Those who can sometimes teach...

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	• What Matters Most: How a Small Group of Pioneers Is Teaching Social Responsibility to Big Business, and Why ... Jeffrey Hollender, Stephen Fenichell, 2004 - 240 pages average customer review:based on 8 reviews view larger image
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highly recommended

This book matters a lot.

This review is an adaptation of my review published in Personnel Psychology, Winter 2004 issue.

As one of the pioneers in the corporate social responsibility (CSR) movement, Hollender is evangelical about promoting the implementation of CSR "in all of its forms." I'm not sure I know what he means by that. As he acknowledges, it's in the "mind of the beholder" because there's "no firm consensus" about what CSR means. I certainly can't criticize him for not pinning down the concept. Professor Ronald Sims (2003), in his own book on the subject for instance, has offered five different definitions. I think Hollender equates CSR with the idea of a triple-bottom line of responsibility and accountability for fulfilling what he thinks should be the financial, social, and environmental obligations of a corporation.
Margaret Mead once said in effect that social change always starts and can only start with a small group of people. The small group identified in the book as pioneers in the CSR movement include small business entrepreneurs like Ben Cohen and Jerry Greenfield of Ben and Jerry's Ice Cream, socially responsible investment funds like the Calvert Social Investment Fund, and a host of advocacy groups or non-governmental organizations (NGOs) like the activist group, Greenpeace, and the more reserved Businesses for Social Responsibility (BSR) that was conceived as sort of an alternative Chamber of Commerce.
The book gives an interesting account of the different ways in which these pioneers promote CSR among big corporations. One way, for instance, is non-confrontational and educative in trying to "bring big business [no matter how socially irresponsible] to the table and then move the table." For example, BSR works closely with big companies to promote a set of best practices that hopefully will not only further the CSR progress of those companies but also entice other companies not to be left behind. Another way is confrontational, involving pressure tactics and sometimes law suits. Greenpeace, for example, gradually succeeded in pressuring Royal Dutch Shell to choose a more environmentally responsible way to dispose of an obsolete oil storage tanker and loading platform in the North Sea.
As you can well imagine, the notion of CSR is controversial and fraught with issues. The authors clearly know that and for the most part deal with the issues relatively well in my opinion. I'll mention and discuss a few of the issues.
Perhaps the biggest issue is over what should be the legitimate purpose of business. Hollender, understandably, totally rejects what he considers to be the "hysterical" opinion of conservative economist Milton Friedman that CSR is "fundamentally subversive" and that the only legitimate responsibility of business is to make an honorable profit. To Hollender, CSR "in all of its forms" is the legitimate purpose. Thus a corporation that seeks to ameliorate public problems not of its own making is a more socially responsible company. He cites Coca Cola as an example of a company persuaded by activists to modify its operations in ways to further the prevention and treatment of AIDS among its employees and those of its bottlers and suppliers.
Three related issues are over who should be the public corporation's legitimate stakeholders, for what should it be held accountable, and over what period of time. To people in Friedman's camp, the issues are no-brainers. Shareholders are the only stakeholders, the corporation is only accountable for maximizing their wealth and doing so through legal means, and time is marked in quarterly returns. This view is basically that the conventional bottom line is the only one that must matter. To people like Hollender, the issues are also no-brainers. Absolutely everyone and everything, including the environment, along the company's long value chain from initial product resources to product disposal are the company's stakeholders, the company must be held accountable through full and transparent cost accounting to every one of those stakeholder interests, and time is marked in the long run. The conventional bottom line is thus immensely modified quantitatively and qualitatively.
I found the authors a bit lax in relying on several of their sources about one important matter bearing on those three issues. The sources were quoted as claiming that boards of directors have a statutory obligation to maximize shareholder wealth in the short term. I questioned that claim, and one of Hollender's spokespersons acknowledged that it was a mistaken claim. But this nevertheless doesn't negate the immense pressure CEO's are under to hit the numbers each quarter. This pressure comes primarily from institutional investors who might as well be surrogates for a statute. It takes a morally courageous CEO and a sustainable company to resist that kind of pressure. In an article featuring Hollender and Bill George, the recently retired CEO of Medtronic, the latter commented that he would say at every annual shareholder meeting that the company was "not in the business of maximizing shareholder value," and he believed he "got away with that because the results were so good" (Kelly, 2004).
Another related issue is over how much self-disclosure there should be of a firm's CSR performance. Hollender proposes full "transparency," yet acknowledges that it can make the company squirm, as his did, over risking the possibility that full disclosure may end up making the company legally liable for a product shortcoming that might not otherwise ever be known. He agonized, for example, that while one of his products was more "natural' than that of any of his competitors, he was sure some of his customers at least presumed that his product "was a bit better than it actually was." Not being a fanatically unrealistic CSR advocate, he decided to put a "product self-critique section" on his company's Web site instead of putting a disclaimer on the product's packaging. It's a compromise, yes, but far more responsible than the values held and practiced by a baby food maker I remember as once having been charged with diluting its product.
Another related issue is whether to take a public company private to escape Wall Street analysts and record-keeping requirements. More public companies are apparently going private, and Hollender himself is a case in point. He took his firm private, and that is what it still is today. He points to the private outfitter, Patagonia, as being able to take socially responsible actions much more easily than if it were traded on Wall Street.
Yet another issue addressed, and the last one of theirs I'll mention, is over whether a small, socially responsible company should "sell out" to a larger corporation. An advantage of doing so besides making a lot of money from the sale is the prospect of a responsible product being introduced to a much larger market. But a disadvantage is that the seller risks seeing its values and practices diminished if not overturned altogether by the larger corporation. The authors describe how Ben and Jerry initially felt they had negotiated a deal with Unilever, the buyer of their company, to preserve the values the two pioneers held dear, only to learn later of some actions taken by Unilever incompatible with the values.
The authors claim that the CSR movement has become a "contagious trend." I think that's a bit exaggerated, and the authors offer little hard data to back up their claim. I think it is true that CSR is becoming a more popular topic, but I suspect, and the authors acknowledge, that it lends itself to tokenism or lip service for the sake of appearances or reputation. That's why incidentally I chose to mention the authors' examples of Shell and Coke. Shell reportedly regards the North Sea experience positively and claims there is now "increasingly open and honest communication with the communities," yet we read recently that its two top executives were forced to resign after lying for several years about the company's oil reserves (see, e.g., Timmons, 2004). As for Coke, it's frequently in the news for its "cozy ties to strong arm dictators and rogue bottlers" and for other alleged wrongdoing (see, e.g., Klebnikov, 2003). I could also have mentioned wrongdoing by some of the other companies the authors cite as making progress of one kind or another in their CSR performance. My point is that with so much harmful wrongdoing being committed by public corporations, I would far prefer to see a relatively more restrained movement, one that "simply" calls for public corporations to operate "harmlessly." Achieving that standard would be a quantum leap from prevailing corporate behavior, and I think corporations should direct their resources to taking that leap and not diverting them to the solving of problems not of their own making or to giving guilt gifts through philanthropy or to offering isolated token efforts.
The book is intended for a wide audience, including business leaders, employees, and NGOs. I personally think it deserves to be on a best seller list and should be read by the CEO of every public corporation who has yet to decide where to position his or her company on the CSR spectrum. I also think all thoughtful citizens should read this book. It matters a lot.

REFERENCES

Kelly, M. (2004). Conversations with the masters: Two of the great CEOs talk about the pressures of managing with values. Business Ethics, 18, 4-5.

Klebnikov, P. (2003, December 22). Coke's sinful world. Forbes, 86-92.

Sims, RR. (2003). Ethics and corporate social responsibility: Why giants fall. Westport, CT: Praeger.

Timmons, H. (2004, March 04). Shell's top executive forced to step down. The New York Times.

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Must Read

I found the book to be uplifting. It is nice to see this type of behavior being practiced. We have entered a time in our existence where we have to start thinking of how we operate as an industrialized country.

Chris Ortiz, author of 40+: Overtime Under Poor Leadership

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Honest and Transparent

The CEO of Seventh generation, Jeffrey Hollender, pens this book on responsible business. I came across this book because Seventh Generation recently decided to sell their wares through Target instead of Wal-Mart. Most small businesses would love to be courted by the Wal-Mart retailing giant but Jeffrey Hollender felt that Target agreed more with Seventh Generation. In this book, Jeffrey discusses his thoughts on running a responsible business.

The opening chapters were somewhat difficult to get through. Perhaps it just took several pages for me to get used to his prose?

The underlying message I felt was that having a socially responsible business is possible but will require a lot of work on everyone's part. Everyone is so connected to each other now. Perhaps an environmental conscious entrepreneur decides to open a chain of organic restaurants and ensures that farmers are paid a fair price. But what if the restaurant hires an exterminator that uses a toxin that ends up contaminating the soil for generations?

The idea is to have a closed-loop business model ... that leaves things in the same condition as when the company began. For example, think of the credo of camping sites. Moreover, the closed loop business model is more than just your business but includes your suppliers and customers. Specifically, there are hidden costs to disposal of things like electronics and the ubiquitous clear plastic bags. Of course, we every day consumers can throw them in the trash for someone else to deal with. But someone does deal with our trash and there are some real costs. The book gives a story of a putrid land in China where a lot of our electronic waste goes.

I have always loved companies that are transparent with their business models from a financial perspective. Transparency is about communicating to shareholders, consumers, and employees. Transparency is about being candid and introspective on dealings and reasoning for decisions.

There are a mixed bag of corporate stories mainly with Ben & Jerry Ice Cream (who is now part of Unilever) and Seventh Generation. There is of course some mention of Johnson and Johnson's Tylenol case and also on electronic companies like Hewlett Packard and Dell. There is some applause for British Petroleum for a decision to put no money to politics and Shell who compromised with Greenpeace on an issue in Africa.

Surprisingly this is a well thought out book that doesn't get hysterical. It's honest, transparent and I recommend it.

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Those who can sometimes teach...

Another leader of an iconic "green company", Jeffrey Hollender - founder and CEO of Seventh Generation (yes, I use their laundry detergent exclusively) discusses the challenges of running a business with high integrity and full disclosure. In particular, Hollender recounts Seventh Generation's stint as a publicly traded company and posits that public ownership inevitably leads to an erosion of core values by the pressures of the markets. He cites also the example of Ben and Jerry's take-over by Unilever. I personally believe that positive social change can be wrought through the public securities markets and that values driven investing is the most significant tool available.

I appreciate What Matters Most as a cautionary tale keeping me alert to some of the perils of my chosen approach (Socially Responsible Investing as a vehicle for change). I had the privilege of hearing Jeffrey Hollender speak at a Working Assets brown bag lunch lecture. He is a forceful presence and very inspiring in his forthrightness in answering questions probing the gray areas that an ethical company must struggle with.

P.S. A recent addition to my review: The Resources section at the back of the book is very well researched and thorough. It would be worth buying the book merely for that appendix.

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A Necessary Perspective

As a professor management who is interested in corporations acting more responsibly, I have just begun to use this book in my senior strategic management course. Hollender is a thoughtful and insightful proponent of socially responsible business. Each chapter covers a specific characteristics of SRB (accountability, transparency, sustainability, etc.).

He recognizes that running a company using these principles is not easy but definitely worth it.

He covers most of the pioneers in the field (Roddick, Cohen, Anderson, Chouinard) and their struggles to live their corporate lives in a responsbile way.

I highly recommend it.

Dale Fitzgibbons

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reviews: page 1, 2

For more than sixteen years, Jeffrey Hollender has presided over Seventh Generation, a world leader in manufacturing environmentally friendly, nontoxic household products. What Matters Most illuminates the successful practices of Seventh Generation-and many other pioneering companies around the world-to demonstrate the pragmatic aspects of a corporate strategy that hardwires social and environmental concerns into the company's culture, operating systems, and business relationships. It shows business leaders how to assess their own company's performance, adopt a socially responsible approach to doing business, and embark on a path of long-term growth. "Jeffrey Hollender...has shown that doing the right thing does pay off both in terms of building a brand that generates great customer loyalty and a business that has consistently generated superior growth." -Ben Cohen, Founder, Ben & Jerry's "What Matters Most stands out for its moderate and thoughtful analysis of a controversial issue.... Hollender is a voice of reason in today's important debate on corporate responsibility." -Soundview Speed Reviews

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