'Outbehave' Leads to 'Outperform'

We live in a world of parity, adrift in a sea of sameness. Every bank has free checking, every doctor is dedicated and almost all lawyers are smart. Whatever your product or service, somebody somewhere will find a way to do it faster and cheaper. In an age when it’s harder than ever to stand out, smart companies are turning to socially responsible behavior as a powerful differentiator.

In his bestselling book How: Why How We Do Anything Means Everything … in Business (and in Life), management guru Dov Seidman argues companies that “outbehave” their competitors ethically tend to outperform them financially.

Corporate social responsibility (CSR) can do more than elevate a brand. It can be used to enhance and defend an organization’s reputation. In a world where disgruntled employees and unhappy customers can trash you globally in the time it takes to dash off a nasty blog entry or upload a staged video, good corporate behavior can be a great immunizer.

“We can’t control our stories,” Seidman says. “We can control how we live our lives.”

Refreshing Change

This year, for the first time in nearly a quarter-century, Pepsi spent Super Bowl Sunday on the sidelines. Instead, the company put $20 million into a CSR campaign called The Pepsi Refresh Project, whereby it provides 32 cash grants each month to individuals and small organizations with good ideas for improving their local communities.

The execution has been brilliant. Because the grants are awarded democratically, people have to promote their ideas and generate support for them. Naturally, social media comes into play with people asking friends to ask friends to go to Pepsi’s site, learn what the program is all about, and vote for their idea. Consumers who would never think about visiting Pepsi’s website are seeing the program up close – and likely walking away impressed with Pepsi’s contribution to the community.

Tell Us About It

Even a great CSR program may not help an organization if no one knows about it. Dell offers a great example.

Out of nowhere, an activist group called the Silicon Valley Toxic Coalition attacked Dell for an alleged lack of environmental stewardship. It became a major PR issue, despite the fact that Dell had an established program that put many of its old computers into classrooms instead of landfills. No one knew about it.

Eventually, Dell formed a sustainability department, put a high-level exec in charge of it, and actively engaged the environmental and CSR communities. Dell even worked with competitors to establish industrywide environmental standards.

Lesson learned: If you’re going to do good, you have to let people know.

In the end, good behavior well communicated can enhance good performance. One works with the other, and both are good for business.

Three Must-Haves

You don’t have to be a Fortune 500 firm to make CSR work for your company. At any size or scale, a successful program needs these three qualities:

Strategic Alignment
Think of Dell and its classroom donation program, or locally, The Roasterie and its commitment to fair wages for coffee bean farmers. What sort of cause makes sense for your company? For your customers?

Sustainability
Not the green kind. The CSR program should be able to sustain itself year after year, being repeated and refreshed over time and cycles. It should become a natural part of the company’s culture.

Reward
Find a program that offers at least the potential for reward. It can be both the satisfaction that comes from doing the right thing and the financial reward that comes from the support of your customers because you have effectively (and emotionally) differentiated your brand.