not only a global agreement process in the industry. He can also influence industry opinion and the general public, getting them to move slowly in the right direction.
Developing Measurement Methods. There are not yet appropriate metrics for the role of a company in civil society. Companies are measured by criteria that are different from what they should be. Success is not only economic success. Success has to incorporate social parameters. Is it not necessary for market leaders to set these standards and metrics too? Initial strategies-for example, the triple bottom line-unite economic, ecological, and social parameters in a type of consolidated balance sheet of the company.
Adapting Organization. In the last ten years, global corporations have cared more about their global strategy than the cultural differences of the countries and cultures in which they operate. To be a respected (and successful) player in today's world economy, a company's focus has to shift from a global approach to a regional approach.
Bolko von Oetinger and Martin Reeves, "Größe Verpflichtet" ("Size Obliges"), Harvard Businessmanager (January 2007): pp. 60-66.
Available only in German.
Multiple Modernities: European, Chinese & Other Interpretations
Papers presented at Multiple Modernities Conference, hosted by the Strategy Institute of The Boston Consulting Group, May 20-21, 2001, in Berlin, ed. Dominic Sachsenmaier and Jens Riedel with Shmuel N. Eisenstadt; preface by Bolko von Oetinger (Boston: Brill Publishing, 2002).
Market Economy in the Age of Cultural Challenges-An Initiative to Bring Business Back into Society
Conference of the Strategy Institute of The Boston Consulting Group in the Wissenschaftszentrum, February 11-12, 2004, in Berlin, ed. Bolko von Oetinger, Tiha von Ghyczy, Bernhard Giesen, Dominic Sachsenmaier, Jens Riedel, and others.
Available only in German.
Introducing T-Shaped Managers-Knowledge Management's Next Generation
The knowledge economy demands a new kind of executive-one who freely shares ideas and expertise across the company while remaining fiercely committed to business unit performance. T-shaped managers care for both their business units and the company as a whole. But they must be carefully cultivated.
Morten T. Hansen and Bolko von Oetinger, "Introducing T-Shaped Managers-Knowledge Management's Next Generation," Harvard Business Review (March 2001), pp. 107-116.