IBM is back in its stride. Once the ‘icon’ company symbolising socially responsible American-led international capitalism, billion dollar losses in the early 1990s forced a fundamental rethink – not just job losses, budget cuts and regrouping on global business lines (rather than national operating companies, the bedrock of traditional community relations); but also finding a new way to be a good corporate citizen in the midst of the ICT revolution of new information and communication technologies.
Since its early days, IBM had prided itself on adopting a caring approach as part of corporate culture. Indeed in Britain, the company is arguably the founder of modern CCI, having set up Action Resource Centre, the UK’s first dedicated secondment broker fully a decade before Business in the Community began. However the move from corporate philanthropy to strategic social investment and holistic corporate citizenship has happened in the last decade – a shift partly prompted by the ‘losses’ shock.
Corporate history
IBM’s business is manufacturing advanced information technologies, including computer systems, software, networking systems, storage devices and microelectronics, and providing related services. Today it employs over 300,000 staff around the world and has operations in more than 160 countries, with manufacturing and research centres in 20 countries. IBM began life in 1911 as the Computing-Tabulating-Recording Company; the real driving force, Thomas Watson, joined in 1914 as general manager, gaining complete control in 1924 when he renamed the firm, International Business Machines Corporation. Growth during the 1930s was rapid, thanks to the highly disciplined and competitive sales force. The move to electronic data processing systems from punch-card tabulators, typewriters and electromechanical calculators did not begin in earnest until Watson’s son became president in 1952. By the 1960s, IBM was producing 70% of the world’s computer output, primarily large and costly mainframes.
With profits came generosity: during the decade ending in 1993, IBM’s worldwide contributions were valued at over $1.5 billion; in 1990 alone, cash contributions totalled $180 million, not counting in-kind employee volunteerism or loaned executives. Over 200 people staffed community relations worldwide.
But IBM’s sheer size and dominance left it slow to respond to the arrival of small scale personal computers and by the early 1990s, the mighty corporation had plunged into billion dollar losses. In 1999, declared worldwide contributions had reduced to $123 million, with 70% of the total delivered through specialists’ time, software and hardware. However this shift to contributing IBM core expertise was the central plank of the new community investment strategy. Only a small part is off-the-shelf items unlike, say, Microsoft, where 76% of the reported total comprises software. (Making fair comparisons is increasingly difficult, given that US-based companies in particular tend to use market value for their large in-kind contributions – notably IT and pharmaceutical – rather than the actual cost to the company, as recommended by the London Benchmarking Group, the Per Cent Club and others striving for consistent valuation methodologies.)
Global strategy
The hallmarks of IBM’s approach today are ‘technology and talent’, not chequebook philanthropy: how can we harness the power of technology to address our social problems? This is a more holistic approach than addressing the narrow ‘digital divide’ question of groups in danger of being left behind. IBM’s focus is on education – surveys show this is top priority for its customers, shareholders and employees on both sides of the Atlantic. The programme focuses on a few major projects, with local and regional implementation of global themes. Above all, CSR is a core element of corporate strategy.
This new global strategy started in 1994, led by Stanley Litow, vice president for corporate community relations, recruited by Lou Gerstner from a senior role with New York City’s Board of Education. His strategy is based on three pillars:
• social investment – working in partnership with organisations engaged in strategic change;
• technology innovation – using IBM’s research and consulting skills to develop new technologies and applications – not simply implementing existing solutions;
• priority issues for business and society – including student achievement in schools, workforce skills for jobs in the information society, and using IT to promote greater access to resources.
Each project must have a plan, with clear outcomes for both sides. Partners must commit to sustain the project beyond the development phase. The new approach is built on a centralised effort to develop ‘global’ programmes, both overall themes and specific technology projects that can be implemented regionally and locally. One result is smaller community relations teams and budgets outside the corporate centre. Another is closer working with business units, especially the public sector. This remains a challenge – such a model for pro-active corporate involvement in the social agenda is not yet the norm outside the UK and US.
The first fruit of this new strategy was the Reinventing Education programme which has now reached more than 10 million school children – applying IT to modernise educational systems by tackling systemic problems at their roots (see flagship projects). In the EMEA region (Europe, Middle East & Africa) first off was a pan-European programme on structural unemployment, working with the European Commission. This was followed by Reinventing Education partnerships with three governments – Italy, Ireland and UK. In 2000, IBM hosted the second conference of European Schoolnet, an initiative of 23 ministries of education to accelerate the integration of ICTs into Europe’s school systems. This is being followed with the first European eLearning Summit on May 10-11 which IBM has organised with industry partners across Europe and the European Commission. (http://www.ibmweblectureservices.com/eu/elearningsummit)
Celia Moore manages the EMEA, programme, based in London but part of the European marketing function headquartered in Paris. The major European countries have dedicated community relations managers who work with her and the US-based HQ team.
Measurement
IBM has embraced the reality that CSR – like other activities such as advertising, research or training – has to be measurable. The flagship Reinventing Education programme is being independently evaluated in the US by the Center for Children and Technology, looking at the long term beneficial impact in education. This is also identifying common success factors between the individual partnerships, to accelerate wider take-up. But measurement must go beyond social benefit to measure business impact too. IBM has identified the following indicators:
• New products and service development: 16 new patents arise from IBM Research’s involvement in Community Relations programmes – such as Digital Library software from the Hermitage project;
• New business development: products and services developed from the Reinventing Education programme have been incorporated into business offerings;
• Human resources: addressing the IT labour shortage – programmes focus on institutional change and on changing students’ perceptions of the industry and the company;
• communication: flagship projects garner extensive national coverage when launched, and community relations now accounts for around a quarter of IBM’s local coverage in the US;
• Socially responsible investment: making the case for IBM stock being included.
Today the market value of companies such as IBM far exceeds their physical assets; much is based on intangible assets, like reputation, brand equity, and knowledge. Last year, the Financial Times estimated IBM’s reputational capital at $53 billion, third only behind Coca-Cola and Microsoft. If only a small portion is based on corporate citizenship, that is a lot of payback. Today IBM is winning external recognition again – the world’s most socially responsible company, according to Fortune magazine; first among Business Ethics magazine’s 100 Best Corporate Citizens; winner of two Ron Brown awards for corporate leadership, to mention just a few.
Looking ahead
So IBM has come through its early 1990s difficulties, with a more focused, effective programme. In the UK, IBM now has a smaller team, and community relations has recently not had a high profile externally. This is a key area the new UK community relations manager will address when appointed in the summer. Looking globally, IBM’s very welcome commitment to rigorous evaluation of major programmes such as Reinventing Education needs to be sustained until the long term impact can show through, and be extended internationally.
IBM has a record of supporting wider measurement projects too: it was a founder member of the London Benchmarking Group in 1994 and recently took part in the new Boston College/ProbusBNW transatlantic benchmarking study (in which it was placed in Band 1 for four of the seven benchmark categories: strategy, activities, outcomes and selected programmes, and in band 1 / 2 for management, communications and measurement). IBM was a founder member of CSR Europe and sits on its board. It is in a strong, possibly unique position to bring together latest thinking on both sides of the Atlantic about measuring CCI impact. The time is surely ripe for IBM to lead international efforts to raise the demonstrable effectiveness of corporate community engagement.
executive biography
Celia Moore
manager of corporate community relations, IBM Europe, Middle East, Africa
Celia joined IBM in 1995 to implement its new pan-European strategy. Before joining IBM she had extensive experience of engaging the corporate sector in social issues from various roles in the voluntary sector. In her early career at Apex Trust she worked with companies on employing white collar ex-offenders, and involved them in running careers advice sessions inside junvenile offender institutions and residential children’s homes. From there she went on to specialise in developing preventative services for young people at a social services policy unit in a London borough and
the Intermediate Treatment Fund.
In 1988 Celia joined Action Resource Centre, the agency specialising in business involvement in the community. As operations director and deputy chief executive, she was involved in ARC’s expansion into all UK regions and its focus on the development of employee community involvement programmes with companies including Marks & Spencer and Nationwide.