By Oxfam India
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Arun Maira on What is Stopping Companies from Owning their Responsibility

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In an interview with Namit Agarwal, Arun Maira shares his original, insightful and refreshing views on what is holding back companies from being responsible, how criticism might break down engagement between civil society & the private sector and why corporations have to be active citizens.

Mr. Maira is an renowned author and management consultant. He is a former member of the Planning Commission of India and also the former India Chairman of the Boston Consulting Group.

Q: You have written extensively about the need for transforming the role that corporations play in society and about making fundamental shifts in that direction. Indian companies are seen to be making fundamental shifts across various business dimensions especially in technology and product innovation. However, we do not see such shifts in the area of business responsibility. What is stopping them from doing so?

I go back to Thomas Kuhn’s classic book The Structure of Scientific Revolutions, which states that a paradigm is a way of thinking, a way of evaluating, a way of judging. Every paradigm has its heroes and role models.

We look up to role models. We want learn from them. We want to be admired and respected like them. Our role models colour many of our values. For example, in the technology entrepreneurial space all over the world and in India too people have their role models such as Bill Gates, Steve Jobs and Mark Zuckerberg.

These ‘role models’ have created very innovative enterprises, wealth for themselves and their shareholders. Young people who are both their employees and their primary users admire them very much. What one is learning from these role models is about product innovation, and business models. They are also greatly admired for the wealth they have created for their shareholders and themselves. These are standards by which entrepreneurs judge themselves, i.e. how much wealth have I made and what is my valuation. This is the driving force for our tech entrepreneurs in India.

The business media naturally picks on this new, modern, exciting thing as compared to say what is happening in the agriculture and farm sector, which does not sound very modern to young people. Therefore, we read more stories in the present paradigm as to what is good for business coming out of such role models. More people are attracted. This creates a self-reinforcing loop.

Indian media lionises these people for these values and we are locked inside a paradigm. It is a closed tight system and to break out of this is not easy. People who break out of it early on are shunned and banished.

This inherent structure of a ‘paradigm’ is the problem that makes it difficult for people to make fundamental shifts in business responsibility.

There have been very strong people from business who began to have second thoughts about shifting the centre of our thinking on business responsibility. For example, Paul Polman of Unilever who has tried to break out of this paradigm. The others from within the paradigm now call him St. Paul.

Q: Engagement between civil society and companies on the issue of business responsibility spreads across a spectrum starting from activism on one-end and project partnerships on the other. What is the most effective way for civil society and companies to bring about change?

Criticizing someone and asking someone to think differently does serve a purpose, as it does not let them sleep easy. However, perversely, it also has a risk of making it easy for the ones being criticised to stay where they are and not change at all, if they think their critics are being unfair and are wrong.

By branding others as black and yourselves as white one puts at risk the possibility of people changing. This is happening much more on social media where the general discourse is that those on the other side are stupid, they are wrong, they are the nuisance, they are the problem and we need some other solution.

Criticism creates pain and no one enjoys the pain. One would want to feel the pain only if it is for creating something that really matters to him or her. It starts with an internal pain when one wants to change something about oneself. When someone has begun to change but continues being criticised he or she will feel needlessly harmed. This breaks down the engagement.

Similarly, companies that have begun the process of change might stop engaging with civil society if they feel needlessly harmed. For civil society to help the change process, it also has to help the people inside to make the change, by acknowledging their desire to change, and appreciating their difficulty in making change, and not just repeatedly demand that they make the change.

Q: Do you see companies and business leaders beginning to change? How does one identify such companies and what is a good strategy to engage with them?

At the recent World Economic Forum in Davos, Mark Zuckerberg talked about Facebook being redefined as a public service and not just a platform. The CEO of one of the largest investment firm – Blackrock, made a public announcement asking the top 500 global companies to become more responsible.

As more and more eminent people who are very respected by the business community are beginning to talk about breaking the paradigm, more people will start thinking and moving in that direction.

The bell curve or Gaussian curve is a good way to explain the changing paradigm in a social system. Somewhere within the bell curve there is a centre of gravity, with the majority of people around it. This is the center of the present paradigm. In the context of the present business responsibility paradigm, if one wants to move the paradigm towards the right, let’s say towards a broader view of business responsibility, such as the one Paul Polman advocates, one should make efforts to work with people who are closer to the right side of the curve and support them. More people within the middle bulge of the Bell curve are induced to follow. Thus, one is helping to shift the centre of gravity.

One should not worry about moving the people who are on the opposite side of the hump, those who are entrenched in their narrow views, because they will always take shelter behind the average i.e. the present paradigm. So, the strategy of change should be to find ‘some canaries in the mine who are making the right noises’, and to tweet along with them, more loudly, and attract others to follow. The leaders are the ones who give us hope. However, they by themselves may not be able to make this movement. Civil society has to think more strategically and bring them on board.

Q: We have seen a rise in CEO activism. Recently several CEOS in the US raised their voice against minority ban. In India, we have seen a very few CEOs speak publicly on rights-based issues. Have you come across cases where Indian CEOs have collectively raised their voice against violation of rights? Do they have a role to speak on civic space issues?

Let me start with an example. After the 2002 Gujarat riots, Anu Aga, the then Chairperson of CII Western region took a determined stand to say what had happened was wrong. She was promptly criticised by people from within CII stating that politics is none of their business. This triggered a chain of events that led to a consultation led by Anu Aga and R. Gopalakrishnan, the then president of All India Management Association (AIMA) with people from business, civil society and government. The objective of this consultation was to think together on the question – ‘When something is not going quite right in society whose responsibility is it?’

As a result of this discussion, a ‘ladder of business responsibility’ emerged. The very first step of this ladder was defined as a company’s responsibility towards its investors. The next step up the ladder is a company’s responsibility to its customers. At the third step on the ladder are the people who produce – employees and suppliers. In a way, these first three steps are within the company’s ‘business system’, or its value-chain. Suppliers supply, producers produce, customers pay, investors earn. Moving outside this system, onto the higher levels of the ladder, however, one enters a realm without quantifiable relationships and legal contracts. This is in a more rarefied atmosphere, where companies must perform their roles as citizens of societies, and not merely as producers of monetary value.

Companies are warned that it is not enough for them to satisfy their customers. They must also respect the needs of citizens or they will be denied their social license to operate.

Therefore, if a company is interested in its shareholders (as also its employees and customers) who are within the ambit of the business’ business, it must also understand the needs of society and other stakeholders, who are outside the ‘business of business is business’ boundary, and give them what they need or at least not damage them. This can happen through a conversation with them. This is a necessary part of running a sustainable business.

Subsequent to defining the various steps of the ladder, several questions emerged. If the character of society, the value of society, the broad governance of society is not okay, which citizen should speak up? If corporations have been defined as citizens with legal rights of citizens like every citizen, why should not corporations have a responsibility to speak up if the society of which it is a part does not seem right? Why should it be left to just small individual citizens to do this?

This led to defining corporate citizenship as citizenship of a society where a company has the responsibility to speak up when things are going wrong. A corporate brand that stands for fairness, compassion and responsibility will be strengthened if the company speaks up.

Corporations have far more weight to influence the rules of the game than average citizens. They most often use this weight to influence the rules of the game to make more money for the bottom step of the ladder i.e. creating value for the shareholders, rather than using their considerable weight for creating value for society at the top of the ladder.

This is a dilemma that a business leader will have while deciding to speak on rights-based issues – whether to cater for the lowest level of values at the bottom of the ladder or to the highest level of society’s values—for justice, dignity for all, and fairness in the rules of the game. The civic space is a space where every citizen has an equal right to life, to dignity, and a right to be heard. It is the private sector’s responsibility to maintain that space. Those who have the biggest voices should take the greatest responsibility for speaking up when that space is threatened.

You can follow Arun Mair on Twitter here.