What Are We Changing and Why Are We Changing It?

Reggie Van Lee

Thank you all for inviting me to be with you at this most amazing gathering of Net Impact. I'm old enough (barely) to remember your predecessor organization, Students for Social Responsibility.

Back then, and it was just ten short years ago, many in the business world viewed the organization as a bunch of "tree-hugging" social activists armed with newly minted MBAs naively wandering into the corporate world and making change happen from the inside out.

Now there was nothing wrong with being environmentally or socially astute. In fact we know that it is mission critical for companies to understand the impact they have not only on the environment but on the lives of their employees, suppliers, and business partners. And there was nothing wrong with being socially engaged. But corporate America wasn't yet truly enlightened about the value of corporate social responsibility — at least not in the way we define it today. So that begs the question: what changed?

A little historical perspective helps frame that question. In the 1980s and much of the 1990s a growing number of corporations viewed social responsibility as a necessary evil — something that was managed under the umbrella of "community affairs" or some similar non-threatening moniker.

The idea as I recall it was to make sure key stakeholders were aware of all the good things the company did in the community and in our business associations — like giving to charities, belong to the local chamber of commerce, supporting the right professional associations — so that when things hit the fan we would have something called "reputation equity" to fall back on.

In other words — at least to those who might be skeptical about corporate intentions — the business world was reluctantly engaging in a slightly more enlightened form of PR. The goal was to create and benefit from the halo effect of their "good works" so that when they screwed up, stakeholders would look at them a little less critically.

But then things started to change. And the speed of change accelerated dramatically as a result of external factors that many knew were coming, but few had the motivation to plan for. The change began with a divergence and convergence of business and social interests unprecedented in modern times.

At first corporate social responsibility was seen as a response to activist shareholders and other third parties like the media and regulators critical of a company's policies, practices, lack of diversity, predatory behavior, and the like. At the same time other corporate stakeholders — boards of directors, stockholders, Wall Street analysts — were demanding return on investment on a quarterly basis. Unfettered capitalism was the salve for all economic and social issues. This was clearly a divergence and convergence of interests and marked the beginning of the serious thinking about contemporary corporate social responsibility.

At the recent Ford Foundation Corporate Involvement Initiative that one of my colleagues participated in a white paper noted that:

"While businesses and corporations merge and globalize, governments and public sector programs are scaling back. The roles of business, government and civil society are changing dramatically — with European governments leading the way — repositioning themselves in the new economy from resource provider and rescuer to catalyst and enabler."

Along those same lines Business for Social Responsibility points out that over the past decade the CSR has grown in importance because of:

• Increased stakeholder activism and much more sophisticated stakeholder engagement.



• The proliferation of codes, standards, indicators and guidelines for appropriate and acceptable corporate behavior.



• Accountability through the value chain as stakeholders increasingly hold corporations accountable for their business practices (with special emphasis on supplier environmental, labor and human rights issues).



• And growing government interest and action particularly in Europe where corporate social responsibility has played a major role in both the public policy and business agendas.

So let's go back to this conference's title: "From Corporation to Community: Building a Network for Change." And let's ask the question again ... what are we changing and why are we changing it?

I assume that most of you are involved with Net Impact because you believe in its mission — fostering a new generation of leaders who use the power of business to create a better world. That's pretty heady stuff. But not only is it stuff worth doing, it is mission critical, strategic and what will differentiate the next generation of leaders.

As The Aspen Institute points out so well in its "Beyond Grey Pinstripes 2003" report, it is up to the next generation of business leaders to understand that success will be defined differently. The rules have changed. The bottom line is different.

Success will be defined and determined by leaders who understand the intricate and fragile intersection of financial and economic issues with social and environmental issues. And that's where you come in.

The next generation of leaders — people like you — will need the values, skills and vision to make social responsibility a business imperative. Notice I say "leaders" — not "corporate" or "business" leaders — just "leaders." Because whether leading in the corporate, public or the nonprofit sector, you will be held to new standards of accountability. Social impact will become as important a measure as financial ROI. The two will become inextricable.

At Booz Allen Hamilton I'm proud to say we have an environment that demands social responsibility. It's ingrained in our operations through our core values. We are measured and held accountable for them. It is part of our culture. We are proud of our awards in the fields of corporate citizenship and community service. We are proud that we are an acknowledged leader in workplace diversity and are seen as a family friendly employer and one of America's top ten companies for working mothers.

You know, I'm a management consultant. I work with CEOs and other executives. I'm responsible for generating new business while also providing the best possible strategic and creative thinking for my clients. I'm also engaged in the community and with institutions where I have a passion, like the Harlem Dance Theater or my alma mater, MIT. Passion is important. It's what sets you apart from those who just go through the motions. And if you are going to be one of the next generations of successful leaders you need to be passionate about doing what is right and what is needed in today's global society.

So when I ask you, "What are you changing and how are you changing it?" what I'm really saying is that you need to consider the new world order and what it means to be a leader now and in the future.

Leadership comes in many forms — one is by example. I'm proud of my company and how we are passionate about extending our impact beyond our traditional parameters and into the communities where we do business, where our employees and their families live, and where our clients work and live. In this regard our Chairman and CEO, Ralph Shrader, leads by example by setting the tone. Ralph serves on non-profit boards, is active on the world stage around corporate citizenship issues, and empowers the firm's partners and employees to do the same. As a result Booz Allen Hamilton has received many accolades and awards that not only help our reputation but also have bottom line implications.

For example, we have just been named 2003 Federal Contractor of the Year. The award recognizes the firm for our outstanding contributions during the past year to its employees, the government contracting industry, and the U.S. government. As the Federal Government begins to look at who it does business with in the same fashion as the European governments have done, a differentiator is corporate citizenship.

We are proud of the pro-bono work we recently did in India where we looked at how public/private partnerships have a critical role to play in the fight against the HIV/AIDS epidemic. This work has the potential for enormous social impact. It also provided an opportunity to showcase our talent and expertise in front of a host of prospective clients.

And as you heard in my introduction, I've had the pleasure of working with The William J. Clinton Presidential Foundation, New York University's Stern School of Business, National Association of Minorities in Communication (NAMIC), and the National Black MBA Association (NBMBAA) to create a pilot program designed to help individual small businesses in Harlem thrive in a challenging economic environment. If you think the pressure of helping a multi-national corporate conglomerate transform its business practices is pressure, think about the pressure and excitement of helping small businesses thrive in a community that will benefit enormously from your work. It takes passion and nerve.

My personal philosophy is that you have to lead by example. In my case, leading involves following my passion. I have a passion for solving problems. That's what it takes to be a successful consultant. But problems don't exist strictly in the business world. They exist in the charitable, governmental and educational sectors as well. And as we've seen and heard throughout this incredible Net Impact conference, these sectors no longer exist in isolation from one another.

What are we changing and why are we changing it? Hopefully your involvement with Net Impact and what you've heard and seen at this conference has changed your perception of what it takes to be a socially responsible leader. Hopefully you are beginning to understand that success is not defined strictly by financial gains, but also by social and a broader economic impact. And hopefully you are learning that leadership is about passion and passion is about more than financial ROI.

My advice to you is get passionate about the personal and professional benefits of community service. Serve on nonprofit boards. Get involved with your alumni association. Consider a career in civil service (or better yet, come work for Booz Allen in our government business). Share the business acumen and knowledge you've gained in achieving your MBA while at the same time realizing there is much to learn and gain from the other sectors.

I've learned over the years that building a personal and diverse network of business and related contacts has helped me be a better consultant, a better person and a better leader. The word diverse is the key. I seek volunteer leadership opportunities where I can expand my business contacts and where Booz Allen might be able to engage in pro-bono assignments that will provide an opportunity to showcase our talent and capabilities.

In work I've done with nonprofit organizations I found that I get to develop relationships with, and learn from international, national, regional and local community, corporate and government leaders that I might not meet in the normal course of business. But what I found I get most out of these relationships is a personal network made up of people with diverse and often conflicting perspectives. It's a network that keeps me in touch and grounded. It's a network I can turn to for personal and professional support.

In flipping through the pages of Booz Allen's annual report it struck me how much of what we talked about had to do with what our people do to effect change. We do that through what we call values-based projects. One such example happens to be a project I led at my alma mater, MIT, to help that university develop a ten-year program that will post virtually all the material on MIT's 2,000 courses on the Web, free to anyone, anywhere. This initiative, called "OpenCourseWare" or OCW, is different from other distance learning programs that generally offer courses on line (for a fee) as a way of generating revenue for the institution. OCW on the other hand is exciting and innovative because it delivers on the original goal of the Internet — to share ideas and information freely and without cost.

Passion and impact. As we like to say at Booz Allen, it's the power of both.

Hopefully you will leave this conference with a better understanding of what each of you can do at the personal, individual level to help you become enlightened, socially conscious leaders. You can do that in many ways and in many places as business leaders, as educators, as civil servants or as owners of your own businesses like Seth Goldman who you heard from this morning.

As you heard Seth is a former Net Impact student member and is founder and TEO (as in "tea" EO) of Honest Tea, the best-selling brand of bottled tea in the natural-foods industry. Honest Tea's web site carries a truly wonderful statement about Seth's and his company's perspective on social responsibility that is elegant in its simplicity. Let me read a couple of points from it:

• We will never claim to be a perfect company, but we will address difficult issues and strive to be honest about our ability or inability to resolve them.



• We will strive to work with our suppliers to promote higher standards.



• We value diversity in the workplace and intend to become a visible presence in the communities where our products are sold.



• When presented with a purchasing decision between two financially comparable alternatives, we will attempt to choose the option that better addresses the needs of economically disadvantaged communities.



• A commitment to social responsibility is central to Honest Tea's identity and purpose.



• The company strives for authenticity, integrity and purity, in our products and in the way we do business.



• In addition to creating a healthy alternative beverage with 1/3 the sugar of most bottled drinks, Honest Tea seeks to create honest relationships with our employees, suppliers, customers and with the communities in which we do business.

Seth and others like him are role models for all of us. They are changing the way his industry operates and changing it because it is both in the company's and society's interest to do so. And Seth and you can change things. All it takes is passion and commitment.

Each of us can bring about positive social and economic change. And we do it by staying connected to each other, by networking and by supporting vital and vibrant organizations like Net Impact that are empowering each of us to be socially conscious.

What are we changing and why are we changing it? The answer is we are changing everything. And we are doing it because we can.

Thank you!