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Insights 16 Apr 2010

Open Good, Closed Bad –

By John Elkington

“Open is good, closed is bad.” Not exactly what you expect to hear from a former top Shell executive, but when Björn Edlund took the stage at the first Just Means conference on social media and stakeholder engagement he was almost painfully honest. He argued that “large corporations are obsessed with control, rather than conversation,” but suggested that business thinking is beginning to shift.

And not before time. When SustainAbility first looked at corporate reporting and engagement over the Internet back in 1999, we quoted New Economy guru Kevin Kelly on the report’s cover, to the effect that, “The network economy is founded on technology, but it can only be built on relationships. It starts with chips and it ends with trust.”

If anyone read that as a prediction that hardware, software and websites would automatically merge the worldviews of business and society, they misunderstood, badly. Every new disruptive technology can be both an ally and an enemy for business—and with much more interactive Web 2.0 technologies now erupting all around, there is a need to take a look at those fast-moving objects and trajectories on our radar screen.

Fully a decade after that first adventure in the hype-saturated, soon-to-crash world of the New Economy, SustainAbility returned to the fray in mid-2009, conducting research on the implications and applications of the new wave of social networks on corporate accountability and transparency—with the trust equation very much in mind.

Our conclusion was that, while the business case for social media was still emerging, there are major opportunities for greater transparency, engagement and collaboration. Harnessing these opportunities requires companies to engage in genuinely honest, open, and perhaps difficult dialogue, not simply to use these channels to broadcast messages. Indeed, the hardest concept for many companies to grasp is the idea that they should accept some loss of control, that allowing the conversation to evolve unedited, ensuring unfiltered—and often self-balancing—offers the richest opportunity to gain feedback from advocates and critics alike.

What a difference a year makes in this space—as we now watch companies opening up to the world of social media and networks in ways that would have seemed extraordinary last year. Back at the JustMeans conference, Unilever’s Tim Johns agreed that social media is “stronger when you concede control than when you manage it.” Or consider Timberland, with its Voices of Challenge platform, which has opened itself up for discussion and challenge on key sustainability issues ranging from supply chain labour standards to climate change policy.

Even the most sophisticated companies sometimes struggle with social media: anyone following Nestlé’s Facebook page saw in March what can happen when companies try to seize control over the conversation. In response to the moderator’s demand that participants stop altering Nestlé logos, one participant eloquently tried to educated Nestle on the benefits of social media. “Social media is about embracing your market, engaging and having a conversation rather than preaching.” Unfortunately the moderator did not share this view and responded: “Thanks for the lesson in manners. Consider yourself embraced. But it’s our page, we set the rules, it was ever thus.” An explosion of comment followed, together with an apology from Nestlé.

The Timberland and Nestlé examples illustrate some of the ideas advanced by Nicholas Christakis and James Fowler in their new book Connected. The authors call social networks “intricate things of beauty,” and “a kind of human superorgansim” with two key characteristics: connections, both short-lived or life-long, and contagion, a measure of the extent to which those in networks interact—and influence other networks.

In both cases the companies achieved connections—Nestlé’s Facebook page has over 90,000 surprisingly active fans and the Timberland site has attracted a wide range of participants. Both also achieved a degree of contagion through the viral nature of blogs and Twitter that transmitted the stories beyond the confines of the individual sites. It was the tone and approach that positioned Nestlé on the wrong side and Timberland on the right side of this equation.

The Social Media Revolution is leveling the playing field—giving a broad range of stakeholders the opportunity to initiate and drive conversations with (or around) companies. As companies try to navigate their way in the new world of social networks, they should find comfort in the fact that the rules have not changed and the keys to building interest and trust are still rooted in honesty, transparency and candor.

One area of business that this shifting landscape will impact profoundly, we suspect, is the process of and tools used to report on corporate sustainability. Radical new forms of transparency and accountability are being experimented with, as in the case of America’s Open Government Initiative, which—among other things—enables citizens to track many different aspects of what the Obama Administration is doing, including its initiatives on sustainability and green jobs. We are seeing glimmers of hope in the corporate world as well with SAP and CDP collaborating on a number of new technologies including a CDP mobile app which allows consumer’s on demand access to the CDP data on the go.

But how can we make market transparency contagious, viral, over a broader front? This is an area we are exploring at Volans and SustainAbility in two projects in tandem with the Global Reporting Initiative (GRI). The first, the GRI’s Readers Choice Awards, examines the current state of reporting. The second, entitled The Transparent Economy, investigates where market and business transparency will take us over the next decade. The work is supported by Dow Chemical (headquartered in the USA), Novo Nordisk (Denmark) and SAP (Germany), with the printed report launch planned for the GRI annual conference in Amsterdam in May.

Really? A printed report, you ask? Well, yes, but we are also investigating how we can exploit the cutting edge of social media to present our findings and engage in an expanding set of conversations worldwide. Don’t turn off your set.

Another iteration of this article appeared in CSRwire’s TalkBack blog on 14 April.

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