October 09, 2006

"Corporate Social Responsibility" and the "Bottom of the Pyramid"

Can a corporation have a conscience? Nobody really asked that at Columbia Business School's Social Enterprise Conference 2006, but the question underlaid it all uneasily. Well, at least for me. The fact that the conference exists at all clearly indicates that plenty of business school students have some conscience, but they fact that they are in business school in the first place also clearly indicates that conscience is modulated by a certain faith in enterprise.

The buzzword that resonated loudest to me in this buzzword filled environment was "corporate social responsibility" or CSR for short. The idea is that companies need to healthy citizens or something, but in practice it seemed more like a way for people embedded deep in giants like Citicorp or Alcoa to soothe their own consciences with a small diversion from the corporate cash flows. Strikingly absent from the discussion was any sense of how CSR spending, when it exists at all, might stack up against the rest of these giant's budgets.

Jim Sinegal, the CEO of Costco, at least talked real numbers as he accepted an award of some sort. He proudly threw up a quote about how it was better to be a Costco employee or customer than a shareholder. The Costco philosophy is to cut costs everywhere except when it comes to employees, who if I remember his sliders correctly represent 70% of the companies operating cost! But even as he deflected personal credit away from him and out towards his entire management team it was quite clear this approach is merely an iteration of the age old concept of the enlightened dictator. The employees/serfs may be happy, but only because the situation is enforced from the top. Like his counterparts at the head of Starbucks and American Apparel, Sinegal has no structure in place to ensure that his enlightened approach can be anything other than a management decision.

This situation has deep roots in the history of management theory, it's something of a Taylorism versus Fordism approach. Happy employees is clearly a successful business style, but so is the far more exploitative bean counting tight ship way of management. Costco might be better for employees than Wal-Mart, but both still are out there and both perpetuate hierarchies that pump money into a small upper class. Some kings were better to their serfs than others, but either approach meant the existence of a kingdom. And I don't think it's a coincidence that the corporate organizational form emerged just as democracy began to unstabilize the aristocracies of old.

It's not the aristocratic side of this corporate finishing school that's really disturbing though, it's the religious one. Most people in these environs have some sense, however watered down, of their privilege and the larger inequalities out there. It's the people who truly have a faith in "The Market" that really freak me out. The ones that really believe that "CSR" will spread because consumers demand it or scarier still those that believe in BOP. BOP stands for the "bottom (or sometimes "base") of the pyramid", the billion strong poorest of the poor. The idea is that by turning these people into entrepreneurs partnered with multi-national corporations and selling to their equally poor peers poverty can be eradicated.

One of the key mantras of BOP believers is that it can not be reduced to just selling goods to poor people, but instead requires a far more intense and interlocking relationship with the target market. This is absolutely true. What BOP is about is not selling products, that's just a corollary to all. What it is about is selling an ideology. Like the centuries of missionaries before them the BOP proponents think they are saving when actually they are converting.

Poverty is an issue with far more ramifications than can be explored here, but the simple point is that not having a lot of money can only be seen as an absolute bad thing if you follow a faith that revolves around the accumulation of wealth. Certainly there are probably problems that we as westerners see in the populations at the "base of the pyramid" that the people themselves might also agree are problems. But there are also problems that are far less physical and far more religious in nature. Like the heathens of old these are people with different value systems than us, and like missionaries trying to save souls, it's quite likely some of the problems the BOP practitioners are out trying to solve are only problems of faith. And as well meaning as they may be I for one have no faith their little enterprise...

Posted by Abe at October 9, 2006 05:37 PM

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