BITC sets the standard for principled money-making

September 25, 2006

The best businesses make their own destiny. They don’t follow trends, they create them. They innovate faster, understand their customers better, adapt to market changes quicker. The question now has become which of them will adapt best to the growing demands that corporate responsibility applies to how they make their money, not just whether they give some of it away.

Conservative Party leader David Cameron drew attention to WH Smith’s promotions for unhealthy chocolate, and to BHS selling sexualised clothes to children. Prime Minister Tony Blair announced that he would consider banning the advertising of fast food to children to aim to tackle obesity. These have been just the latest and highest profile examples of how the terms of the debate have shifted into places where the answers aren’t easy, and getting it wrong can create a whole lot of trouble.

Business in the Community’s Marketplace Taskforce is publishing its Marketplace Principles, following a period of extended consultation and testing over the last nine months, aiming to provide a framework to show how businesses can get back onto the front foot in some of these debates.

The principles cover two distinct areas – top level aspirations that companies should be proactively seeking to achieve in how they operate in the marketplace, and a set of management behaviours that make it most likely that companies will be successful in achieving their objectives.

The aspirations come under four broad themes.

  1. CUSTOMERS: The first of these covers the relationship with the customer. It covers some of the well-worn traditional ground of keeping your promises, being honest, legal, decent and truthful in your advertising. But it also includes other areas, such as responding to the needs of vulnerable customers who may be hidden from sight but who may be adversely affected either by the product or service, or conversely by an interruption in supply of the product or service. The heated debate around direct marketing to children is a classic example of the sensitivities in this area. Does, for instance, Walt Disney’s proposed mobile phone for children represent a welcome entry of a trusted, reassuring brand into providing a product that will provide valuable safeguards? Or is it taking the company onto dangerous ground where it could be accused of exploiting children and potentially putting them at risk? Everyone has an opinion – including the parents to whom Disney is aiming to sell.
  2. SUPPLIERS: The second theme covers responsibility in the supply chain. In some cases, this is well trod territory. There are more codes and standards out there governing how you deal with instances of child or forced labour, unpaid overtime etc. than one knows what to do with. But fundamental challenges remain. It is all very well to criticise the “high cost of low price” – the impact that highly competitive and powerful retailers can have in forcing prices down. It is less obvious, other than committing commercial suicide, what should be done about it. Where does the line exist between treating suppliers fairly and letting them get away with treating you as a soft touch at the expense of your margins? And if you tread that line in isolation, will that render you uncompetitive to the detriment of yourself, your staff and – ultimately – those self-same suppliers?
  3. PRODUCTS: The third theme focuses on the inherent impact of the product, either when used as directed or the potential for misuse of the product. We all know about the struggle of the motor industry with the implications of climate change. The sector has come through its long period of denial and resistance, and is now investing billions of dollars in seeking the next generation technology that will keep the product viable into the future. Those companies that took the challenge most seriously first, such as Toyota, are now enjoying the edge and watching the giants of yesteryear struggle as energy prices head northwards.
  4. RULES: The fourth and final theme covers the rules of the marketplace. There is no such thing as a free market – how market forces work is shaped by the state of regulation. As such, businesses are legitimate stakeholders of legislators and lobby in order to improve their ability to operate. This has recently become a higher profile issue within corporate responsibility and companies are expected to have a degree of openness about the lobbying positions they are taking, and consistency between these and their values and CSR statements. In addition, there is high interest in how businesses behave when they operate in environments where some fairly basic rules are either absent or routinely not enforced.

The management behaviours, part of the principles, aims to identify what makes it more likely that you will succeed. Gone are the days when people could talk about CSR as something that was easy and automatic. So long as you did the right thing, the benefits would follow in the form of goodwill and cash on the bottom line. As with every other aspect of managing the business, there are many ways to go wrong.

Interestingly, when Business in the Community carried out a series of detailed case studies of companies that have been for some time demonstrable leaders in a number of marketplace areas, it found that all the management behaviours but one were present in all of the case studies. And the one that wasn’t present was present in none of them. It was a much more consistent picture than had been expected. The amended result can now truly be said to be a picture of how leadership companies establish their position.

The Marketplace Principles is not a code of minimum standards that companies are asked to formally sign up to. Rather, it is a qualitative framework – something that businesses can use to challenge complacent assumptions about how good they already are in the face of issues and dilemmas that they hope will go away of their own accord.

Mallen Baker is a developement director of Business in the Community He is currently responsible for developing BITC’s approach to marketplace issues, which includes how companies manage issues that arise around their core products and services.He initiated the Business Impact Review Group – the group of 20 companies who developed a common approach to CSR reporting, and was responsible for the work of the Business Impact Taskforce which produced the landmark Winning with Integrity report.