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D Shivakumar, chairman and CEO, PepsiCo India
catalist 2014
“Companies Must Earn Society’s Trust”
If you don’t have character as a company, it is very difficult to move beyond satisfaction to trust.
COMMENTS PRINT
SOCIAL ENTERPRISE
A new class of entrepreneurs are walking the tightrope between profit and social impact by forging strategic tie-ups with corporates, NGOs and the government. And they are here to stay
Rajat Ubhaykar
catalist 2014
Six years ago, in an attempt to counter competition and present differentiated content, Outlook Business decided to highlight the stories of social entrepreneurs as part of an annual issue.
Outlook Business
catalist 2014
In a social enterprise you can see the impact of what you are doing in the face of your customer in a very short time.
Ajay Piramal
catalist
I have seen a variety of people with and without this guilt. Those who don’t have it really end up prospering. And those who have it invariably move out of the radar.
K Ramkumar

Every time I am called to speak, there are three topics that most people want me to speak about — brands, leadership and technology. Beyond CSR is about all three and without those three things you will never be able to get anywhere.

India is the first country to put out CSR as a part of The Companies’ Act. No other country in the world has done that. You all know the prerequisites — net worth of Rs 500 crore, revenue of Rs 1,000 crore and a profit of at least Rs 5 crore. And 2% of that must be spent on CSR. There are 16,000 companies that have the potential to contribute. This 2% comes up to a gigantic $3.3 billion. Suddenly when developmental economists and social people see that kind of money, they say, “Wow $3.3 billion dollars. Where is it? Let’s look for it.” That’s what people are getting into the mood of. But where is this money? How can we tap it? How can we channel it into a way that benefits this country? That is where we are now.

When talking about beyond CSR, we use the words ‘give back’. I prefer the word contribute. Give back means that we are obligated to give what you have taken. Contribution means doing it with freewill and the belief that you want to really help someone. Give back is a penalty. That mentality is not worth it. Think about contribution to a better and advanced world.

To think beyond CSR, we not only need to think about contribution, but also of an ecosystem. There are many companies that can benefit from a combined investment into one particular area. Be a part of and contribute to a larger ecosystem that can in turn help us.

Next, one of the things that we think of when we talk of beyond CSR is the concept of perception management. I would rather use the term external engagement. How are we engaging with our external stakeholders and why is this important in this context? Well the world has changed and it has changed forever. Twenty years ago, a company and a CEO were measured on about seven parameters only. Today, they are measured on 25-35 parameters. Half those parameters have nothing to do with the business . It has to do with commitment. Are you committed to ecology? Are you using the right material in your packaging? Are you buying from sources that have a wrong history? Are you doing this for children? Are you seducing children or talking to them when you should not be? Are you talking of the gender biases that exist in society? Half the measures a company takes today are qualitative. Managing external stakeholders is becoming increasingly critical in a world that is set to go beyond CSR.

External engagement has to be a part of your strategy. It’s not a matter of “now that we’ve done it, let’s manage the perception.” That doesn’t work in tomorrow’s world. The whole concept of it is to be part and parcel of your strategy.

 
 
"We have always been good at judging the competence of organisations but have been poor in judging their character"
 
 
I think one of the things that beyond CSR will demand is to move from only satisfaction to earning trust. You earn and lose trust on a daily basis in the social world. Trust, to my mind, is a combination of two things — character and competence. We have always been good at judging the competence of organisations, which is the size of the company, its core, the profit it delivers, what are the percentages, the costs etc. We have been very poor in judging the character of the company. There are few companies that state their values and say they will die to uphold them. If you don’t have character as a company, it is very difficult to move beyond satisfaction to trust. You will do a good job of the business. But if you don’t have the character in you and if it is not really practiced in the organisation, it will be difficult to move to a place that is beyond CSR.

In today’s world CSR is also known as corporate social responsiveness. In India, we have 900 million mobile phones and 150 million people on social media networks. The total circulation of all newspapers in this country is 130 million. We have more social media users than newspapers. So, whether it’s one person or a group of a thousand or a million, if they have an idea and the idea has momentum, it becomes a huge cause. In the wake of that cause, a lot of companies and a lot of reputations start swirling around it. Ask yourself if you are being responsive and equally responsible in today’s social world. To be socially responsive as a corporate, you need to be humble, orchestrate the response and be responsive. You can’t take a lot of time or the cause will sweep you aside. Somebody said this best in a strategy book. “Great strategies take signals, amplify weak signals and work on them.” Responsiveness is all about picking the weak signals and ensuring that you address it.

Finally, I spoke of trust and I will end with it. A survey is done every year, globally and in India, on who is most trusted. The sample size is of 33,000 and 1,200 in India, but of people who are really well-known. Globally, NGOs come first and businesses come second. In India, businesses come first and NGOs come second, media third and government comes fourth. While the ranking looks good, in terms of sheer percentage increase, the only increase this year in India has been in NGOs. The score of trust in business has dropped a little and the score of NGOs has gone up a little. The score of trust in media has plummeted dramatically, in double digits, and the score of the government has fallen as well.

Here’s an interesting statistic — while the score for the overall government is low, that for the regulators in government is high. People are asking for checks and balances. Just because the government contributes, it doesn’t mean that they take people for granted. They want the government to behave well on dimensions that affect the society.

Going beyond CSR means truly earning the trust of society and being good at something, which is the competence part. To go beyond CSR, each company, each leader and each institution like the media, the government or NGOs need to display character. CSR is the way to start, India being the great example. But, beyond CSR will need all of us to earn trust and build on it almost every day. There are two things about sustaining trust — being predictable and positive. It earns you trust and helps you anticipate and participate in the change. That’s the only way you can constantly build trust in an ever-changing world. The way to win trust, which we are recognising the hard way, has nothing to do with power. Power and trust are inversely correlated. In the early days, power had some correlation to trust. But today, power is not even a part of the equation. Being predictable, responsive and ensuring you have the humility to work with your constituency is important.

COMMENTS PRINT
SOCIAL ENTERPRISE
A new class of entrepreneurs are walking the tightrope between profit and social impact by forging strategic tie-ups with corporates, NGOs and the government. And they are here to stay
Rajat Ubhaykar
catalist 2014
Six years ago, in an attempt to counter competition and present differentiated content, Outlook Business decided to highlight the stories of social entrepreneurs as part of an annual issue.
Outlook Business
catalist 2014
In a social enterprise you can see the impact of what you are doing in the face of your customer in a very short time.
Ajay Piramal
catalist
I have seen a variety of people with and without this guilt. Those who don’t have it really end up prospering. And those who have it invariably move out of the radar.
K Ramkumar
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