Jan 25, 2010

Multi-nationals to the rescue? Local author says 'yes' in new book

Book Review: The Surprising Solution
Author: Bruce Piasecki (Saratoga Springs, NY)
Reviewer: Robert Millis

“I now believe the best path to that common goal of a better world resides in the rising role of large firms to develop better products.”
- Bruce Piasecki

How does a corporation best position itself to succeed in the 21st century’s global realities and opportunities? The answer: by abandoning its traditional focus on certain age-old assumptions and instead taking steps to enhance the value of its so-called social brands, that’s how.

So goes the advice from Bruce Piasecki in his latest book The Surprising Solution – Creating Possibility in a Swift and Severe World. The author is principal of the AHC Group in Saratoga Springs, NY --- a consultancy with a stated mission of improving the energy, environmental and product appeal of very large & complex companies.

From Piasecki’s perch, there is a sea change occurring in the way the big fish of the global economy — the multinationals – view the world’s major social problems. Whereas in the past, such pressing issues as crime, poverty, environmental destruction or conflict were looked at as being inconvenient but risk-manageable impediments to corporate missions, enlightened leaders now accept the need to actually address those issues with corporate resources. Google’s pledge to “Do No Evil” isn’t enough, Piasecki would advise; now is the time to unleash the private sector’s muscle into the actual problem solving.

Why? Because it is in their economic interests, he argues. The new world order of commerce comes complete with what he calls a “a new trinity” of price, quality and social response. If a company can successfully build an image that is a mirrored reflection of the larger society’s (or market’s) value system, it will be rewarded with long running loyalty, which in turn rings the register. In a brand driven world, up pops this concept of Social Brand.

There is gold to be had in those far flung hills: an enterprise profits as it addresses social needs and thereby adds to that brand’s value. Indeed, this is not a philanthropic exercise with investments in the greater good being driven not by the community relations department but as an outcome of big-picture boardroom strategy retreats.

The How to this goal of value-creation is a clear, straight line: build it into one’s product strategy. After all, developing and delivering products is what corporate behemoths do the best, right? Piasecki argues that we should play to those strengths and get ‘er done. Sometimes the simplest answer causes the biggest surprise, thus the Surprising Solution offered here.

This new paradigm becomes labeled ‘Social Response Capitalism’: global good thru better products. Build products that reflect your company’s social values; while taking care to ensure that those values are accurate reflections of the larger community. The loop ends nicely with a promised carrot of $$$ rewards: despite the initial reluctance, such a culture shift will actually (eventually) ADD to the corporate bottom line.

The immediate reaction one has when working thru the logic and case studies (with such examples as the Toyota Motor Company) is to ask if this exercise is nothing more than an overly complex view of another rather simple concept: Supply and Demand. Is the Toyota success of the past few decades primarily due to the intricate social brand development strategy described in these pages or what is just good old fashioned demand forecasting?

Here, Mr. Piasecki straddles between such a basic marketplace reaction and an almost neo-supply side model that would make Mr. Freidman and Mr. Laffer proud. And yes, such a macro analysis can be applied to multinationals, given their size and scope: as the book points out, 51 of the top 100 world economies are corporations.

But there can be no denying that brands have value, or that an image of Social Good is a more positive currency than is Social Bad. The question becomes one of quantifying that value, especially in determining its effect and influence on the millions of micro buying decisions that take place every day. For there lies the final proof is in the pudding test.

This review is being written on a new notebook, purchased in recent weeks. Its manufacturer, HP, is a firm that apparently buys into the Social Response Capitalism model, as evidenced by it being highlighted in the Surprising Solution. I now find myself asking “how much did HP’s high marks on the social value report card play into my buying decision?”

In my case, I would conclude that HP's brand panache DID play a role, but that my own personal connection to (and image of) that particular brand is more related to the “two guys in a garage spark the PC revolution” view of HP that has been hard wired into me since the 80s than it is to anything else. But do I stand alone with such a reaction? Am I the norm? Or is that “two guys...” thing actually just another manifestation of social branding in its own right?

Going further, we then find the proverbial rub: quantification. Because this really comes down to a question of goodwill value (a phrase that is curiously missing from the book): how much is this social brand development contributing to the overall soft-asset value of any given organization? For while Mr. Piasecki argues that is the key component moving forward, it is but one single component. Any given corporate decision maker needs more than that to go on with: he needs to determine whether the $200 million in retained earnings gets plowed back into such options as expanding capacity, improving productivity or this new fangled concept of social brand value creation.

In other words, Mr Executive needs numbers. Granted, the vogue-ish VCI (Value Creation Index) has been making the rounds for a decade now, but it seems insufficient to meet the demands of your typical Chief Bean Counters at Fortune500ville. Drawing such lines in the sand – providing hard numbers on both the demand assumptions and on the social capital value of that $2000 HP notebook in front of me– is the hoped for next act of Mr Piasecki and his think tank colleagues.

Other equally fascinating questions percolate from a motivated reader of this book. What about what might be called the Half-Assed Solutions, or the WalMart-styled green-washing initiatives? We know that many such shortcuts to value will be explored, exploited and undertaken; so how do we differentiate the real and the noble from the fluff and the head fakes?

Another is the aspect of location: how it plays into the notion of social brand value. A McDonald’s might conclude that it could gain such traction by an initiative that places healthy salad bars in its restaurants. Such a move might, in fact, meet its goal in a developed nation filled with people fortunate enough to have the time and energy to be concerned about such issues, but it won’t in a third world nation where starving natives are lurking in the parking lot. There lies a need for a new application of the “think global, act local” proverb, possibly?

Many such topics arise from reading The Surprising Solution. But that is exactly what Mr. Piasecki was seeking, as shown on page five where he states his initial desire as being nothing more than “to start a conversation about the powers and responsibilities of multinational corporations.:

Mission accomplished. Join that conversation by picking up a copy.



David Levesque said...

Nice review Bob, good analysis. I buy all my products based on the price and green rep of the company. My new 500GB hard drive with Bamboo case and energy efficiency come to mind. I agree Bruce's ideas are basic marketing supply/demand/feedback/risk. But sometimes it takes someone from the outside looking in to state the obvious, especially to these large multinationals. I think these companies don't have all of the solutions, i.e. a very small % of Toyota's sales are pollution creating hybrids, but I do like the direction, engineering, social and profit that they are heading.

Anonymous said...

You must like to talk a lot because I notice a recurring theme of the word conversation. Talk talk. Talk talk. Talk talk.

Anonymous said...

Yeah right: let's sit back and wait for the big corporations to fix our problems.

Just look what a good job they did fixing our housing and investment 'problems'.

Is this guy that naive? Or is he just lining up consulting jobs with them?