Corporate Social Responsibility: Balancing the Risks and Rewards

Geary Sikich
Principal at Logical Management Systems
Geary Sikich is a Principal with Logical Management Systems, Corp., a
consulting and executive education firm with a focus on enterprise risk
management and issues analysis. Prior to founding Logical
Management Systems, Corp. in 1985 Geary held a number of senior
operational management positions in a variety of industry sectors.
Contact Information
219 922-7718
G.Sikich@att.net www.logicalmanagement.com
www.linkedin.com/in/gearysikich

Conundrum:
Corporate
Social
Responsibility
Balancing the
Risks and
Rewards

9 Critical Steps

Corporate Social Responsibility shows a preference for
a wider range of issues around the organization, with
new responsibilities, opportunities and risks (positive
and negative). This ties in with the stakeholder
approach to business.
The definition of Corporate Social Responsibility then
becomes “achieving business success through
managing responsibilities towards stakeholders”.
When we do this with a long term perspective we call it
“sustainability”.
CSR A Definition – A Perspective

CSR resides on three levels:
 Strategic – Mission, Vision, Values
 Operational – Goals Achievement
 Tactical – Objectives Achievement
The challenge is to define and assign responsibilities
to these levels; and the actions associated with those
responsibilities.
CSR Three Key Levels

Are you making things
fit; regardless of the
consequences?
You may be falling into
an “Activity Trap”
In Greek mythology Procrustes or "the stretcher [who hammers out the metal]", also known as Prokoptas or Damastes "subduer", was a
rogue smith and bandit from Attica who physically attacked people by stretching them or cutting off their legs, so as to force them to fit the
size of an iron bed. In general, when something is Procrustean, different lengths or sizes or properties are fitted to an arbitrary standard.
Management and the Activity Trap - George Odiorne

Sobering thoughts from two experts
“90% of the information used in organizations is internally
focused and only 10% is about the outside environment.
This is exactly backwards.”
—Peter Drucker
"We're living in a world where we need to completely
understand our environment and then look for anomalies,
look for change and focus on the change.“
—Admiral Mike Mullen, 17th Chair, Joint Chiefs of Staff

STRATEGY:
What are we committed to?
CONCEPT OF OPERATIONS:
How will we fulfill these commitments?
STRUCTURE:
Do we have an organization that serves our needs?
RESOURCE MANAGEMENT:
How will we manage our resources?
CORE COMPETENCIES:
What skills do we expect from our organization?
PRAGMATIC LEADERSHIP:
How will we optimize authority, decision-making,
workflow, information sharing?
Six Key Questions

Strategy sets the goals and objectives
for the enterprise.
Business continuity develops plans
that enable the enterprise to meet
its goals and objectives when
operating under abnormal
circumstances.
Risk management identifies the
threats, hazards, risks, vulnerabilities
that the enterprise faces and
develops mechanisms to buffer the
realization of these for the
enterprise.
Competitive intelligence focuses on
the recognition of change in the
operating environment that allows
strategy to maximize the attainment
of goals and objectives.
Strategy
Risk Mgt.
CI BC
Convergence
CSR

You may be surprised to
learn how complicated
the making of a simple
pencil really is.
(“I, Pencil” – 1958) http://youtu.be/IYO3tOqDISE
http://youtu.be/8N08Kkjq9gA
How many people actually know how to make a pencil?

We like simplicity
We like concrete
reasons
We like causes
We like things that make
sense (even if that sense
happens to be wrong).

Business Continuity Lifecycle
Normal
Business
Operations
Transition
Point 1
Response
Mitigation
Termination
Transition
Point 2
Reentry
Restoration
Resumption
Transition
Point 3
Resumption
Transition to
New Normal
Operations
Transition
Point 4
New
Normal
Business
Operations
Activation
Reactive Response
Chaos Control
Unplanned
Disruption
Planned
Disruption
Termination
Emergency Response
Crisis Management
Business Recovery
Systems/Information Recovery
Recovery Management
PR – Crisis Communications Management

 Establish PR and Communication Strategies
 Establish a Crisis Communications Team
 PR, Communications, Human Resources, Legal, etc.
 Develop/Implement Notification Process
 Identify, Train, Exercise Spokespeople
 Develop Response Materials in Advance
 Plan for a Variety of Scenarios
 Develop Standby Statements; Tailor to Fit Situation
CSR: PR and Communication Strategies

Complexity
Touchpoints
Responsiveness
Resource Constraints
It is much easier to
sell: “Look what I
did for you”
than
“Look what I
avoided for you.”
Managing Risk or Delusional Distraction?

CSR Strategy
Action
Right Action
No Action
Wrong Action
Sustainability
Positive Consequences
Negative Consequences
Execution Risk
Execution Risk
Transparent
Vulnerabilities?
Corporate Social Responsibility (CSR)
Variables?Outliers?Distorted Maps of Real Risks?Linear vs. Non-Linear Thinking

What We Think We Know
Unconfirmed, Uncollaborated
What We Know
Confirmed, Factual
What We Need to Know
Intelligence, Answers
What Do We Know that We Don’t Know
Speculative, Hypothetical
Uncertainty
Knowledge Assess – Don’t Assume, Predict, Speculate…
What We Don’t Know
Undiscovered, Unknown

Linking Objectives to Strategies to Risks to KRI’s
Profitability
Reduce Costs
Increase
Revenues
Strategic
Initiative # 4
Strategic
Initiative # 3
Strategic
Initiative # 2
Strategic
Initiative # 1
Potential
Risk
Potential
Risk
Potential
Risk
Potential
Risk
KRI
KRI
KRI
KRI

Low
High
Geo-Political
Global Workforce
Environmental
Competition
Economies
Infrastructure
Social Trends
Technology
Markets
Foreign Sources
Impact
Likelihood
Low
High
Very Rapid
Impact of the risk would
be evident in a month
Rapid
be evident in a quarter
Slow
be evident in a year
RISK VELOCITY
Emerging Risks – Likelihood, Impact & Velocity
Sovereign Debt
Alternatives
•Traditional risk assessments that prioritize risk on probability and impact are outpaced by
the speed at which risks move throughout the organization.
•While 70% of finance executives agree that risk velocity is a core consideration, only 11%
have introduced it into their risk assessments. Source: Deloitte; Risk Integration Strategy Council Research

Before you can make a decision…
You must reduce uncertainty – the future is not the same as the past
“Because we are asking
the wrong questions
precisely, we are getting
the wrong answers
precisely; and as a result
we are creating false
positives.”
Geary W. Sikich, 2003
Speculation
(What I do not know)
Projections
(What I think I know)
Known Facts
(What I know)
Seemingly disparate information must become useable.
Information has to be transformed into Intelligence

What’s missing from CSR?
Assumes that your current strategy will work

Collect
Collate
Analyze
Validate
Distribute
Control
Information, no matter how well managed, is not knowledge unless it can
be used. Geary W. Sikich, 2002
Information Management

Volatility and Disorder – Nonlinear Effects
Rigid thinking defaults to what
is not seen is not there and
what is not understood does
not exist.
Time and volatility – the more
time; the more events, the
more disorder.
Causal Opacity: with complex
systems (organizations)
interdependencies are severe –
isolating a causal relationship in
complex systems is impossible.

Step 1: Where Are We?
Develop an External Environment Profile
What are the key factors in our external environment and how
much can we control them?
Step 2: Where Are We?
Develop an Internal Environment Profile
Build detailed snapshots of your business activities as they are at
present.
Step 3: Where Are We Going?
Develop Assumptions about the Future External Environment
Catalog future influences systematically; know your key
challenges and threats.
12 Steps to get there

Step 4: Where Can We Go?
Develop a Capabilities Profile
What are our strengths and needs? How are we doing in our key
results and activities areas?
Step 5: Where Might We Go?
Develop Future Internal Environment Assumptions
Build assumptions, potentials, etc. Do not build predictions or
forecasts! Assess what the future business situation might look like.
Step 6: Where Do We Want to Go?
Develop Objectives
Create a pyramid of objectives; redefine your business; set
functional objectives.

Step 7: What Do We Have to Do?
Develop a Gap Analysis Profile
What will be the effect of new external forces? What assumptions
can we make about future changes to our environment?
Step 8: What Could We Do?
Opportunities and Problems
Act to fill the gaps. Conduct an opportunity-problem feasibility
analysis; risk analysis assessment; resource-requirements
assessment. Build action program proposals.
Step 9: What Should We Do?
Select Strategy and Program Objectives
Classify strategy and program objectives; make explicit
commitments; adjust objectives.

Step 10: How Can We Do It?
Implementation
Evaluate the impact of new programs.
Step 11: How Are We Doing?
Control
Monitor external environment. Analyze fiscal and physical
variances. Conduct an overall assessment.
Step 12: Change What’s not Working
Revise, Control, Remain Flexible
Revise strategy and program objectives as needed; revise explicit
commitments as needed; adjust objectives as needed.

It’s all about targeted flexibility, the art of
being forward thinking and resilient,
rather than reactive to short term trends
and events. We argue that the core of
sustainability (and CSR comes down to
the same) that is about the resilience of
you as an individual, as an organization
and as a social context.

Geary W. Sikich
Principal
Logical Management Systems, Corp.
www.logicalmanagement.com
gsikich@logicalmanagement.com
g.sikich@att.net
+1 (219) 922-7718
“If you keep doing what you’ve
always done – you’ll keep getting
what you’ve always gotten.”

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THANK YOU
?
219 922-7718
G.Sikich@att.net
www.logicalmanagement.com
www.linkedin.com/in/gearysikich

Corporate Social Responsibility: Balancing the Risks and Rewards

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