Previous CSR cannot respond to the era of VUCA
A situation where various things are uncertain, it is difficult to predict what will happen, and their effects unfold in unexpected forms is now spreading on a global scale. Such a situation is called VUCA.
As background, there are a variety of factors connected in complicated ways, including abnormal weather due to climate change, pandemics such as that caused by COVID-19, the rapid progress of technology such as AI, political conflicts, and economic differences. Companies that are unable to respond to such a state as VUCA will be weeded out.
So, is it necessary to stretch an antenna to grasp all things and quickly respond to changes? We certainly need to respond to various changes, but if we are swayed by those changes, we are putting the cart before the horse.
In fact, companies that jump at things in the public eye now, such as data driven, big data, AI, and DX, and merely move around in confusion being in line with the surrounding companies, are often seen. Such companies produce results in the short term, but it is difficult for those companies to grow in the long term.
It is rather important to clarify for what purpose a company exists and carries out its activities.
Of course, a company cannot continue to exist unless it makes profits. For that purpose, the company needs to look for employees, build relations with business connections, shareholders, and financial institutions, and increase its number of customers.
However, in the era of VUCA, will those stakeholders follow companies that only seek their own profits?
The situation is VUCA for workers, consumers, financial institutions, and all other stakeholders. It is important to trust each other when living together in a situation where what will happen is unknown.
It has been considered that Corporate Social Responsibility (CSR) is important. As part of CSR, for example, companies vigorously gave support for cultural and other activities. I think that enriched society and civic life.
But for companies, CSR is to return money to society from their surplus profits and that, in short, companies may have considered CSR to be a kind of burden that incurs costs. The choice of whether or not to return money to society depends on a company’s thinking, and it is natural to stop giving support if a company has no money to spare.
In other words, companies talk about CSR but in fact do not warrant certainty or continuance. It can be said that companies committed themselves to contributing to society with an arrogant attitude, as they had money to spare. Can such CSR produce real trust?
What is needed for a company to grow and develop while it builds relations of mutual trust with its stakeholders and shows its reason for being in society? One answer that attracts public attention is a company’s thinking regarding Purpose.
Purpose represents the meaning of existence of a company
Standardized views that represent appropriately thinking about Purpose in Japanese language have not actually been established. The expression “purpose for existence” may be closest to it.
That is, such thinking means that a company should clarify the purpose for which it exists as a corporation and will continue its business activity to realize that purpose.
For example, a company that is an outdoor products maker originated in the U.S. and is developing globally says that it does not exist for the purpose of selling outdoor products.
That company says that its purpose is to save the earth and that it provides outdoor products of good quality as part of the purpose.
For another example, there is a company that runs hamburg steak restaurants in Shizuoka. Its CEO says that their purpose is not to sell hamburg steaks.
He says that their purpose is to provide restoration – to have people recover by healing their tired bodies – and to release people from fatigue and stress, and that the company provides hamburg steaks for these purposes. Those restaurants are very popular, and the company has developed to run more than thirty restaurants in Shizuoka.
In fact, the number of such companies has greatly increased. The point is that the companies first have a Purpose of what they wish to do for society and that they provide products and services as means for attaining the Purpose.
In other words, the companies do not just contribute part of their profits to society, as in the previous CSR, but their main business itself is CSR.
Naturally, the companies do not stop contributing to society if their main business becomes dull. In fact, continuing contribution to society grows their main business.
It may be seen as an expedient of making profit.
If the top of a company such as a president or a CEO has a firm Purpose and transmits his/her thoughts and real intention to stakeholders and society, a clear difference will be created between that company and companies not doing so.
First, employees will change. The salesclerks of a company that offers restoration serve customers in a different way from those of a company that sells hamburg steaks to make profits. It applies not only to salesclerks.
Working with social significance and identity motivates the employees of all departments and raises those employees’ sense of loyalty. This spreads to customers, leading to popularity.
This can happen in all types of industries and in fact may create consumers who always buy or decide to buy products of the same brand and even create extremely enthusiastic fans.
The stagnation of economic activities due to the COVID-19 pandemic caused investors to sell shares and change them into cash. However, the shares of companies that transmit their clear Purpose are hard to sell, and their prices are stable and there are even data showing steadily growing curves of the prices.
In other words, a company that transmits its firm Purpose produces trust among its stakeholders if they sympathize with it.
Conversely, a type of company that uses a pretended Purpose as an expedient, as it is called Purpose Washing, will greatly damage stakeholders’ trust. It can be said to be fatal in the era of VUCA.
Cultivating our sense of identity is important
The word Purpose has not been used until recent years, but companies that have the thinking of philosophy have existed for some time.
For example, why has Toyota, which started as a loom maker, grown into the top car maker in the world? Why has Sony, which was a sound manufacturer, developed into a standard bearer in the entertainment industry? It is because their existence is based on a firm philosophy.
Accordingly, even when the history of internal combustion engines using fossil fuel is about to end, Toyota will continue its business activity in a new field. However much the form of entertainment changes in any age, Sony will continue to thrill and excite people in that age.
Even in the era of VUCA, such companies do not move around or obstinately persist in what they have done, but can flexibly respond to the era based on a philosophy, as their pivot, which clearly represents how they are concerned with society.
The powers to transmit and communicate as a company, including the top person in the company, are important to getting stakeholders and society to sympathize with its Purpose.
In the present age, everyone has become able to transmit his/her thoughts and ideas easily thanks to the development of SNS. Anyone can access such information. The importance of making good use of such techniques will increase in the future.
This applies not only to business activity but also to each of us.
We can easily transmit information, so what we transmit is important. It is most important for each of us to have our own thoughts and ideas based on our culture and experience. As with companies, we cannot gain trust or sympathy through a pretended Purpose, or purpose washing.
It is important to improve our own thinking so that we will not be swayed by data flood, and we can develop the ability to analyze from a broad point of view and make a judgement.
Such a sense of identity will support a flexible and steady way of life in a real sense.
* The information contained herein is current as of October 2022.
* The contents of articles on Meiji.net are based on the personal ideas and opinions of the author and do not indicate the official opinion of Meiji University.
* I work to achieve SDGs related to the educational and research themes that I am currently engaged in.
Information noted in the articles and videos, such as positions and affiliations, are current at the time of production.