A business case for corporate social intelligence
Economic systems evolve to meet human needs, like the agrarian, feudal, and mercantile systems before it capitalism emerged to meet human needs profitable, STEPHEN ONYEKWELU writes that capitalism needs to continually evolve to respond to changing realities.
Capitalism seems to be coming under renewed pressure to create sustainable corporate practices. In the mid-1990s, John Elkington captured this trend in “the triple bottom line” concept. His contention was that companies should be preparing three different (and distinct) bottom lines. One is the traditional measure of corporate profit – the “bottom line” of the profit and loss account. The second is the bottom line of a company’s “people account”. This is a measure in some shape or form of how socially responsible an organisation has been throughout its operations. The third bottom line is of the company’s “planet” account; a measure of how environmentally responsible it has been.
Recently, Micheal Porter, a distinguished competitive strategy expert recaptured this in the “creating shared value” (CSV) paradigm. The CSV paradigm is gaining momentum; it is an approach to business that integrates social issues and challenges into economic value creation. This is in the backdrop of growing concerns that business is a major cause of social, environmental, and economic problems. Resulting from these increasing concerns is the diminishing legitimacy of business, this low level of trust in business leaders leads political leaders to lay down policies that undermine competitiveness and sap economic growth.
For “the triple bottom line” and CSV paradigms to be effective, they need to be embedded into corporate strategy. Corporate strategy, a product of creative conversation between the board of directors and the top management team is a function of corporate leadership. The idea that leaders need social skills is not new. Social skills are a spectrum of social intelligence. A corporation is a social system, a network of social relationships. In 1920, Columbia University psychologist Edward Thorndike pointed out that “the best mechanic in a factory may fail as a foreman for lack of social intelligence.” Thorndike defined social intelligence as “the ability to understand and manage men and women.”
Claudio Fernandez-Araoz in recent times, found in an analysis of C-level executives that those who had been hired for their self-discipline, drive, and intellect were sometimes later fired for lacking basic social skills. Social skills are important. This is more so in light of perhaps the most spectacular discovery in behavioural neuroscience, the identification of mirror neurons, found in widely distributed areas of the brain.
A mirror neuron is a neuron that fires both when an animal acts and when the animal observes the same action performed by another. The neuron “mirrors” the behaviour of the other, as though the observer were itself acting. Such neurons have been directly observed in primate species. What has this got to do with business, corporate governance, corporate leadership, “the triple bottom line” and creating shared value?
Now, this class of brain cells (mirror neurons) operates as neural Wi-Fi, allowing us to navigate our social world. They create an instant sense of shared experience. This has critical significance for corporations, because leaders’ emotions and actions prime followers to mirror those feelings and deeds. The old carrot-and-stick approach alone does not make neural sense; traditional incentive systems are simply not enough to get the best from followers. A bonded group is one that performs well.
For example, Net Impact, a non-profit membership organisation for students and professionals, conducted a survey in United States of America of undergraduates in 2010, which found that 84 percent of students would seek employment that is meaningful, promotes personal development and socially responsible during their careers.
This is substantiated in a research paper Daniel Goleman and Richard E. Boyatzis submitted to Harvard Business Review, as follows: “The firing of social neurons is evident all around us. We once analysed a video of Herb Kelleher, a cofounder and former CEO of Southwest Airlines, strolling down the corridors of Love Field in Dallas, the airline’s hub. We could practically see him activate the mirror neurons, oscillators, and other social circuitry in each person he encountered. He offered beaming smiles, shook hands with customers as he told them how much he appreciated their business, hugged employees as he thanked them for their good work. And he got back exactly what he gave. Typical was the flight attendant whose face lit up when she unexpectedly encountered her boss. “Oh, my honey!” she blurted, brimming with warmth, and gave him a big hug. She later explained, “Everyone just feels like family with him.”
From the foregoing, the triple components, profit, people, and planet of “the triple bottom line” and CSV require internal structures, policies and mechanisms set by corporations to first create shared internal corporate experience, which depend on the social intelligence of corporate leadership.
Capitalism is an unrivalled vehicle for meeting human needs, improving efficiency, creating jobs, and building wealth. However, a narrow conception of capitalism has prevented businesses from harnessing its potentials. The 3p (profit, people, planet) and CSV imply a heightened awareness of societal needs and creating business models to profitably meet them. Porter maintains the purpose of the corporation must be redefined as creating shared value, not just profit per se.
Given discoveries in neuroscience of social mirror neurons, the neural Wi-Fi circuitry they create and how this produces shared experiences, an application of these discoveries to corporation governance and leadership could have interesting consequences.
Personal social intelligence comprises social awareness (primal empathy, empathetic accuracy, listening, and social cognition) and social facility (relationship management). Corporate social intelligence would then mean a heightened corporate social awareness and corporate social facility. Corporate social intelligence would drive the next wave of innovation and productivity in the global economy. It would also reshape capitalism and its relationship to society. This is because corporations as social systems have “social mirror neurons”, which generate “social neural Wi-Fi circuitry” and a shared social experience. A company’s corporate social intelligence would determine its understanding and application of the 3ps and CSV.
General Electric’s (GE) Ecoimagination, a business strategy formulated to deliver improved economic and environmental outcomes to customers is a demonstration of corporate social intelligence. According GE, “Ecomagination’s success has been and will continue to be based on our relentless focus on results and on investment in cleaner-technology R&D. In 2015, we invested $2.3 billion in cleaner-technology R&D and generated $36 billion in revenues from Ecomagination technologies and solutions. Going forward, we will continue to increase our portfolio of digital applications that further the efficiency of our technologies and solutions to improve resource productivity.”
A new form and source of corporate social intelligence is emerging. Across the world, there are about 1.5 billion conversations an hour on social media platforms. Social media users share over 30 billion pieces of content; comments, opinions, information videos, podcasts and photographs each month. This was non-existent 15 years ago. This means businesses have potential access to huge amounts of data about their markets, customers and competitors. The crux is to turn these social media conversations from noise into intelligence.
STEPHEN ONYEKWELU