CCBYZ – 7.09 The NAKED Corporation: How the Age of Transparency… Part 9 [Audiobook] (w/commentary)

Foreign welcome back to another episode of the corporate Cowboys podcast as we continue season seven now episode nine as we continue reading into the naked Corporation how the age of transparency will revolutionize business by Don Tapscott and David T Cole this was published in 2002 by Free Press and

We were on chapter nine so I’ll Dive Right In just a heads up I’ll be reading to you my name is Alex I’ll be your host for the next however long it takes for us to read this chapter together I have not pre-read it but be aware that I’ll be providing

Commentary as we go along as is only right by a corporate cowboy this chapter is titled harnessing the power harnessing the power in June 1998 Royal Caribbean Cruise Lines rccl a Liberian corporation headquartered in Miami pleaded guilty to conspiracy and obstruction of justice damn this chapter started hot

I won’t be interrupting I won’t be interrupting too hard too much uh too frequently right um I’ll I’ll read through I’ll I’ll let the uh the energy build some before I interject some I don’t know something witty continuing the U.S courts forced the company to pay nine million dollars in

Fines after a coast guard investigation proved it had intentionally and repeatedly dumped massive volumes of waste oil into the ocean fouling the same Waters whose pristine Purity it’s touted in tourist brochures how uh that’s not even ironic that’s just [ __ ] rccl had the capability to prevent this Fiasco it had installed special devices

On its cruise ships to separate waste oil from water and then filter the water for a safe disposal in the ocean while storing Mucky used up oil for legal disposal in Port but the cruise lines operations Personnel had systematically bypassed the separation devices with homemade piping and poured the untreated

Oil water mix directly into the ocean damn that’s [ __ ] the company promised such actions would never happen again Jack Williams newly appointed presidents issued a statement saying we deeply regret our role in polluting the marine environment and we are particularly sorry for the attempt to conceal that pollution these acts are

Inexcusable they were wrong and we accept full responsibility for these violations yeah I think they’re sorry they got [ __ ] caught but astonishingly only a month later another rccl ship was found dumping oily waste overboard within a year the company again pleaded guilty this time to 23 counts of illegally polluting the

Ocean and tampering with evidence on ships operating in the Caribbean off the ports of New York and Miami and in Alaskan Waters it paid another 18 million dollars in fines rccl also admitted to regularly dumping other pollutants including chemicals from photo processing dry cleaning and printing into the sea

Williams blamed the problems on a group quote a group of employees who knowingly violated environmental laws and our own company policy close quote he added quote the majority of these violations reflect a lapse in our enforcement efforts not a lapse in our corporate conscience or our commitments to

Protecting the ocean close quote the courts disagreed with its president’s claim that the company’s hands were clean and its employees were to blame it found the violations so systemic repetitive and long-standing that the criminal conduct amounted to a routine business practice for rccl DM the court

The court went in with no lube dog the firm’s own compensation policies effectively LED senior employees to pollute the ocean running the oil water separators and disposing of oil waste in ports cost ships hundreds of thousands of dollars a year ships officers bonuses depended on keeping costs down so those who wanted

To meet their performance targets be seen to care about their jobs and receive their year-end payouts had little choice but to dump oil into the ocean oh Cry me a [ __ ] oily River [ __ ] considering the rccl story shows that one thing it’s one thing to adopt a set

Of values and quite another to build a company that lives by them for the new Integrity to take root requires leadership stewardship and specific work to ensure that values-driven outcomes are embedded in every employee’s performance plan the new Integrity must be as much a part of the organization as human resources Finance information

Technology or sales and marketing these corporate functions may seem natural today but some had to fight their way to gain legitimacy Authority accountabilities resources and seats at the executive table in this chapter we discuss the Practical how to’s of giving the new Integrity a meaningful seat and in doing so build an

Open Enterprise throughout we will refer to a two-part or Yin and Yang in quotes approach to values-based Performance the yin that’s the female principle in Chinese philosophy is productive sustainable stakeholder relationships the Yang is competitive sustainable business practices Integrity requires trust-based engaged relationships based on transparency with a broad portfolio with

Stakeholders it also means rethinking products services and business operations to maximize Financial social and environmental objectives motivation will leadership planning and hard work will get you there the next subheading here minimal versus maximal transparency firms or more specifically firms as various operations work at any of three levels of transparency and they’re drawn

From work led by a colleague David wheeler see figure 9.1 I’ll briefly describe for you 9.1 it’s toward the bottom of the page here 9.1 is a triangle Illuminati confirmed I don’t [ __ ] know it’s titled the figure is titled three value levels of the firm right and there’s three levels to this

Triangle it’s a it’s a pyramid of sorts right now there is a scale there is a scale on the left hand side that goes up alongside the triangle the arrows go both ways though apparently it’s a sliding scale right so the higher up you go the lower or the lower you go right

So the towards the lower end of the scale it’s labeled do minimum harm and it gives an example of avoiding destroying value right so you avoid destroying value on the upper end of the scale it’s labeled do maximum good right and the example for it is create maximum value that makes sense

Now the three levels of this pyramid are labeled as such level one is at the very bottom right the bottom level it’s compliance culture and it briefly describes it as preserves value consistent with laws and norms and seeks to avoid the unacceptable destruction of value that’s economic social or

Ecological value right level two the one in the middle it’s labeled relationship management culture and briefly just in brief is the value created but typically traded off usually after the demands of investors are satisfied and then level three the very top the tippy top is open Enterprise organization culture and that’s briefly

It maximizes the creation of value simultaneously in economic social and ecological terms very nice very nice impressive let’s see uh let’s see your pyramid let’s see your pyramid impressive All right there are a couple of points here level one oh well I guess I should have just kept reading instead of trying to describe it to you because it it uh actually goes into the three points with uh three bullets here and I’ll go ahead and just read them

Level one firms focus on compliance they obey laws and follow customary Norms of behavior in society such firms May maximize business performance but they only minimize negative externalities when they must or when no effort is required compliance focused firms view most transactions as win lose draw

Encounters in which their job is to seek the maximum Advantage for the lowest cost possible cost the lowest possible cost and then in parentheses it says here secret law Breakers who pretend to be level one may really be level minus one okay the fact that you got to throw that [ __ ] into parentheses

Ought to let the reader know you know how to be a [ __ ] billboard welcome to corporate dog welcome to [ __ ] corporate level two firms comply with the law oh Point onto the second bullet level two firms comply with the law but today go further when it comes to relationship

Management they invest in strengthening relationships with close and imports and stakeholders weather customers employees communities or business partners is chewing the hard win loss mindset of level one relationship managers adopt a paternalistic trust us we know what’s good for you stance that’s funny sounds like the government they apply trade-off analysis to

Difficult decisions they typically provide business partners with rewards for good behavior engage in some philanthropy and encourage quotes Communications strategies for all nice the third bullet here level three open Enterprises they see transparency stakeholder relationships and sustainability as sources of competitive Advantage they redefine their products services and business processes to

Strengthen long-term stakeholder relationships and to achieve alignment with changing social and environmental goals they apply transparency and engagement to stakeholder encounters conduct genuine dialogue in an atmosphere of equity and hold themselves accountable for commitments faced with difficult decisions they seek innovative solutions that maximize value for all

Parties that that my fellow listener my fellow reader that is where corporate Cowboys operate that is where corporate Cowboys should strive to live in level three the [ __ ] top of the pyramid we ought to be the cream of the crop when it comes to business operation when it comes to

Facilitating Innovation and creativity when it comes to creating value you want to talk about creating value in all spheres of Our Lives that’s where corporate cowboys live that’s where we thrive continuing no firm is exclusive at any one of these levels in all operations many function

Vigorously in all three in the mid 1990s Chiquita was at best merely legal in its Labor Relations and political contributions while actively managing a relationship with the rainforest Action Network on some environmental issues when the company passed through chapter 11 in 2001 it operated with creditors shareholders and employees somewhere

Between levels two and three now it is an open Enterprise when it manages to high levels of performance transparency and engagement on labor standards and environmental care in this chapter we treat the open Enterprise as the Target and describe the features of such sustainably competitive firms

Oh maybe it’s the way I read it but like Target to me came off as like you know like that’s our well it could come off about two ways right it could come off as being the objective or being the target you feel me I won’t dwell too much on the ideology

Behind being a corporate Cowboy if you are truly interested go listen to the podcast corporate Cowboys podcast season one episode one start from there Shameless plug but hey this is for free so go the next subtitle here is what are we managing here question mark That’s included what are we managing here

The new Integrity needs to be managed from the top board level governance officer level leadership and so on a number of companies have already done this some have mandated a senior executive like the VP of corporate Affairs human resources or strategy to be responsible for a stakeholder slash sustainability objectives others have

Gone so far as to create full-time positions such as the corporate responsibility officer or VP of sustainability is this a passing fad like the chief knowledge officers who proliferated during the 1990s in response to theories of organizational learning obviously firms can and should exhibit Integrity without a full-time executive but to

Move the broader issues to the center of the corporate agenda requires at least a part-time if not a full-time executive job assignment what is the case for a broader mandate Beyond basic integrity consider where executive mandates come from every big company has a Chief Financial Officer and VP of Human Resources HR

Most people roughly agree on the scope of these jobs this is because we see both money and people as key resources which need careful stewardship the case for a CFO is easy someone has to keep track of the cash and comply with Myriad regulations from paying taxes to shareholder reporting Finance pays for

Itself by minimizing taxes and getting managers to cut costs similarly HR performs mundane administrative tasks like hiring and benefits HR delivers added value when it ensures that you have the right people that thorny Personnel issues are solved and that Performance Management helps keep employees focused on what counts simply stated Corporate Finance stewards

A firm’s money while H.R stewards its people what does quotes corporate Integrity steward can this quote what be as intuitively and distinctively critical to firm performance as money and people the case is becoming clear simply stated the quote corporate Integrity function stewards two sets of strategic resources stakeholder relationships that’s the yin

And sustainable business practices that’s the yang are these resources intuitively distinctive and critical to business performance this has already happened in many firms and then there’s a block quote here that says Executive Vice President stakeholder relations Executive Vice President of stakeholder relations I don’t know there’s a dash there Executive Vice President

Stakeholder relations yeah I would imagine that of stakeholder relations I wonder why they got to include the dash like it’s a [ __ ] like it’s hyphenated like it’s special anyways this executive VP Lisa Kingo is a member of the six-person executive management committee at Novo Nordisk a 3.5 billion dollar denmark-based

Pharmaceutical firm her mandate is a stakeholder engagement which enables us to stay attuned to emerging issues and concerns and B the objective to balance social environmental and economic concerns in every business decision which translates into both corporate and individual targets Kingo Nets this all out as licensed to operate a key

Parameter of pharmaceutical companies these days that’s why trust and transparency are so important what about the job title many in current use seem vague like the EVP of corporate Affairs or narrow the EVP of stakeholder relations coining the Chief Financial Officer moniker we propose a new formulation that may be more On Target

The business Integrity officer the bio the term connotes commitments to values and principles effective risk management and governance stature all vital to this mandate it also has an appealing acronym the balance of this chapter describes the mechanics of the bio mandate all right the next subheading here 10 characteristics of the open Enterprise

And yeah there’s 10 characteristics which they list them off here for us starts with a little preface open Enterprises display similar qualities 10 sets of practices that together shine out in each of these The Firm infuses the values of the new integrity that’s honesty meeting commitments caring transparency and the maximization of

Economic social and environmental value the first is leadership this begins with the CEO and board and is visible to all number two governance and Reporting not a burden good governance and transparency Drive engagement Clarity integrity and Focus performance number three strategy and Entrepreneurship the new Integrity has unique implications

For each industry company and business activity in open Enterprises all plans address new Integrity criteria clearly and specifically both in the way planning is conducted at stakeholder inclusion and in its content number four corporate character this is about embedding the new Integrity into the DNA of the firm through such

Programs as internal Communications Performance Management and training number five brand and reputation the new Integrity is not spin but it must be communicated infusing the brand with the firm’s lived values enhances its values for customers shareholders and others number six environmental engagement critical to success in the stakeholder

Realm is a healthy stable and open operating environment sustainable ecosystems peace order and good public governance number seven stakeholder engagement open Enterprises puts resources and effort into reviewing managing recasting and strengthening relationships with stakeholders old and new number eight products and services sustainable Innovation leads to long-term economic social and

Environmental performance number nine operations open Enterprises lower risks and costs by applying new Integrity thinking to Everyday operations and number 10 Information Technology not just a driver of transparency information technology is a powerful tool for enabling a firm’s transparency stakeholder engagement and sustainability strategies we discuss each of these qualities in

The sections that follow for each we provide a set of quote outcomes which when present indicate that a company has achieved the Hallmark practice we also describe quote strategies these are actions that companies take to achieve the desired outcomes note that while the list is in rough logical order these practices do not

Occur in any particular sequence in the real world companies can and do starts just about anywhere all the practices happen in parallel over extended Time Each entails roadblocks setbacks confusion and contradiction change is work man I’ve said that [ __ ] before I’ll say it again change is work right

But because it’s a different type of work folks I mean Executives or leaders are just [ __ ] who aren’t Keen to changing who are not keen to adapting and staying up on their game staying sharp any change to them is too much work just because it’s something different because

They’ve lulled themselves into a sense of security but Security in corporate does not exist you ought to keep moving do it moving keep changing keep up the pace otherwise you’ll get left behind and I mean I like nothing more than to leave folks behind but at the same time

I I gotta I have to keep my own crew on its toes keep them changing and adapting keep them have them keep up with me gotta be a leader amongst leaders in order to cultivate leaders I mean I’m Not tooting my own horn or anything but I’m just a corporate Cowboy incorporating other

Corporate Cowboys goes back to uh just being an associate incorporating other associates uh there is a uh a gray box here and I think it provides us a case study which I’ll go ahead and read for us it’s the Novo Nordisk an open Enterprise Novo Nordisk a Danish pharmaceutical

Company with 18 000 employees and operations in 68 countries is the main case study yes case study okay what do you know is the main case study in this chapter though it’s not a household name the company is an award-winning Global leader in transparency and stakeholder-focused sustainable practices Novo was spurred into this

Terrain Way Back in 1970 when it was a manufacturer of enzymes for laundry detergent Ralph Nader led a campaign that claimed the enzymes gave skin infections to the company’s Factory workers sales fell by 50 percent a year later the charges were proven unfounded but Novo had learned the power of

Stakeholders driven by an emotional social and environmental issue the scars are etched into the company’s Collective memory and it made a commitment never to a allow such an event to happen again in 1990 the company initiated a formal process of engagement on the hotly debated issues of genetic engineering

With ngos employees and other stakeholders it engaged in quotes triple bottom line accounting and reports with external verification in 1993. it added social and environmental criteria to business units and employee key performance indicators and balanced scorecard programs was there a cost perhaps but the company’s performance is robust despite 2002 troubles from a

First quarter earnings warning and a canceled the drug trial Novo is an upbeat company in a downtrodden sector between 1997 and 2002 its revenues Grew From 2.5 to 3.5 billion dollars while earnings per share nearly doubled from 86 cents to 1.66 novo’s 2002 operating margin was 24 and

Its net was 16 the share price has consistently outperformed the industry for example gaining 15 in the first three months of 2003 while the industry was flat diabetes The Roots cause of nearly 1 in 10 deaths worldwide drives 70 percent of the company’s revenues insulin is the

Main diabetes drug Novo has a 47 share of the global insulin markets by volume and provides a variety of other diabetes related products and services it is also a player in homeostasis management growth hormone therapy and hormone replacement therapy the company’s activities inevitably expose it to controversy

While diabetes is more or less under control in rich country there’s a couple of points here so I’ll read through the first point is while diabetes is more or less under control in rich countries it afflicts more than 100 million people in the developing world the number will

More than double in the next 25 years the second Novo relies heavily on genetically modified microorganisms to produce drugs the third it is an advocate for stem cell research number four it tests drugs on rabbits mice rats and other animals number five Novo has supported industry efforts to protect pharmaceutical patents in developing

Countries novos people and public statements are bracingly candid it doesn’t Flinch from describing mistakes and challenges Novo Nordisk has walked the Walk of transparency for some time but as it learned in 1998 no company no matter how good in quotes can be complacent here’s what happened in 2001 Novo Nordisk

Joined 38 companies in a lawsuit against the government of South Africa charging it with violating the World Trade organization’s trade related intellectual property agreements that’s trips for short South Africa had passed legislation giving itself the right to abrogate patent rights for any pharmaceutical product although Novo was not in the AIDS medication business

Which was the main issue it participated because it believed that trips properly addressed the needs of developing countries the lawsuits backfired into a global public uproar against the pharmaceutical industry a crisis driven by the anti-globalization movement enabled by the internet and fanned by the media the crisis happened mere weeks after Lars

Rabin Sorensen became CEO of Novo Nordisk for employees who remembered the 1970 Ralph Nader campaign that was the return of a surrealistic nightmare on February 15 2001 the headline on the country’s leading liberal newspaper read quote Danish companies impede delivery of essential drugs this kicked off a crisis

That continued for two months ATT AC a new Danish anti-globalization group led the charge newspapers ran heart-rending human interest stories about AIDS in Africa a massive demonstration rattled the gates of the company’s Copenhagen Factory the media picked up and repeatedly ran a defensive statement by the new CEO that we are not

A humanitarian organization The Firm later said it was quote the longest and most severe media storm our company has ever faced close quote Sorensen’s response combined Spirits with spunk and engagement he met the company’s critics and went to the factory gates to quote listen to and talk to the demonstrators to get the

Feel of the people’s sentiments and arguments against globalization he defended The View that quote we cannot give away our products or give up our intellectual property while acknowledging the need to slash patents drug prices in developing countries Sorenson and his Novo colleagues pointed out that well over 90 percent of

Medication needs in developing countries could be met with cheap off-patent drugs like aspirin and Insulin that the real challenges were alleviating poverty and improving Access to Health Care Services the drug the drug companies in South America reached a settlement in April whereby the cost of medications was reduced

Novo Nordisk announced a plan to tackle poverty and access the leadership in education and access to Diabetes Care lead that’s the lead initiative our response to ensuring better access to global health care that that was in quotes it included formation of the world diabetes foundation with a 10-year

Commitment and a 60 million dollar endowment the foundation is an arms length organization with an independent board of directors its mandate is to advance National disease strategies care capacity and low prices including practical matters like education distribution of medicines prevention diagnosis and treatment Sorensen presented the idea to the

Firm’s major institutional investors and won their approval quote they too expect us to act on our responsibility as a global corporate citizen you might say that facilitating more and better diagnoses is merely a cynical plan to sell more insulin our view is that there’s nothing wrong with the strategy that invests in delivering

Better more cost-effective care in a way that is financially sustainable for the company that makes the investment that right there that that quote right there I entirely agree with and because it’s a way I mean maybe maybe it’s a special case given Health Care given access to to medicine and

Whatnot but I believe that that is how sustainability how sustainable investment should be you invest in your community to to be able to um empower the community I guess enrich the community I suppose but also allow the community to grow in a way that in the future yields

Better Business that yields more profit right and if doing so is just what handing out diagnoses for free like um uh facilitating access to health care and if this should happen to lead to an increase in diagnoses or just identifying who has diabetes or pre-diabetes to be able to treat them

Earlier or to be able just to treat them effectively I don’t see how that’s not a sound business plan I mean Novo nordisc is doing all right by my book the dispute last paragraph here the dispute with South America had a silver lining for Novo Nordisk it fostered a new context

Revitalized and more disciplined commitment to stakeholder engagement and the alignment of Financial social and environmental outcomes all right the next little subheading here leadership leadership it is precisely because novo’s leadership was engaged with its stakeholders and had a strategic Vision in place that Lars Sorensen responded vigorously to the South American Drug

Patent controversy the organization swung into action and stakeholders ended up trusting the company even more Novo had been applying new Integrity leadership strategies that’s from figure 9.2 for many years we’ll get to figure 9.2 in a bit here its practices have evolved in fascinating ways for Simplicity we will just describe how the

Company apply to these strategies in the past couple of years so uh figure 9.2 just I’ll describe briefly uh is a table on the left hand side it has outcomes on the right hand side strategies and the strategies obviously relates to those outcomes that are that

Are being that are being sought right so if you want to achieve a certain outcome you have to apply certain strategies pretty straightforward on the left hand side then we’ll start with top management commitment and focus and for that those strategies you need visible CEO and board leadership you need leadership by example

The second is organ the second outcome is organizational commitment and focus and the strategies necessary are director and officer assignments transparent processes and Communications the third outcome here is stakeholder belief the firm is serious and the strategy is necessary for that are corporate values code of conduct

And then the fourth outcome here are is core values and Charter defined the strategies necessary for that are a use of Industry codes and engagement with corporate responsibility industry continually then Novo publishes three annual reports to stakeholders although reports are but to the tip of the iceberg in transparent Communications

Novo makes the points that person-to-person communication is far from important they set the tone and begin to define a public record novo’s reports are clear informative and logical they consistently anticipate and answer questions the annual review is a compendium of information and marketing content including financials activities

And events features and news the annual report sorry the annual financial report is the official set of audited accounts and notes and the sustainability reports also audited by a major accounting firm reviews quote our strategies activities and targets regarding social environmental ethical and socio-economic issues affecting our future performance end quote

All shareholders receive the annual review by mail and may opt to receive the other two reports all three along with an archive of past reports are on the company website Sorensen’s letter to stakeholders mostly discusses traditional financial and business issues especially important after a tough year in which the company

Ultimately pulls through and met its targets but Sorensen also describes novo’s focus on employee development social responsibility human rights and Environmental Management in the 2001 report after a better Financial year and on the rebound from the South Africa challenge Sorenson forcefully displayed his personal commitments to stakeholders and sustainable business practices right

From the opening paragraphs but effective CEO and board leadership requires more than words in a report or dialogue at a barricade it must be systemic EVP stakeholder relations Lis Kingo or lisae Kingo if you recall is one of only six members of the company’s executive management committee hers is a full-time

Job not an add-on for a senior marketing or human resources executive the company first created this position in April 2002. the company’s 2002 sustainability report which Kingo edits and produces says quote a particular responsibility for keeping the company’s actions attuned to stakeholders demands lies with the board of directors executive management and cross-organizational

Committees sustainability issues oh close quote sustainability issues are on the board agenda twice a year three cross-functional committees that’s environments and bioethics social and Industrial relations and health policy each chaired by a member of executive management identify issues sets policies and devise strategies targets and action plans

The underpinning of this all the under the underpinning of all this the Constitution as it were is the Novo Nordisk way of management which includes a vision Charter and policies what we think of as corporate values and code of conduct some aspects of these are homegrown quote we will be the world’s leading

Diabetes Care company our aspiration is to defeat diabetes close quote Novo has also adopted several industry codes such as the international chamber of commerce’s business charter for sustainable development and the UN Global compact in 2002 company Executives spoke at and participated in Industry conferences from the world economic Forum to the

Johannesburg Summit on sustainable development quote no not quote sorry in parentheses here where it co-hosted a workshop as well as many lower profile events in 2001 Novo became a co-founder and Main sponsor of bridging Europe a Grassroots Initiative for rethinking the continent’s political institutions it also co-founded the Nordic partnership

With 17 other companies and the World Wildlife Fund aiming to bring sustainable sustainability into Core Company operations on the basis of a solid business case and stakeholder engagement in addition Novo works with socially responsible investment organizations and tries to push SRI up the agenda of the mainstream Financial Community don’t

[ __ ] don’t don’t [ __ ] do it don’t social justice water down dilute capitalism when you start doing that you put the reins you put you put the reins on what is organic growth then you have synthetic growth you have artificial growth you start astroturfing literally this this sense of virtue you become

What you hate which is authoritarian which is fascist which is Socialist Communist you you become exceedingly overbearingly paternalistic right it gets in the way of business it gets in the way of value creation and innovation yeah anyways anyways Hewlett-Packard continuing Hewlett-Packard senior vice president for corporate Affairs Deborah Dunn is

Another active and effective business Integrity officer Dunn reports to CEO Carly fiorina and is a member of hp’s executive committee she displays infectious enthusiasm and determination to change the way corporations behave in the world Dunn is responsible for worldwide functions including social and environmental responsibility e inclusion that’s hp’s program for Bridging the

World digital divide Emerging Markets offerings government Affairs public affairs and philanthropy she focuses heavily on the digital divide where she seeks to apply hp’s resources to provide solutions that can become deeply rooted some of Dunn’s work is intensely local Andhra Pradesh Dublin and East Palo Alto while in other cases she engages in

Global diplomacy the creation of a un-sponsored microfinance program that’s in parentheses internally done is a key player in the development of hp’s overall strategic plan employee Communications around stakeholders and sustainability and addressing breaches of corporate ethics the next subheading here is governance and Reporting in the aftermath of 2002 most observers

Agree that directors and officers must be independent governance must meet or exceed legal and Industry standards executive compensation policy needs a rewrite and a portfolio of good governance processes is essential including objective performance assessments of boards and directors see figure 9.3 and I’ll describe it to you

When we get there rather than March this well trodden ground we take a tour of another core transparency topic formal stakeholder and sustainability reporting of which no Novo appends of which Novo happens of pens which Novo happens to be a leading practitioner every publicly traded company and every manager whose variable compensation

Depends on company performance understands that reporting is a two-way street yes the stated reason to publish regular detailed financials is accountability to shareholders regulators and the public but financial reporting is also part of a feedback loop that changes Behavior inside of the firm it helps employees understand they are

All in the same row boat and makes them common makes them use sorry makes them use common formats to describe results publish results also Benchmark performance against the competition and the economy they help employees customers and partners evaluate the firm’s Financial dependability Financial reports affect in parentheses

For Better or Worse how employees do their jobs especially when bonuses are at stake and here is figure 9.3 I’ll briefly describe it for you it’s another table again with outcomes on the left strategies on the right so let’s start with the first outcome that’s business integrity strategies for that include director

Slash officer Independence and meets slash exceed legal requirements and pertinence Industry standards the second outcome is executive flexibility and performance the strategy for that is good governance processes the fourth outcome is perceived outcome perceived accountability to stakeholders strategies for that include transparent reporting independently audited and the fourth outcome here is access to

Capital strategies for it are full-cost accounting credible executive compensation model and process and shareholders slash stakeholder rights hundreds of businesses also reports regularly on social and environmental performance as with financial reporting so with social and environmental reporting the internal feedback loop is a key part of its value

At Chiquita as we’ve described reporting was a key driver of change and employee commitments at a time of Crisis yeah just a side note if you don’t remember Chiquita was gunning down villagers and employing hit squads [ __ ] Savages continuing at Novo which embeds stakeholders sustainability targets oh

If you want to know more about Chiquita go listen I believe it’s season seven episode six I think don’t quote me on that if not better safe than sorry start at season seven episode five and it’s not that one just started episode one what the [ __ ] at Chiquita as we’ve described reporting

Was a key driver of change and employee commitments at a time of crisis at Novo which embeds stakeholders sustainability Targets in employee job targets the annual sustainability report sums up the last year’s accomplishments sets targets for the next and describes a current agenda of dilemmas that challenge the business

In parentheses for example how can we respect others as cultural beliefs and positions on a sensitive issue such as stem cell research and yet maintain a Competitive Edge in the quest to defeat diabetes many social and environmental reports are selective or sorry many social and environmental reports are selective and

Self-serving sales pitches they tout a company’s purported contributions to employee health and safety or philanthropy with no external Assurance of these claims few reports by contrast rigorously describe Financial social environmental and corporate governance performance like Financial reports the best of them are designed and independently audited in accordance with publicly available credible standards

There’s a little gray box here with more Novo Nordisk information so I’ll go ahead and read that to you the the box is titled Novo nordisc’s unique governance structure well let’s read about it Novo Nordisk ownership is split between a shares and B shares a Shares are held by novoas a holding company

That itself is wholly owned by the not-for-profit Novo Nordisk Foundation Novo as owns 26.7 percent of Novo nordisc shares a multi-voting mechanism gives it 69.8 percent of the votes so it’s got a majority hold essentially it’s got majority control Novo nordisc B shares are publicly traded via the Copenhagen London and New

York stock exchanges they are the most actively traded of Danish company shares none of the novo nordisc nine directors are company Executives three in accordance with Danish law are elected employees another three including the board chairman and vice chairman also sit on the board of its holding company

Novo as I don’t know why they gave us that info maybe they want us to take a peek at its transparency and deduce whether or not some kind of conflict of interest exists I don’t [ __ ] know but I’m going to continue reading maybe the book will maybe the book will tell us

One problem is that social environmental and governance reporting are immature leading standards and standard Setters have emerged only recently the Netherlands based Global reporting initiative gri provides a widely accepted approach to the principles and specifics of economic social and environmental reporting within a context of stakeholder engagement

By April 2003 over 200 companies in 24 companies by April 2003 my OCD won’t let me continue I gotta [ __ ] redo that by April 2003 over 200 companies in 24 countries North American firms include at t b c Hydro Chiquita Dow Ford HP McDonald’s Nike PNG and Suncor affirmed they used

Gri guidelines but a handful EG Novo and Johnson Johnson claimed to have met the stricter Criterion of reporting in accordance with the guide oh so a lot of them claim to do it and others are actually walking that [ __ ] talk man okay okay continuing bearing points partner Eric

Israel a leader of its of its foreign Point partner Eric Israel a leader of its sustainability practice comments that quote the meaning of citizenship for one particular company can be completely different than for another how do you Benchmark an organization and compare it to others in the same

Industry up to now there’s been no equivalence of generally accepted accounting principles Gap gaap four social responsibility that’s where gri comes in gri provides a template for a stakeholder slash sustainability report including and there are a couple of points here which I’ll read to you the first vision and strategy for

Sustainability including a statement from the rep from the reporting organization CEO the second here profile overview of the reporting organization and scope of the report the third governance structure overarching policies and Management Systems in place to implement the organization’s vision for sustainable development and to manage its performance and the fourth year economic

Environmental and social performance indicators the indicators are the heart of a gri compliant report a couple more points here First Direct economic indicators measure monetary flows between the organization and key stakeholders as well as indicates how the organization affects stakeholder economic interests these are conventional metrics allocated

By stakeholder for example net sales and Geographic breakdown of markets are mapped to quotes customers cost of goods and services pushed to suppliers payroll and benefits to employees interest and dividends to Providers of capital and taxes subsidies and philanthropic donations to the public sector the gri second Point here the gri also

Suggests reporting on indirect economic impacts namely the major externalities associated with an organization’s products and services third Point environmental indicators concern and organizations impacts on living and non-living natural systems including ecosystems land and water these indicators are presented in both absolute figures and normalized measures EG resource use per unit of output the

Absolute figures provide a sense of scale or magnitude of impact while normalized data illustrates efficiency and support comparisons from one organization to the next sample indicators are materials use energy use water impacts on biodiversity greenhouse gas emissions rates of recycling and incidences of fines for non-compliance with environmental regulations

And the fourth Point here social indicators enjoy quote less of a consensus than environmental Performance Management they draw on International standards from the United Nations and the international labor organization the indicators include employment creation union membership a measurement whose value is hotly contested injury rates and training rates many gri social

Indicators use qualitative measures such as an organization’s systems policies and procedures qualitative indicators include informing Consulting and negotiating with employees over operational changes such as restructuring worker management health and safety committees human rights Community impact of operations political contributions customer health and safety and product information and labeling

In addition to its generic reporting guide the gri plans to produce sector and issue specific guidelines gri only solves parts of the problem it’s mainly provides the what part of the new Gap gaap the other issue is how to report more precisely how to verify whether a report is credible whether it

Meets the needs and expectations of stakeholders the reporting problems of the 2002 corporate governance crisis were not caused by a dearth of indicators rather it was due to problems with compliance with the spirits of disclosure Beyond compliance and with the quality of the Audits and Auditors that theoretically provided Assurance of

The reports as quality to address this problem in 2003 accountability a non-pro a not-for-profit uk-based Institute released a new standard to guide and assess the work of assurance providers such as Auditors and other third parties among the members of accountability are the Association of Chartered Certified Accountants from United Kingdom Business

For social responsibility from the United States Cooperative Bank from the United Kingdom Instituto ethos from Brazil KPMG learn from South Africa new economics Foundation from United Kingdom Novo Nordisk and pricewaterhousecoopers the accountability framework AA 1000 Assurance standard defines five principles for sustainability reporting will it give us those five principles here

Yes they’re listed here I’ll read them for you the first inclusivity the an organization’s commitment to a identify and understand its social environmental and economic performance and impact and the associated views of its stakeholders B consider and coherently respond whether negatively or positively to the aspirations and needs

Of its stakeholders and see provide an account to stakeholders for its decisions actions and impacts the second materiality the Assurance provider States whether the reporting organization a company has included the organiz the the second Point here materiality the Assurance provider States whether the reporting organization eg a company has included the information that

Stakeholders need to make informed judgments decisions and actions information is material if it’s Omission or representation could influence the decisions or actions of stakeholders yeah I mean that’s that’s pretty much along the lines of uh how it’s defined federally here in the U.S in in regards to uh

Like selling securities and whatnot the third completeness the Assurance provider evaluates the extent to which the reporting organization can identify and understand the material aspects of its own sustainability performance where the Assurance provider finds gaps it should encourage the reporting organization to fix or describe them failing a fix the Assurance provider

Should describe them in its Assurance reports the fourth here responsiveness the Assurance provider evaluates whether the reporting organization has responded to stakeholder concerns policies and relevant standards and has adequately communicated its responses in its sustainability report then the fifth evidence the Assurance provider evaluates whether the reporting organization has provided adequate

Evidence to support the content of the report such standards are still immature and evolving and other players like the international standardization organization are in the game for now the gri and aa1000 are your Best Bets I mean this is back in 2002 though so it’s probably it’s probably changed it’s

Probably become even more woke are your Best Bets continuing not only for reporting but for building structured models for transparency driven stakeholder engagement how cute I mean I like that it says your stakeholder engagement when what was it two chapters three chapters before go listen to it three chapters before it

Was talking [ __ ] about stakeholders about how stakeholders aren’t even doing the due diligence they’re just becoming more and more and more passive and just uh following following the uh the profit not even following the money just following the profit so becoming uh less less active this social responsibility

Is just form of virtue signaling right where if a company claims to be doing it and uh puts enough paper puts enough promotion in your face that they’re doing something about it you’re gonna throw them money regardless of what they’re actually doing right so yeah stakeholders can eat a dick too I suppose

Two continuing two other pieces still come up short first stakeholders sustainability reporting lacks a standard format or look and feel we have nothing comparable to an income statement or balance sheet a concise set of figures that Nets out all the overall situation in a company second few countries require or regulate

Stakeholder slash sustainability reporting finally voluntary reporting means that fewer companies reports and lack of Regulation also means slack and disjointed reporting standards dog you didn’t see this coming you didn’t [ __ ] see it coming if there’s no regulation there’s no [ __ ] standards they just again they’re they’re brochures they’re [ __ ]

Pamphlets for social responsibility for environmental sustainability I’m sure oh I’m sure they’re [ __ ] colorful and they paint a a big picture they’re selling a dream right anything anything to uh attract that investor money anything to attract stakeholder funds right stakeholder contributions continuing regulation makes a difference says a bearing Point study in Japan

Which mandated environmental reporting and guidelines in 2001 72 percent of the top 100 companies put audited environmental results into their 2002 Financial reports following but well behind were the United Kingdom 49 and the United States at 36 percent Germany and the Nordic countries were in the 25

To 35 percent range while in Canada only 19 19 1 9 19 did the same Novo nordisc’s sustainability reports 2002 is explicitly quote in accordance with the gri guidelines and aa-1000 duly assured by accounting firm Deloitte and touche in early 2003 or as a touch or tush touch touch Deloitte and touch I

Mean there’s no Accent on the E there so I don’t know if it’s touche it it could just be touch in early 2003 it was one of the few available textbook implementations of these standards a model of stakeholder engagement completeness business reasoning and inspiration in addition to its downloadable reports Novo provides statistics

In addition to its downloadable reports Novo provides statistical and qualitative information on its website there is also a detailed cross map of its report to the gri indicators nevertheless there’s room for improvement going back and forth from paper to various web pages can be confusing and though Novo has been

Reporting for a decade it provides comparative Trend data for only a few indicators all right the next little subheading here strategy and Entrepreneurship strategy and Entrepreneurship Peter Drucker said half a century ago that the purpose of a business is to create a customer customers are the first though not the only stakeholders

For any business and meeting their needs is the essence of strategy meeting the needs of growing numbers of desirable customers over the Long Haul is the essence of sustainable energy sorry sustainable strategy and sustainable energy really because it uh it fuels itself that’s that’s what sustainability means so it’s the essence of sustainable

Strategy what is new in the age of transparency is that gaining the trust and commitment of its other stakeholders enables The Firm to serve customers best and then it refers to figure 9.4 which is up ahead I’ll describe it for you when we get there as Toyota and shell in

This hold on well because it refers to figure 9.4 let me just describe it for you in brief it’s another table right and it’s got outcomes on the left hand side and strategies on the right hand side so it’s just two columns right on the left

Hand side it uh the first outcome is short and long term optimization of Financial social and environmental performance the strategies relevance to it are in bed in all planning processes analyze industry slash stakeholders slash firm specific issue slash risk slash opportunities and identify analyze obstacles to change

The next outcome here is a competitive advantage and the strategies relevance to it are applying creative analytic business casing techniques to multiple time views right so I’m assuming it goes uh oh well actually it gives us here the immediate midterm and long term yeah that’s good good time good views of time

Both uh immediate short-term and long-term goals right the next outcome the third outcome here is Raising industry civil foundation and the strategies for it are to engage existing slash potential stakeholders in strategy development the last one the last outcome here is addressing obstacles to change and strategies for addressing obstacles to

Change are engage with competitors governments on raising standards and develop a timetable with Milestones so yeah that was figure 9.4 strategy and Entrepreneurship so continuing as Toyota and shell illustrates in their strategies for non-carbon fuels such companies seek competitive Advantage from stakeholders slash sustainability strategies that focus on the customer

Where costs are inevitably associated with externalities leading companies work with their Industries to raise the Civil Foundation of sustainable business practice again with customers as the focus the Kimberly process from chapter six and if you’re interested in that go listen to season seven episode six that’s where we reviewed and read

Chapter six of the naked Corporation so this chapter six the Kimberly process is one example the diamond industry which was prodded by consumers governments and ngos that industry got better and agreed to eliminate the purchase of gems that financed vicious Wars in central Africa Best in Class companies don’t just have

A few great integrity programs their policies require all plans to address stakeholders slash sustainability issues along with competitive Financial human resource information technology and other core factors they encourage and reward entrepreneurial stakeholders slash sustainability initiatives and they require planners to engage with stakeholders while making their plans not after the fact

Novo Nordisk describes its strategy framework for sustainability in three tiers and it says you go look at figure 9.5 I’ll briefly describe figure 9.5 for you here and that is uh it’s titled from strategic objectives to business goals oh and it gives a little description here it says in the areas of bioethics

Environment health and safety and social responsibility the Strategic objectives are built into the annual balance scorecard targets for Relevant units at production sites for example targets for reduction of water and energy use reflect the Strategic objective to improve Eco productivity the people strategy in turn and its specific targets applies to all organizational

Units nice nice so figure 9.5 from strategic objectives to Business Schools is just another pyramid it’s a pyramid and this one is split into one two three four five six layers including the peak one two three four five six the very bottom the bottom layer is called short-term targets

These are from one to two years the second layer the Second Step Up are medium range targets those are from three to five years and then moving on from there there are indicators in the third layer in the fourth layer there are strategies in the fifth layer there are policies

And then that sixth layer the peak the Pinnacle there are strategic objectives right I would imagine that those go toward informing corporate culture in achieving and in planning for your short-term and medium range targets with the overall goal being inculcating your organization from top to bottom and bottom to top with

Strategic objectives that are acted on automatically right but that’s just me Alex I’m over here pontificating um that’s just me elaborating going off on a tangent right spitballing brainstorming some that’s all that’s all but but I’ll read it I’ll go ahead and read along and we’ll see if I was right

Or not and typically I mean your boy Alex doesn’t miss right unless I’m shooting from the hip if I’m shooting from the hip Fanning if I’m shooting from the hip Fanning the hammer bat bat bat bat bat right then you know you can expect one or two to be

Off Mark but they’re not stray they ain’t straight I might be off Mark but they’re not stray continuing then so the strategy framework for sustainability in three tiers by Novo Nordisk right so the first is the corporate’s governance structure which quotes defines our commitments and that’s described above under quote leadership

The second stakeholder engagement which quotes enables us to stay attuned to emerging issues and concerns end quote right number three Target setting and systematic follow-up procedures which quotes help ensure continuous Improvement and exchange of better practices in the organization end quote all right okay in order to attune its strategies to

Stakeholder interests and sustainability objectives Novo squarely tackles quote strategic dilemmas in 2002 these included and there are a couple of points one two three four four points the first how to ensure diligent observance of risk management while nurturing a spirit of innovation and the pursuit of opportunities the second how

To improve access to Diabetes Care by making profits more affordable in developing countries while sustaining a profitable business thick that point was poorly written because how do you make profits more affordable don’t you want to make don’t you want to want to make access that’s by the service and products more affordable in

Developing countries yeah now maybe that was miswritten the third Point how to respect cultural beliefs and positions on questions like stem cell research while maintaining a Competitive Edge in the quest to defeat diabetes and the fourth how to justify to shareholders that investing in non-material assets such as Environmental Management is good for

Business and preserves share prices Lisa Kingo describes the Novo Nordisk learning curve that’s figure 9.6 as a formal process for moving issues from Leading Edge to mainstream company practice King goes 27 person stakeholder relations group incubates and manages an area until it becomes fully embedded in business processes across the company at

Which point it lets go and moves on to newer topics real quick I’ll describe for you figure 9.6 and that’s titled Novo Nordisk learning curve and it also provides for us a little description like the last figure like figure 9.5 it says here the Novo Nordisk learning curve reflects

The process of addressing issues beginning with the initial impulse from stakeholders to framing our response and as we learn to fully integrating this response into business processes for example environments and health and safety issues are well integrated in the business whereas assessing the socio-economic impacts of our activities

As part of decision making is an emerging issue with which we are still coming to grips for one for each for each key issue we have identified indicators that will help provide reliable and quantifiable data upon which stakeholders can base their assessments okay okay continuing then there is a block quote

Here by Novo Nordisk it says the stakeholder group is like a greenhouse we spot new trends and figure out which will be more important for Novo nordisc going forward we spotted human rights five years ago yeah these [ __ ] acting like that’s like that’s novelty like that’s new that’s the discovery

Human rights were important only five years ago dog no the [ __ ] Ed really okay well enough sarcasm Alex continue through our engagements with stakeholders politicians or opinion leaders we try to stay attuned to the emerging issues when we sense that something is coming up that may affect our company’s long-term business

Interests we commission an external review to assess the extent to which it involves us and the state of our compliance you like that pause there you like that pause because if you read into that if you read it between the lines the only thing they’re paying for the only thing

They’re Outsourcing is just a report that’s it they’re not they’re not financing or or funding any programs for a change no it’s just a report of of how much more they need to cover their ass this is really just a cya report how much ass they have exposed out there and

How much more compliance they have to shore up in order to not have their ass exposed all right it says here this usually takes a year out of this process we determined that we needed to do better on human rights and diversity as well as access to health care so we launched two

Projects then a proactive strategy and a toolbox okay okay baby steps baby steps right it wasn’t completely what it wasn’t completely all what Alex made it out to be but you know baby steps is better than nothing okay next we started to do stakeholder engagement and integrated these

Initiatives into the company okay so we got some integration going forward nice I’d like to see to what degree right I would like to see to what degree whether or not it’s Proactive or reactive more than likely it’s reactive but but again uh baby steps baby steps come on Alex it

Says your equal opportunities and access are still in stakeholder relations since they are still incubating not yet fully in the line environment health and safety on the other hand are more mature and now managed mainly in the line and block quote Novo sets both corporate and individual targets that balance

Social environmental and economic goals these goals effectively the company’s Management’s framework are built into corporate and business unit balance scorecards with measurable targets across a wide variety of domains examples of targets that the company sets and achieved or for long-term targets has on track to achieve in 2002

There are a couple of points here of of the targets that the company has set and achieved or are set to achieve right the first vice presidents to establish plans with targets for addressing equal opportunity issues second ninety percent of suppliers evaluated on environment and social performance Okay the third to

Develop a sustainable business model for helping people in poor countries gain access to Diabetes Care okay are you sure it’s not profits care like that last list we we [ __ ] read the the fourth eighty percent of all employees to meet and dialogue with patients okay the fifth ninety percent of all

Managers with direct reports to establish one business goal on how they will develop their people I like that one in particular I like that one because it gets managers active not complacent not content with the status quo but active in terms of developing their team developing their team as

Professionals now to what extent that’s informed by social justice and equal opportunity Ventures right uh whether or not it’s that’s watered down the Innovative and creativity pool you know one can’t really say because that’s not what these reports are looking for those reports haven’t been funded so much because

They’re not really out to seek Innovation corporations in in this respect are only trying to attain an appearance an appearance of social justice an appearance of social Equity they’re not they’re not actually taking firmative steps they might call it affirmative action but they’re not it’s not affirmative steps all right

But I digress I digress I don’t wanna I don’t want to make this too political but when you twist and turn and you live in the age of spin [ __ ] even capitalism sounds bad right number six by 2005 but yo I’m a corporate cowboy it’s capitalism until I die Alex stop

Stop distracting stop interrupting number six continuing by 2005 to increase annual Eco productivity of Water by five percent and of energy by four percent and then number seven to contribute to the total removal of animal tests for biological product control by 2004. okay okay one example of nodo’s notos you remember

Those one example of novo’s approach is its strategy for sustainable Diabetes Care in developing countries sustainable profits care and in developing countries the business opportunity is significant but so are the challenges in China alone where some 30 to 40 million people are estimated to have type 2 diabetes the

Diagnosis rate is 10 to 15 percent compared with 50 percent in Europe This is an obstacle to the company’s own markets growth but also an obstacle to treatment for patients rather than simplistically pedal drugs the company has adopted a holistic strategy in countries from China to Costa Rica the

Goal is to create infrastructures capable of competently delivering diagnosis can care medicine and Equipment it has decided to knock down the key barrier the widespread ignorance regarding diabetes among sufferers and caregivers Novo Fosters National plans strategies and programs of awareness and education for patients and health professionals these in turn require Partnerships with

Local Champions and seeding the political will of governments Novo framed the challenge as a dilemma insulin the main drug for treating diabetes is off patent and cheap enough to price for the poor but the company also has the world’s best pipeline of new Advanced medications for the

Diabetes epidemic the costs of r d and production make these drugs affordable only in rich countries novo’s lead initiative lead initiative and World diabetes foundation will help raise diagnosis rates and get insulin to patients quickly at littledirect return to Novo little little direct so there is still return it’s just little direct all

Right okay while Paving the way toward a future in which some patients gain the means to seek more advanced treatments this is a classic alignment of doing well by doing good at the highest levels of business strategy these initiatives Place Novo at the center of future diabetes programs in the world’s largest

Emerging Markets uh hold up yeah why’d I mess that one up these initiatives oh because I was thinking of uh of doing well by doing right right and uh I think that goes back to what chapter two yeah I think that that sparked something in my mind I don’t know if that goes

Back to chapter two or chapter three if you’re interested go listen to uh yeah season seven episode two or episode three and if it’s not either one of those start with season seven or episode one and if I’m wrong start a season one episode one welcome to the corporate Cowboys podcast

Shameless plug uh it says these initiatives Place Novo at the center of future diabetes programs in the world’s largest Emerging Markets I mean they mean China they and Costa Rica well not Costa Ricans China’s [ __ ] huge and I bet India’s up there too but they’re not

Really speaking on it I wonder why they illustrate how a firm does work like patients education that’s in rich countries would be paid and performed by government leading to improved outcomes for a broad collection of stakeholders from patients that’s customers to Physicians that’s Partners communities employees governments and shareholders the next subheading here

Corporate culture oh my favorite if stakeholder slash sustainability objectives are to be met they must be lived every day in the corporation be embedded in its DNA as Elise Kingo says quote thousands of employees at Novo Nordisk have some sort of sustainability work providing health and safety

Programs access to Diabetes Care and so on every employee must be aware attuned and motivated this in turn requires consistent internal messages exemplary programs effective performance and compensation management targeted Education and Training and the use of technology to enable the entire system oh by the way that that quote closed a

While ago I’m just I just continue reading my bad I forgot to close that quote the balance scorecard and annual sustainability reports are the foundation of novo’s corporate culture programs see figure 9.7 all right I’m going to briefly describe to you figure 9.7 is titled corporate culture

Now it’s a similar table like we’ve uh not seen but we’ve read it before we’ve come across before two columns the left hand side are outcomes the right hand side are strategies for those outcomes on the outcome side the first one is values and code of conduct to guide

Employees Behavior strategies for it embed new Integrity metrics and scorecards and Performance Management okay use reporting cycle to drive learning and Improvement okay okay the second outcome on the left hand side it’s plans programs processes and daily interactions embed the new Integrity okay so so the new

Integrity is going to be embedded via plans programs processes and daily interactions so what are the strategies for it there is to promote the purpose the value the business case and the game plan internally okay I like that promotion of a promoting a game plan internally I hope it’s from

From top to bottom bottom to top right seems seems like it should be a comprehensive game plan in order to promote internally and everybody feel like they need to be Hands-On with it at least I think number three on the outcome side there’s the Improvement of new Integrity

Outcomes and the metrics is continuous so they want to see continuous Improvement strategies for that they include education training and career development nice they include a use of new Integrity Knowledge Management Systems okay okay lastly develop information and Communications technology tools and infrastructure I think that goes without

Saying because this book was published in 2002 that’s already happened fam it’s [ __ ] 2023 and you know we live in a corporate world order if you don’t have infrastructure set up or you’re not building infrastructure or you’re not leasing using exploiting somebody else’s Network you’re [ __ ] your own bag up you’re

Fumbling the bag hard all right continuing using these tools Novo communicates its strategies and programs benchmarks its successes and failures and structures performance and compensation management activities kingo’s personal performance targets are identical to the enterprise-wide indicators listed in its sustainability reports they include tangible measures of living the company’s values Access to

Health Care in developing countries employee safety and development use of animals Eco efficiency and Company Financial reports if your values are genuine your employees will know yo I like that because it’s true if your values are not genuine employees tend to see through your [ __ ] [ __ ] and

They just show up for the check because they gotta eat right but there there’s no passion there’s no Drive there’s no real dedication no commitment right they they just show they’re just a another body in the building so so the uh so the lease stays paid in the air conditioning stays on that’s

That’s it essentially if there is if there is no value there is no passion okay and and if they’re not right and if they are not if the values are not genuine it means if the values are not a genuine they will eventually figure it

Out I want to say almost off rip I think in today’s day and age again because this book was published in 2002 in 2023 most every employee can see through the [ __ ] and if they can’t it’s because they’re either novices or just really naive innocent I mean morally innocence like

They’ve never been [ __ ] over in their life some way somehow right they just they’ve just lived in a bubble of luck and Fortune which I mean those individuals are few and far in between but they do exist they exist if your values are not genuine your

Employees will know and if they are not they will eventually figure it out Novo describes the centrality of its employee programs to its entire strategy quote more than any other stakeholder group our employees are the essence of Novo Nordisk we therefore consider it essential to monitor how Novo Nordisk

Employees worldwide think about the company their job and their opportunities to develop their skills and competencies yo Novo Nordisk doing something right I mean at least they’re reporting it they’re reporting they’re doing something right you know gay end quote by the way the company internally promotes and celebrates its many stakeholders slash sustainability

Initiatives in novo’s 2001 employee survey 85 percent agreed that social and environmental performance are important to the company’s future the survey gave the company subpar grades on employee development metrics such as the presence of personal development plans ability to stay up to date on work related issues and future resource requirements

Planning as you might expect Novo responded with an aggressive metrics-driven employee and career development program Novo organizes its programs for employees in a quote people strategy with Five Focus areas winning culture customer relations attraction and development of the best people developing people and equal opportunities Novo tries to make

Strategies for its employees and other stakeholders mutually reinforcing I like that I like that go Novo Novo I mean taking steps right so when I said that they’re taking baby steps yeah those baby steps are getting larger it looks like they’re taking bigger and bigger steps like they’re finding a stride

Right it’s like they’re they’re they’re getting uh they’re getting into uh uh is it is it a stride it’s like yeah it’s like they’re finding their Shred um so two points here there’s two points I’ll read them to you the first is employees gaining meaning motivation and

Ideas when they connect with the end users of their products meanwhile research on the psychosocial aspects of living with diabetes shows that relationships are as Central to successful care as products and services providers who learn from this insights can gain a competitive advantage that’s nothing new fam even working in sales

The more you know about your clients and the more you can relate to your clients the better clients interaction you’re gonna have and the stronger the relationship you can cultivate the stronger the Rapport you can build in order to sell right that [ __ ] ain’t new anyways Novo asked all its employees to

Meet with people with diabetes and other health care needs that it serves in 2002 80 percent had patient dialogues said a Novo Regulatory Affairs executive in India quote the discussion was very thought-provoking it made me feel that I should start contributing by whatever means possible and that sounds like

[ __ ] puffery that sounds like it’s like a like a gap filler uh they’re really taking like age-old knowledge and trying to apply it in this new wage context right and they’re dropping their uh their Regulatory Affairs executive in India in here I don’t know for what inclusivity point a second point

The company had a series of workplace equal opportunities programs based on the UN Universal Declaration of Human Rights Novo decided in 2001 that in the age of globalization and talent Wars it needs access to an increasingly diverse labor force quote recognizing diversity as an opportunity rather than a problem end

Quote I mean okay good luck the company has its work cut out it definitely does in Denmark in 2002 where the vast majority of its employees live only 5.9 percent were immigrants or descendants of immigrants from developing countries below the modest National ratio of 7.6 percent dog all right dog never mind

Okay I’m I’m not gonna I’m not gonna speak on it the studies are out there this book was published in 2002 I think uh uh I think programs and initiatives that are that are structured around force-feeding inclusivity are largely unsuccessful and the results

Are out there if I can go look them up I won’t make this episode political because that’s not what that’s not what reading this book is about right as as objective as I want to be right some objectivity low-key becomes offensive to [ __ ] who can’t handle it so considering

Only 198 top Executives that’s vice president senior scientists and above 198 top Executives only 20 were women okay the company is tackling this challenge with its usual array of actions oh there we go you see that’s that’s where you slip up some right it’s usual array of actions that’s where you

Slip up right because these aren’t these aren’t proactive these are reactive initiatives this isn’t Innovative this isn’t anything innovative all right so it it’s tackling this challenge with its usual array of actions you can just call it usual shenanigans staff assignments ooh formal objectives and metrics ah for

Formal you know what formal means it just literally means check the box that’s all it just it literally means show up for the check right show for for the for the paycheck and check the box formal objectives and metrics it’s a quota they’re literally just a quota and a variety of proactive

Programs oh nice I like how you put proactive there we’ve already mentioned continuing we’ve already mentioned some of novo’s tracking and Reporting mechanisms group and individual targets built into the balanced scorecard and externally audited sustainability reports Novo has another unique mechanism called facilitations that’s arms length internal audits that review each

Dimension of the business on a four-year recurring cycle the facilitate okay just a quick note you know why I didn’t address that variety of proactive programs that novo’s got because qualifying any program as proactive literally means that anything else you’ve done in the past hasn’t been proactive the the whole point of a

Program the whole point of a program is advancing an initiative that in itself is proactive the fact that you have to qualify it additionally it’s as if justifying your your formal objective and metrics for justifying your staff assignments justifying that affirmative action [ __ ] justifying it by calling it proactive you’re you’re doing

Yourself at a service again it’s shooting yourself in the foot and then throwing the Barrel in your mouth all right no Novo has another unique mechanism called facilitations that’s an arm’s length internal audience that review each dimension of the business on a four-year recurring cycle the facilitation function resides with the

Novo group a holding company that controls Novo Nordisk and several other firms facilitators interview employees on how they perceive the quality of their management and how it reflects the company’s fundamental values and approach to business facilitators write up recommendations to management and follow up on the action

Points in 2002 95 of action points were fulfilled organizations that wish to make their commitments stick invest to educate and train their employees more like inculcate and socialize or or inculcate and condition and indoctrinate a Novo has a big training program that provides the knowledge to identify bottom-up opportunities to reduce costs through

Environmental and materials management okay all right all right okay other employee other uh other companies other companies have embraced large-scale training on ethics and values often under the rubric of compliance I mean bam if you’ve noticed I’m reading this in a way that’s rather cynical right and that’s only because as a corporate

Cowboy I find it I I believe it’s my duty it’s my duty to commentate not only while I narrate read this book to you but comment on some of the sideways some of the sideways uh prop is it propaganda just some of the sideways [ __ ] read that takes place in

Corporate that they try to pass off as something virtuous when in actuality it’s not all right facilitators write up recommendations 95 of the action points were fulfilled organizations that wish to make their commitments stick invest to educate and train their employees Novo has a big training program that provides the knowledge to identify

Bottom-up opportunities to reduce costs through environmental and materials management okay other companies have embraced large-scale training on ethics and values often often under the rubric of compliance Kate’s Kozlowski let’s discontinue Kate Kozlowski director of business ethics and compliance at Ford Motor Company says that for a company such as hers

Meagle and ethical issues crop up everywhere quote thousands of people work on compliance across the company whether in building cars providing credit and financing car rentals Parts services and warranties it’s part of doing business there’s a compliance price tag in every part of the company the only way to ensure predictable and

Consistent standards in a three hundred thousand person company like Ford is to provide a lot of training quote and now it’s not just compliance says Kozlowski there is more pressure for training on ethics sure continuing forward sources online ethics and compliance training from a company called lrn many of the modules are off

The shelf others which Ford developed with lrn will then be sold to other car companies much of lrn’s training uses the quote dilemma as a teaching construct acting out the legal and ethical issues of making a tough decision Kozlowski says quote we use online training to create awareness but for the

Next level we use face-to-face education for example teaching Senior Management the code of conduct dealing with issues of globalization and when we encounter a tough issue like sarbanes-oxley compliance hold on sarbanes oxy compliance sometimes the compliance and ethics group does the training other times it’s Human Resources hmm okay okay then

The next sub out of here brand and reputation marketing and business Integrity have not always been comfortable bedfellows often enough marketers have seen being good as an issue of message rather than substance or have sought to leverage philanthropy or limited stakeholder value while downplaying painful truths as they say

Quote let me put some lipstick on this pig I like that the Marlboro Man is an app symbol for this problem he was the advertising personification of clean living and rugged American values but he was a lie David Miller Jr the original Marlboro Man Died of emphysema in 1987. after

David McLean another Marlboro man that of lung cancer his widow sued the company for damages later on Marlboro Man Wayne McLaren testified in favor of anti-smoking legislation before he died of lung cancer in 2003 marlborough’s parents company in a torrent of sparkly waterfall advertisement changed its name from The

Tobacco stained Philip Morris to the wholesome sounding Altria Group now the company openly admits that its product kills customers and campaigns against smoking meanwhile it continues to advertise where it can legally do so while expanding into emerging economies right on go Phillip Morris look at you [ __ ] people up with your shitty ass

Product you could have just stayed natural and instead not you wanna I don’t know have a [ __ ] ass product literally [ __ ] it’s slow it’s backwards it’s regressive not Progressive that’s funny uh this this is an extreme case it says let’s face it nobody in the business of cigarette manufacturing can be a truly

Open Enterprise we don’t have to face it and that they can be truly open but they choose not to they refuse to why because I don’t know [ __ ] dinosaurs they’re old they’re old and curmudgeony I mean if if uh they were open to change they they probably

Could change but again as I’ve mentioned before in this episode in the past episodes change to [ __ ] who don’t want to change change any change to [ __ ] who do not want to change is more work right even like I said if it’s a different type of work if it’s work that’s actually easier

If it’s different it’s more work because all they know is [ __ ] right all they know is the [ __ ] that they’ve came up on so if you show them how to do something new even though it’s better more efficient it’s more effective even they won’t want change sorry

Uh because uh it says here they can’t truly be open because the product causes harm boy yeah it causes it causes harm because they synthesize the product it’s not natural they synthesize it marlboro’s stakeholder friendly message is impossible to reconcile with its Behavior as a pusher of life-threatening

Substances that also add costs to overburdened Health Care Systems around the world okay cool criticism cynicism is the next sense here take a break Alex relax take a breath cynicism regarding the branding of quotes doing good is common and not just among activist critics of quote green washing I.E whitewashing with an echo

Tint with an Eco tint and I’m not I don’t think I’m an activist no I’m just I’m a corporate Cowboy I do work on my own and uh the result of my work typically is better I I leave I think a corporate Cowboy is objective

In life the end goal is to always leave their corner of the world better than how they arrived but again I digress I’ll continue reading I won’t distract as much okay the trade Journal Sporting Goods business wondered recently whether quote cause marketing makes any difference to the bottom line cause marketing I’m assuming

Being like oh we’re marketing for this cause like you know we’re advertising for cigarettes but the cause is you know lung cancer or some some [ __ ] an article discussed a dance can cost benefit calculation of contributions to the Susan B Coleman Breast Cancer Foundation quote Danskin prefers this Grassroots approach

Over extensive ad campaigns for celebrity slash athlete sponsorships or sorry it prefers them over extensive ad campaigns or celebrity athlete sponsorships quote we integrate event and cause marketing and our efforts mean a lot to our customers many of whom make buying decisions based on our partnership says Joyce [ __ ] danskin’s SVP of marketing

End quote indeed breast cancer is a coveted cause it’s a flicks affluence Target customer segments the ethical dilemmas are few and it is associated with wholesome sports events like Run for the Cure that use sponsors as products also participation can be more cost effective than organizing a marketing

Campaign for a customer’s own products which requires hard work with ad agencies you pay the sponsor fee you send some volunteers and everyone wins hey it seems like a [ __ ] circle jerk to me I don’t know if uh I mean this again this book was written in 2002 I

Don’t know if if by 2002 they had already figured out that treatment exists right and it’s possible it is possible that the Cure is out there right but there’s so much money there’s so much money in that pink ribbon so much money and merging that pink and Merchandising that pink ribbon

That fam if breast cancer were cure Susan B Coleman the foundation would [ __ ] go bankrupt but there’s so much money it’s it’s in their best interest to keep brass cancer alive right they’re probably Alex about to get all cynical it’s in their best interest to take the donations

Folks put into the Susan B Coleman foundation and Lobby for parabens and and and and and for that is it phallicates or fade lights family Fates I think it’s falathites it’s a Lobby for for Oxo benzenes and [ __ ] like that for you know to get breast cancer it’s in their best

Interest why because if there were no breast cancer there’d be no Susan B common Foundation all right continuing continuing the business case is easy and compelling yo Alex just made a dope business case I don’t know if you saw that I don’t know if you heard that

The business case is easy and compelling while the project matches the mandates and skills of the marketing department such causes while worthy of supports present few of the dilemmas or organizational demands of which Novo Nordisk speaks or that’s Nike a fellow firm to Danskin in the Sporting apparel business took on

When it decided to stick its neck out and respond to the challenges of working conditions in the industry supply chain dog I’m reading this in 2023 this book was published in 2002 Nike still has some heavy allegations uh against it so you know you you draw whatever inference you

Need to from that I’m going to continue reading companies like these have made deeper choices as we have discussed they have taken on the task of rethinking their entire mode of operations in line with a transparent stakeholder slash sustainability agenda what they increasingly conclude is that their brand image must convey the malleability

And universalism of such engagements warts and all C figure 9.8 looking at figure 9.8 I’ll briefly describe it for you it’s titled brand and reputation okay it’s another table with outcomes on the left hand side strategies on the right hand side I believe we’re getting a

Sense of how this goes now right so the first outcome on the left hand side is improved and sustained brand value strategies for it include review brand messages and marketing programs second outcome is growth and market share strategies for that include engage financial sector and key stakeholders in

Change dialogue Okay the third outcome is customer loyalty and strategies for that include strength and transparency Communications to all stakeholders all right and the fourth outcome here is low cost of capital strategies for that include describe strengths admits weaknesses and publish improvements benchmarks also review crisis management programs and monitor

Stakeholder issues all right seems pretty straightforward a lot of it is logical I’m surprised they spend their money to quote ReDiscover this [ __ ] and then report it to the public it’s as it’s as if they never knew it does it continuing continuing they are open and candid about the

Dilemmas they face and describe their failings and limitations honestly when a crisis happened they respond quickly and take responsibility for their actions so when you go to the website of Shell Ford and some other risk accepting engaged corporations you will find a discussion forums that include comments from their harshest critics

How should marketers rethink their role Paul Tafe chairman and CEO of marketing consultant Hill and Knowlton says that spin is dead but its Legacy means that the marketing function itself has a credibility problem and no it’s not spin is not that quote marketers seem to have figured out that transparency is the universal

Enabler of trust but ironically they have been labeled as the most deceitful in the past the part of the organization that doesn’t need to tell the truth this is thanks to situation like Nestle and tobacco there are still people in public relations who are Spinners but this is

Not sustainable yet obviously is not it hurts credibility over the Long Haul end quote Tafe argues that the inevitable but unpredictable crisis in the is is the litmus let me reread that Tafe argues that the inevitable but unpredictable crisis is the litmus test of a company’s ability to respond

Quote the costs of a crisis increase substantially if you haven’t identified where it will come from and how you will respond to it in advance for example after the Brent Spar incident with Greenpeace in the North Sea Shell had trouble recruiting University graduates and after a crisis there is often a

Court case it is less painful and costly when the company has responded quickly behaved with integrity and managed the issue shareholder NGO media activism mean that every company will have more crises every year so this moves from being exceptional to being a normal part of business end quote

The problem is most companies don’t train themselves for crisis through everyday transparent Behavior nor do they prepare in advance by defining crisis management processes and assignments tafe’s pessimism notwithstanding the quote transparency virus is spreading even some not particularly quote sustainability focused companies have learned the value of adding open

Dialogue to their brand messages as we described in chapter six go listen to it season 7 episode 6. computer companies Dell and apple host a wide variety of customer conversations on their own websites in some of these conversations visitors even defend a competitive product from a marketing perspective the message

Is clear you’re going to be naked so you better be buff I like that I like that next up heading here is environmental engagement you can’t have a successful company in a failed World conversely you can’t succeed if the World Won’t Let You businesses have an economic interest in

The well-being and support of both their social political and natural environments see figure 9.9 figure 9.9 is titled environmental engagement and again it’s a table two columns the left-hand side outcomes right hand side strategies let’s get it the first outcome is peace order and good governance of external operating

Environments strategies for it include supports good governments anti-bribery and Obey local laws have a local presence local people local Partnerships okay okay the second outcome is a license to operate a strategy for that is support social diversity sure the third outcome is Preservation of global ecosystems the strategies for

That include combat global warming and threats to biodiversity no whatever uh and identify and address stakeholder Investments or interest I’m sorry interest well I mean there I guess they’re also Investments time energy and uh attention sure continuing then most observers agree on the socio-political challenges even if they

Disagree on the risks to the natural environment businesses do well when trust and Social Capital are high where people obey the law voluntarily not by compulsion where corruption is minimal or absent where citizens are educated and healthy and can make a decent living and where life is safe and peaceful not

Filled with fear most agree that these conditions are wanting in too many places and yeah more so now in 2023 it’s not like shit’s gotten better incorporate with the [ __ ] all these all these [ __ ] reports and you can’t make any progress God damn Novo gets involved in reshaping the socio-political and socio-political

Really how why does Novo get involved in shape and reshape reshaping the socio-political environment how when with who you see what I’m saying like when you learn to read between the lines this is just intermittling this is just political meddling governmental meddling it’s lobbying it is literally bribery

Even though they have anti-bribery here that’s one of the goals okay fam sure this is called lobbying now Lenovo gets gets involved in reshaping the socio-political environment the company sees quote political indifference especially among young people as a huge challenge to democracy end quote it’s bridging Europe initiative with the world economic Forum

Oh here we go aims to involve young people in shaping a sustainable Europe through multi-stakeholder engagement activities include an interactive website involving 1 000 young Europeans among 33 countries Illuminati confirmed working papers and international forums the vice president of corporate Communications John Iwata reels of IBM’s approaches as a global

Corporation for fostering supportive external environments the company’s National operations around the world are run as local businesses with local executive teams hiring and promotion damn how is that how is that new all right okay Alex relax IBM’s diversity programs are long-standing and deeply rooted The Firm managers

I’m over here like reading to myself The Firm manages environmental matters philanthropy and volunteerism with as much discipline as other parts of his business none of this is simple local ownership and management don’t always predict don’t always protect none of this is simple local ownership and management don’t always protect mcdonald’s’s restaurants

From violence protests or Coca-Cola from politically motivated competition uh yeah for more info on those about like McDonald’s restaurants I believe that was uh episode four episode four episode five where they talked about McDonald’s franchises uh getting trampled over I believe it was over wages yeah I believe it was

Over wages and I went off on a rant about artificially artificially uh raising minimum wage and why it just raises the price of food and a lot of folks working don’t even deserve minimum wage in some instances because they do nothing to uh to they do nothing to what’s the term called

To promote themselves they do nothing to separate themselves to highlight highlight themselves what’s what’s the term it’s on the tip of my tongue to differentiate themselves yes they do nothing to differentiate themselves from everybody else every other Wagey who just shows up to work for the paycheck

The service is still the service might still be [ __ ] there’s no Drive in or passion and what they do I get their flipping burgers right but even just saying flipping burgers sounds denigrative I don’t know I mean I do know Alex knows but considering that’s a rant stop distracting me

Uh such conflicts such conflicts reinforce novo’s case for the business value of moving tolerance trust and democracy to an even higher level on a global scale corruption is a core socio-political challenge pervasive in many countries some firms like IBM celestica and shell will walk away from

Deals if they must bribe to get them for a cash rich company with 9 and 10 figure profits this is a viable even a competitive strategy for others that live closer to the line of survival such choices can be difficult to even life-threatening literally yeah literally life-threatening they’re probably threatening lives to get

Contracts out there with you know with some help of some three-letter agencies that I won’t name but no literally literally go go read I recommended the book uh I think it was episode three chapter three right confessions of an economic Hitman by John Perkins go read that [ __ ] and understand it

However all too many companies with the economic wherewithal continue to fail on this important issue as Transparency International points out most agree in principle on what is the right thing to do even if they fail to practice it ironic there is less agreement regarding the natural environment many argue that

The risks of global warming and other threatened catastrophes are immaterial or that they pale against advancing technology and continual improvements in the standard of living though things may not be quite quotes good enough they continue to get better and we can trust in progress to prevent the risks from turning to disaster

Bjorn lombborg a young Danish political scientist statistician and author of The skeptical environmentalist is often cited for this viewpoint quote it’s a block quote global warming though its size and future projections are rather unrealistically pessimistic ooh get it there unrealistically oh get it is almost certainly taking place

Almost certainly but the typical cure of early and radical fossil fuel cutbacks is way worse than the original Affliction and moreover its total impact will not pose a devastating problem for our future nor will we lose 25 to 50 percent of all species in our lifetime in fact we are losing probably 0.7

Percent acid rain does not kill the forests and though air and water around us are becoming less and less polluted end quote many scientists see the world differently the editor of Scientific American commented on lombborg’s book as often marred by an incomplete use of the data or a misunderstanding of the

Underlying science even where his sister even sorry even where his statistical analyzes are valid his interpretations are frequently Off the Mark literally not seeing the state of the force for the number of the trees for example and it is not hard to be struck by lombborg’s presumption that he has seen

Into the Heart of the science more Faithfully than have investigators who have devoted their lives to it it is equally curious that he finds the same contrarian good news lurking in every diverse area of environmental science end quote Executives of oil companies damn that was one quote he could have

Put this in a block quote too damn in Executives of oil companies like BP shell and Suncor for whom life would be simpler if they could agree with the likes of lombborg still say that global warming and the loss of biodiversity threatened the sustainability of their businesses Novo nordis view is quote a

Company’s ability to effectively manage environmental risk is under the lens of government authorities and environmental Watchdog groups as well as investors and the general public we are well aware of the environmental risks associated with our operations and are proactive in assessing those risks and taking action to address them

No vote end quote Novo follows the precautionary principle in assessing environmental risks a product of the 1992 Rio de Janeiro Summit the principle says that in the face of threats of serious or irreversible damage lack of full scientific certainty should not be used as a reason to postpone cost effective measures to prevent

Environmental degradation point it’s a side comment while I agree with that point right this [ __ ] is so politicized at this point like that’s why I’m not stopping to comment like every five sentences because it’s gonna drag this episode It’s Gonna drag this chapter out with the rants

Right and and what we want to do is be able to take in the book for what it is taking the book objectively without having Alex [ __ ] rant and and and whine about it right because while I while I appreciate that it’s by the Free Press and while you

Also appreciate that I’m reading it to you for free obviously I’m not gonna exploit and take advantage of the situation to fill your ears with with [ __ ] you might not want to hear right right it says here Novo is directly affected by another environmental threat loss of biodiversity pharmaceutical Innovations

Continue to be mined from the world’s shrinking store of natural life forms yeah I agree Novo explains its environmental methodology in a block quote here in consultation with a range of stakeholders we carefully consider the risks that may arise from current operations as well as from past and future actions insufficient risk

Management can damage a company’s reputation and in worse cases it’s licensed to operate while Superior risk management opens the door to new business opportunities end quote one Novo environmental initiative addresses threats to animal and plant species that arise from disposal of one of its product lines astrogenic hormones a leading scientific

Hypothesis blames growing hormones hold on blames growing increases in reproductive disorders among males of very species around the world on estrogen-based female sex hormones in the environment these hormones come from the urine of pregnant women women using contraceptives or hormone therapy hormone [ __ ] hellmounds these hormones come from the urine of pregnant

Women women using contraceptives or hormone therapy and from the direct disposal of estrogen-like chemicals do I need it say that it turns the freaking frogs gay uh do me a favor hey Google what is atrazine joking I’m just talking smack hey Siri what is atrazine all right Novo says that it disposes of

Estrogen production waste safely so the main environmental impacts arise from patient use of course novo’s gonna [ __ ] disclaim that bro you expect Novo to be that transparent nah fam I said baby steps not [ __ ] splits you feel me these These are are Tiny Steps these are are Miniature steps maybe not even steps

Forward it might be a [ __ ] moonwalk backwards right they’re just doing it for show they could give [ __ ] they could give a [ __ ] about how they ruined the environment as long as they get cashed out at the end of the day fam that’s why you need corporate Cowboys

That’s why corporate Cowboys exist if you ask somebody on the inside you know crack a couple Scrolls break a couple kneecaps anyways Lobo says that it disposes of estrogen product waste safely so the main environmental impact arise from patient use of course blame the patient what who why wouldn’t you blame the pit

The patient is already [ __ ] up they can take a little bit more blame the company has begun to tackle these issues it has published and shared with relevant authorities and interested stakeholders the results of one study one study [ __ ] count it one study that showed a significant impact

On juvenile male fish even at low concentrations they probably had on what like a pregnant woman piss on a male fish next subheading here stakeholder engagement when engagement with stakeholders is viewed as important it receives Management’s Focus planning and discipline C figure 9.10 9.10 figure 9.10 is called

Stakeholder engagement and is it’s a table it’s a table like we’ve seen before two columns left hand side outcomes right hand side strategies for said outcome on the left hand side you’ve got the first a b web and an aweb engagement and competitive performance strategies that’s the model measure and

Manage value exchanges and relationship development engage in direct personal dialogue supplemented by reporting and Technology nice the second outcome is results effective prioritization of stakeholder programs and initiatives the strategy for that include seek optimal outcomes for all stakeholders the third outcome here is Best in Class employees and partners and strategies

For that include to apply corporate values in stakeholder engagement processes bro how the [ __ ] is this novel how is this a discovery all right Alex relax and also another strategy is to enhance partnering capabilities yeah you think I might reconsider uh future future books maybe don’t get them as dated last

Time right stick to like I don’t know 2015 and after I think 2015 and after is a healthy date it’s healthier right because it’s less old all right it says here novo’s business web analysis includes the socio-economic impacts of its production and consumption activities the company charts a quote’s distribution of created

Wealth that Maps where cash comes from that’s 100 from customers I.E people with Health Care needs and health care providers and where it ends up in 2002 55 to suppliers 34 to employees six percent to investors and lenders and nine percent to the public sector via taxes with four percent taken from cash

Reserves for future growth the way Novo Fame frames frames the way Novo frames this analysis illuminates the depth of its stakeholder thinking it refers to suppliers as external economic stakeholders and employee income as a measure of the market value of people’s productive capabilities this is nothing new it’s just dehumanizing people

When what you want to do is re-humanize business it’s just dehumanizing people it’s dehumanizing your stakeholders right it’s dehumanizing your actual suppliers it’s dehumanizing your employees impressive too is the extent to which Novo depends on the allotment of corporate Personnel to ensure the personal touch a couple of points here

First meetings with neighbors to reduce environmental impacts at production sites okay the second evaluating suppliers social and environmental performance I don’t know why but Okay the third because okay never mind the third personal meetings between employees and patients okay the fourth Partnerships with ngos on Animal Welfare Partnerships with ngos on Animal Welfare

There we go the fifth Partnerships with business organizations to promote sustainable development the sixth raising public debate on stem cell research and the need for revised legislation the seventh putting diabetes on the agenda of the European Parliament the eighth building National Health Care capacity with local authorities in

Developing countries because fam do you not see a pattern here is this not lobbying is this not lobbying right now they say they’re against bribery but it ain’t bribery if it’s lobbying right um number nine uh where we are nine funding International research Partnerships okay okay 10 supporting educational programs

For engineers from ethnic minority backgrounds all right 11. public awareness and fundraising activities on world Diabetes Day and 12 timely and proactive media relations on suspension of clinical trials the next little subheading here products and services transforming your core offerings to adapt to a stakeholder slash sustainability agenda can be daunting

See figure 9.11 uh just really quickly here figure 9.11 is titled products and services yet again it’s another chart it’s another table of sorts with outcomes on the left hand side strategies on the right hand side the first outcome we want is competitive advantage and strategies to achieve it are revisit offerings in

Lights of stakeholder interests economics slash social slash environmental criteria the second outcome is sustained value innovation and strategy for that is to use competitive differentiators a lot of these you seem borderline logical but I guess for those who haven’t been in business this this book is a nice overview a nice overview of

What a lot of folks have essentially known since they got it since they first got into business and in 2002 which is when this book was published apparently was was novel some type of Novel Discovery right the last the third outcome is maximize the economic social environmental benefits and strategies

For that are identify and resolve trade-offs and multi-phase parallel rollout so essentially getting a lot done at the same time you feel me it’s just it’s just better management it’s just what they should what they should put down is better Management’s more efficient leadership but no you know if it’s like

It’s as if if the um If This Were A Movie there’s a saying someone that says if the protagonist dies in the first half hour of the movie or if the protagonist saves the princess in the first half hour of the movie then there’s no movie it’s

Just a 30 minute little retelling of what happened but no we’ve got to uh we’ve got to appreciate the journey I guess that a lot of companies were taking in finding a social conscience finding a an environmental conscience a a sustainability conscience and growing conscience of their [ __ ] up actions

All right considering tobacco companies are in the tobacco business whether they like it or not they can sell out and use the money to try something else but such action does not solve the fundamental problem other Industries like healthcare are intrinsically quote good so when a Novo invents new technologies EG to

Simply five patients self-administration of insulin injections or broadens out to research and tackle the psychological and social aspects of the disease as it has recently done cynics can argue that such actions are calculated business Innovations sugar coated with virtue many Industries are somewhere in between they offer some degrees of freedom to

Firms that see competitive advantage in sustainable products and services the first point Ikea responded to critics and adopted new principles for furniture materials and Design This resulted these resulted in new product ideas and a stronger brand a second Point here Whole Foods Market is a darling of Wall Street

Distinguished in the grocery business by being quote the world’s largest retailer of natural and organic foods highly selective about what we sell dedicated to the stringent quality goals and committed to sustainable agriculture keep in mind folks keep in mind this was 2002 right since then Whole Foods has

Sold the [ __ ] out and a significant a significant portion of their 365 brand comes from overseas and whether or not they adhere to uh agriculturally sound practices [Laughter] just keep reading that’s a third Point here Hewlett Packard reinforces its image as a caring ethical company when it rewards consumers who recycle inkjet

Packaging so we wonder about the future of this material’s intensive product what just you’re you’re scared of some printer’s dog continuing the next subheading operations operations operational matters how the firm does what it does arise both inside and outside of the firm see figure 9.12 uh just real quick figure 9.12 is

Another table outcomes on the left hand strategies on the right the first outcome here uh by the way this table is labeled operations the first Strat the first outcome I’m sorry on the left hand side is industry-wide responsible performance and added strategies to achieve this include manage against new classes of risk

That’s Integrity stakeholder social Environmental second outcome is no free writers strategies to achieve that are to integrate social and environmental factors in quality cost and Process Management a third outcome is risk reduction license to operate the strategies for this are to cultivate trust and information sharing in business webs an outcome for this

Sorry an outcome on the left hand side another outcome that’s the fourth now is to lower transaction costs and strategies for that include the cultivation of trust and information sharing information sharing in the business web outcomes number five to process process and Eco efficiencies so process efficiencies and Eco efficiencies I

Guess and a strategy for that is to support supplier assessments education and audits a sixth outcome is quality and strategies for that include to raise voluntary industry standards and seek regulation where necessary or mature and finally number seven outcome is is it number seven yeah number seven is appropriate and efficient regulation

And that is actually incorporated into the strategy of raising raising voluntary industry standards and seeking regulation where it’s necessary or mature I don’t know man it sounds sounds like cuck [ __ ] to me what this is the Practical implementation continuing though this is the Practical implementation of everything we’ve been

Talking about be It sharing information with employees customers shareholders and other stakeholders or realizing social and environmental policies and goals in everyday business processes and practices yes folks this refers to I believe it’s season seven episode two chapter two of this book go listen to episode two if you’re interested on on

Stakeholder webs and and business webs right because the facilitation of communication and the sharing of information is essentially what drives a lot of these initiatives a lot of these outcomes and is rolled up into a bunch of these strategies in order to to action to put these strategies into action

You need the type of infrastructure that makes communication easier that makes the sharing of information easier more efficient so that more people can move on the same information together at once or at least in in conjunction in collaboration with one another and can move congruently every firm will have its priorities one

That many are now tackling is Eco efficiency the alignment of quality and cost-effective processes and procedures with good environmental practices another is transparency itself full and proper disclosure to employees consumers Regulators shareholders and Community Representatives Nestle Nike Home Depot and De Beers illustrate how firms face risks to reputation and performance from issues

That arise outside their own firm’s boundaries in a world of business webs stakeholders increasingly hold firms accountable for the actions of their suppliers and other business partners in addition business webs are easier to build more efficient and manageable when information sharing trust and Social Capital are high Novo Nordisk seeks alignments between

These two factors social responsibility and trust-based partnership in the way that it now works with its business web the company believes that setting high standards of the Environmental Management and human I.E employee rights communicating these standards to suppliers through dialogue and monitoring compliance ultimately increases the trust that contributes to operational efficiency

With several years as experience in managing supply chain standards on environmental issues Novo launched its human rights program with a series of supplier workshops in Europe Mexico India and Japan the objective was to consult key suppliers and external experts on how to assess social performance in the supply chain the

Company also trained 100 employees mainly in purchasing on the issues and dilemmas of social responsibility Novo says this training effort which had strong management support greatly fueled the success of the overall program in its 2002 launch year the program achieved several targets there are a couple of points here which I’ll read

For you shortly the first 90 of key raw material suppliers and a range of key service and Engineering suppliers completed an environmental and social questionnaire 300 in total the second point the vast majority of suppliers responded quotes very positively to the initiative and delivered satisfactory information on Environmental Management

And their positions on labor and human rights a third Point all new supplier contracts include a clause stating Mutual commitments to the UN Universal Declaration of Human Rights the international labor organization conventions and the international chamber of commerce’s business charter for sustainable development suppliers agree to quote promptly report

Inconsistencies with these principles to Novo Nordisk I wonder don’t be cynic Alex don’t be cynical I was about to say I wonder what Novo nordis is doing with these [ __ ] reports with these complaints they could be doing nothing they could be wiping their ass with them and just you know

Going about their day but but again we mentioned baby steps in the past maybe they’re doing something maybe they’re taking steps to rectify the situation but seeing as how it’s about social responsibility I doubt I doubt it’s uh about actual progress or advancement it’s more than likely just about uh the company

Continuing the company declares that it aims to quote eliminate the risk of having suppliers that do not live up to basic human rights it formed a cross-functional committee supported by external experts mandated to take action on violators if need be in 2003 Novo did an overall assessment

Of results and extended the program to other areas including China South Africa and Brazil equally important from a program design perspective the company began to move Beyond supplier self-assessment and incorporate supplier environmental and social metrics into its formal audit systems the next subheading here is information and Communications technology

As we described at the start of this book Information Technology figure 9.13 May well be the most powerful single Force for transparency in our time let me read for you figure 9.3 I’ll describe it for you it’s again another table outcomes on the left strategies for those outcomes on the

Right the first uh of this table is called information and Communications technology the first outcome is more efficient and effective delivery of stakeholders sustainability strategies and objectives the strategies for that Define and resource stakeholders slash sustainability ICT Vision objectives plans and metrics outcome number two early warnings of

Risks and threats to firm or stakeholders strategies for that include to embed stakeholders sustainability requirements in existing ICT Services that’s information and communication technology Services that’s a short it’s an acronym abbreviation the third outcome easy usable stakeholder access to information strategy for that is to create new user-friendly applications to advance

Specific stakeholders slash sustainability strategies and the fourth outcome here is improved engagement collaboration Process Management with stakeholders and strategies for that include to leverage new and emerging Technologies okay okay then continuing firms routinely use it to communicate their agendas notably by publishing their sustainability reports on the web

Yet rarely do they fully capitalize on the power of I.T to drive enable enhance and embed their stakeholder slash sustainability agenda in the everyday life of the firm and its stakeholder interactions most companies already use technology in all sorts of ways to enhance transparency and meet the needs and

Desires of stakeholders and they also have many systems in place which with minor changes could meet such needs even better firms need to develop consistent messages and engagement models for their portfolio of what we call quote stakeholder relationship management applications these Encompass today’s customer and employee relationship management tools emerging partner

Relationship management tools and Future tools for managing relationships with shareholders and communities furthermore a financial business case can be made for various new applications that for example use information to make business processes more quote Eco efficient or wrap information value around existing products and services every transparency and stakeholder

Mandate should include an IT mandate and every it function should be mandated to rethink its application solutions to embrace the firm’s new Integrity strategy for example today some companies have partner relationship management software that tracks the financial delivery and product performance metrics of suppliers I.T managers should think about how to

Enhance such applications to also provide reporting on environmental working conditions and other stakeholders sustainability metrics in the absence of such initiatives opportunities will be missed costs will be higher and some risks will not be mitigated one not so small example a key issue in this entire area is compliance how does

A company ensure that its 150 000 employees on all continents quote do the right thing in accordance with its values and policies stakeholder commitments and the law Kate Kozlowski we’ve heard of her before we’ve read her before the lawyer responsible for compliance programs across Ford describes how the company

Uses its employee portal to enhance engagements and support around the world it’s a block quote coming up Ford law is our legal access website everything is online anyone who needs to find a trademark lawyer or agreement can find it if someone has a legal question or issue

They can access Ford law and search for legal forms memoranda or frequently asked questions find a lawyer send feedback or seek advice on compliance or an ethical issue we get 15 000 intranet hits a week and 30 to 50 email messages each day we tried for years to increase

Awareness about compliance this finally did it and we also get advice to people quickly when they need it a second piece is law pack our law and policy awareness Center it has over 100 training modules on ethics export rules safety and so on translated into several languages there are 20-minute tutorials handbooks names

Of expert contacts in the legal department and so on thanks to the intranet employees feel a much greater sense of ownership in the company before senior managers got a daily news clip sheet physically in paper form it only went to senior managers and they never passed it on to their staff you see

That’s where Senior Management was [ __ ] up the bag and it took it took until What it Took until Ford came up on some issues that they thought about on this novel this novel discovery of of uh the intranet and using employee portals to keep everybody updated nah that was a

Senior Management [ __ ] up fumbling the bag becoming complacent and not running the ball like there’s supposed to go get me started and I won’t get started it only went continuing it only went to senior managers and they never passed it on to their staff how sad now

On the intranet everyone checks the clip sheet unedited news about Ford good and bad everyone whether a clerk or a vice president finds out we all know if the company lost a lawsuit in California we get thousands and thousands of hits on the clip sheet every morning

A systematic strategy end quote by the way a systematic strategy on it enabled transparency stakeholder engagement and sustainability means a variety of possible Investments you can’t do them all at once so prioritize them and roll them out over time there are a couple of points here the first information access

Tools will provide the right information to the rights people at the right time in accessible formats didn’t I just say that didn’t didn’t Alex just say that you want teams to work in sync then they all got to know the same thing at the same time and know what moves to make

From there together all right all right I’ll I’ll leave that be it may be as simple as an annual report downloadable form from oops nope I messed that sentence up it may be as simple as an annual report downloadable from an enterprise portal or a website or it may be a daily

Summary as we’ve suggested above of corporate risks across the spectrum of issues supplemented by real-time alerts when needed such daily summaries might depend on rolling up outputs from a variety of incompatible applications across the Enterprise here Advanced Technologies like web services May deliver key information to business analytics and

Reporting tools a second Point event monitoring Technologies typically provide real-time information about happenings in the physical world they can warn about the occurrence or impending occurrence of workplace or environmental disasters such Technologies are becoming ever smaller faster cheaper and sophisticated a third point process enabling applications include customer relationship management Supply

Chain management and the like firms can improve stakeholder trust reduce inefficiencies or enhance effective or firms can improve stakeholder trust reduce inefficiencies or enhance Effectiveness through the use of timely and accurate information in their business processes these in turn lead to reduced transaction costs stakeholder loyalty and faster slash better slash

Cheaper outputs many process tools are specific to an industry or activity for example Trucking fleets now use computerized maps to help drivers choose efficient routes now a generation of such Maps also provides information about traffic jams and road hazards and how to find preferred gas stations such

Applications are truly let me turn the page here truly Eco efficient they save money and reduce consumption of carbon fuels if all that we’ve described in this chapter seems complicated well it certainly is not simple and of course we’ve barely covered the highlights like anything that is worth doing

Transparency and the new Integrity require a lot of disciplined work final note on this chapter yeah it requires a lot of disciplined work but that’s only to get the New Groove to be made into a new groove to be made routine the the new program to be

Programmed if that makes sense and I I’ve mentioned this earlier in this chapter and in previous chapters as well that’s when you try and bring in change when you try to introduce change into a system that already operates on a status quo even if even if it’s a shitty exchange right

Many will say especially Senior Management will say don’t fix it if it ain’t broke if it ain’t broke don’t fix it we’ve been doing this since the dawn of time or whatever the [ __ ] right even if the change itself is just different work but it makes the work and

The long term better maybe it it reduces the amount of work required it’s just it’s just a different like a tweak in the operation or the process that creates more output or frees up more time uh frees up money and time and energy in the organization but for some they’re just

So stuck on their ways they’ve become old and and cantankerous that they don’t want to [ __ ] move when they’re told that there is a better way to move what do you do to them hold on hold on Alex what do you do what can you do about them is what I

Meant to say you know I’m [ __ ] relaxed I I get this is a corporate Cowboys podcast but I’m reading a book let’s not get too graphic right this is a this is a free service if you need if you need Services of some other kind um but yeah that’s uh that’s that’s my

Parting thought about that is that it’s not as difficult as this book makes it out to be granted granted that this book was published in 2002 so some of the process some of the applications right otherwise I would have used a short uh term apps for it

Um this was 2002 so what the iPhone 3 was out I think it was this is I’m we’re talking a decade ago an easy decade ago but uh in today’s day and age you would think that such apps exist and no I mean they still want to

Treat them as some kind of uber exclusive project management like [ __ ] I’m sure you guys know which ones they are like Monday and Asana and some others um it’s as if nobody else it’s as if no one else but project managers and Executives think about Innovation and creativity and efficiency the regular person

Isn’t as dumb as the average person right the regular person is not as dumb as a quote-unquote average person because most folks say that well picture a person of average intelligence and they’re in the middle right and they’re still pretty dumb like maybe they can’t grapple with concepts of theoretical physics right

But then you think about the people who are below them and they they they’re not smarter than a fifth grader right but even fifth graders aren’t that dumb right sure they might not be mature they might not be intelligent they might not be wise right but they’re not dumb as far as

Finding inefficiencies identifying opportunities for for creativity for applying creativity right all it takes is someone to walk the talk unfortunately a lot of organizations depend on Senior Management on senior leadership to actually steer them and guide them somewhere and many times senior leadership is incompetent they don’t know what the

[ __ ] they’re doing they’ve grown stale they’ve grown complacent they’ve adhered to a status quo for so long why would they change it they’re on their way out they’re retiring soon I mean they could stand to uh they could stand to be helped into early retirement but we’ll close the book there and that

Concludes chapter nine of the naked Corporation how the age of transparency will revolutionize business I’ve been your host Alex thank you very much for allowing me to read to you invent right provide a little bit of commentary on What’s um on what this book is proposing to us in terms of its value

Tune in next time as we continue reading the naked Corporation thank you very much have yourselves a great one

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