Wednesday, April 25, 2012

Slippery when oily

More than two years ago, BP lost control of a well it was drilling using the Deepwater Horizon oil rig in the Gulf of Mexico. 700 million liters of oil poured into the ocean and the consequences for business, society and environment have since been widely discussed. The oil spill in the Gulf of Mexico is still a rich case study for various subjects related to stakeholder management and I have been following the issue of high-tech oil extraction more or less closely during the past years.
However, I am still surprised and somewhat indignant about the behavior of some of the affected stakeholders, based on their assertions that they have learned their lessons. This is because a few days ago a report showed that the United States government and the oil and gas industry have both failed to effectively improve the regulation and safety of offshore oil drilling. The report issued by Oceana, the largest international organization for protecting the oceans, further states that during the past ten months, at least three more leaking oil wells have been detected.

We know from many other case studies that changes in regulation and the implementation of successful business models take time, in spite of initial wake-up calls or public outrage. We have also heard of time-taking learning processes, slow processes of institutionalization and the tedious development of organizational cultures. It is clear that strategic, organizational and technological change processes cannot be implemented overnight. Yet, I am asking myself, why I still get upset reading reports like the one from Oceana? Some self-reflection led me to three possible causes for my astonishment.
First, as I am not a part of the oil business itself, I do not know what kind of systemic pressures oil companies are exposed to. As most of the oil companies are listed on stock exchanges, financial results have to be provided on a quarterly basis. This clearly supports short-term thinking, which is at odds with long term oriented fundamental change processes. Moreover, my personal concept of value creation is broader than the focus on maximizing financial profits.

Second, I think that my perception of issues like the oil spill in the Gulf of Mexico is framed by the coverage in the media. Spectacular and more recent events have a bigger impact on the readership than long-lasting change processes in the business models of organizations. The same is true regarding the media coverage of negative news compared to positive news. It is in this context that I think there exists a huge potential with new social media to accompany such organizational change processes in a timely manner and thus make them more visible.
Last but not least, there is the matter of dealing with causes and effects. The debates in the aftermath of the oil spill mainly covered the issue of improved regulations regarding deepwater drilling. However, this focus on symptoms of deepwater drilling does not take a sustainable perspective. As deepwater drilling is the cause of oil spills, we have to question if we are really capable to perform it in a safe way. Otherwise, it remains slippery on the oily ground.

Tom Schneider

Thursday, April 19, 2012

Lasting change

In 2008 Obama campaigned with the slogan "Change We Can Believe In!" Four years later this slogan evokes the question what kind of change has actually taken place in the US since 2008. President Obama’s opponents claim in the current campaign that they are going to bring about “real change,” since Obama has failed to make the "hope for” change happen. Clearly perceptions differ regarding kinds of change, and especially the expectations about how quickly and fundamentally such change should take place.

In an evolutionary perspective, continuous gradual change is often compared to discontinuous and fundamental change. One can assume that those who voted for Obama expected quick and fundamental change during his first term of office, especially in the economy, which was extremely weak at the time of his election because of the financial crisis. In the present campaign job creation is the dominant issue. But precisely in this area it hasn’t been possible for Obama to achieve fundamental change, at the most some gradual changes.

Observation of strategic changes in firms provide findings that explain why fundamental change is often impeded: One important explanation is that over time successful firms tend to reinforce their values and norms with strong myths and legends so that adapting to changing conditions becomes difficult. Sometimes organizational routines are created; management resorts to this especially in uncertain situations. Thus, uncertainty can be reduced and anxiety can be controlled by routine actions; however, this prevents fundamental change.

The successful development of firms, and growing economic prosperity over decades in a Western context, is an example of a successful development that has lead to inertia. The successful development in the past has become the main barrier for fundamental adaption in the future: despite increasing criticism of neoliberal economic systems, necessary changes have not taken place. When in recent years, new challenges arose in the form of social expectations, especially as a result of corporate scandals and the financial crisis, leaders of firms and of political organizations mostly tended to rely on the deep structures that had been successful in the past. Fundamental adaptation has so far not been able to take place.

Evolutionary research has also shown that sometimes systems destroy themselves by applying their behavioral principles in an exaggerated manner. Excessive short-term shareholder-value thinking, for example, can prevent necessary adaptations and lead capitalism to destroy itself. This primarily, quantitative understanding of welfare is now criticized even by such leading economists as Joseph Stiglitz and Amaryta Sen. Analogous developments can also manifest themselves in other areas of society.

Gradual change consists of continual change in small steps. In this sense Obama and his team have effected, for example, that now in the US access to health care for everybody is being discussed and first measures are being taken. We have been able to observe similar continuous changes in our longitudinal case studies in firms (see Sachs S., Rühli E., Stakeholders Matter, 2011). As an example, since the early seventies there has been a continuous increase in the consideration of an ever-broader cast of stakeholders by firms. New kinds of tools (e.g. stakeholder mapping), departments (e.g. public affairs) and processes (e.g. stakeholder engagement) have been developed. Corporations have started to publish sustainability reports and signed standards (e.g. Global Compact) and founded roundtables (e.g. corporation 20/20).

As in firms, societal developments have taken place in the US, even if not to the hoped for extent and with the anticipated speed. More importantly it seems to me, we should concentrate on the events and stories that show the continual transformation processes to improve the quality of human life, rather than to bemoan the lack of fundamental change that has taken place. By no means should the partial lack of change be used as an excuse to go back to business as usual. In German we have the saying: “Good things come to those who wait.” Therefore I suggest “lasting change” for Obama’s 2012 campaign slogan.

Wednesday, April 11, 2012

Titanic disasters - or stories of successful, sustainable life?
11th April: A hundred years ago, the pride of the White Star Line, RMS Titanic, was steaming westward on its maiden voyage to the New World. What happened around midnight between the 14th and the 15th of April has become part of our collective archetypal memory: a titanic disaster, caused by a blend of arrogance and ignorance, and a false feeling of safety.
Why has this tragic accident achieved such an epic status? The 20th century has seen so many human tragedies and disasters – why this one? It happened even before the First World War that showed how effective and efficient industrialized nations were in killing enemy soldiers, and how ineffective and inefficient they were in solving political problems.

It happened before the Second World War that not only brought an unprecedented amount, but also unprecedented qualities of distress and suffering to humans.

How could the sinking of RMS Titanic create or keep its fame as an archetypal disaster of the 20th century?

Many people have speculated about this question. Let me try it anyway: First of all, it was not a 100% man-made disaster. Travelling by ship was almost as safe back then as it is today. What if the Iceberg had been drifting by the ship at safe distance? To a certain extent, it was just bad luck. It was a risk most of us would have taken. It was an accumulation of unfortunate circumstances that (hopefully doesn’t, but) could happen to any of us.

Second – and even more important – I think it was the moment when the 20th century lost its innocence. The RMS Titanic was a symbol of the achievements of a new area: High tech, top luxury, giant size, top speed; it seemed that man-made technology could break the chains of the old ages, reach new horizons and open the doors to a new quality of life.

The big cities of the early century offered a modern, urban lifestyle that brought an end to old fashioned traditions and gave freedom to the individual. The Titanic was a symbol of a new lifestyle. It offered fast and comfortable travelling to business people, back and forth across the Atlantic Ocean. And it offered affordable transfer to people on the third class decks: emigrants of Old Europe on their way to the pursuit of happiness in the New World.

Literally “out of the blue”, within less than a few hours, all these visions, dreams, lifestyles and hopes that had shown a way into the new century, were destroyed. The unthinkable had happened, the unbreakable was broken, and the unsinkable had sunken to the ocean floor: a titanic disaster disenchanted the young century. The reasons – Ambition? Unthoughtfulness? We will never really now. What we do know: It was the absence of true leadership - the ability to responsibly use the possibilities of a new technology, to adapt to changing external conditions, to take responsibility for human lives.

Many ships have crossed the sea since then. And a new century is about to leave its childhood behind. Has it lost its innocence yet? The archetypal incident must have been 9-11 2001.

While the Titanic disaster was the moment of truth with respect to the limits of new industrial technologies, 9-11 was the moment of truth with respect to the limits of new communication technologies in a global village. Hate and fanaticism keeps mankind from becoming global sisters and brothers through internet, mail and social media.

New technologies, new opportunities, new ages and centuries don’t automatically lead us into a bright future. It takes leadership: responsibility, respect and regardfulness, to make this world a better place, and to create collective archetypal memories which tell us stories of successful, sustainable life.

Christoph Weber-Berg

Wednesday, April 4, 2012

I Paid a Bribe – Ordinary People Fight Corrupt Bureaucrats

What are the costs of getting a professor post in Hyderabad India? 380’000 rupees (~ $7’500). The expenses of obtaining a driving license vary from 100 to 3’500 rupees. The purchase of the international driving license costs even 5’000 rupees (~$95).
This is the price of so called “retail corruption”, the sort of petty bribery that affects everyday life in many parts of the world.

Swati Ramanathan and her husband set out to change all this in August 2010.[1] They started the webpage to uncover the market price of corruption. On the site people can anonymously report bribes they paid, bribes that were requested but not paid and requests that were expected but not forthcoming. The webpage offers detailed analysis of the bribes reported so far concerning the departments and the cities where corruption occurs. In India for example as well as in Kenya the police department is the organization that asks most often for extraordinary “fees”.

The webpage is booming: up until now it received 400’000 reports of illicit payments for routine work. In the first three days of April, already more than 20 bribe payments have been reported in India. The webpage idea is spreading around the globe. Nongovernmental and governmental organizations from at least 17 countries have contacted Janaagraha, the nonprofit organization in Bangalore that operates The organizations were asking about setting up a site of their own. In Kenya for example the site is operated under the same name and in Pakistan it is called The Pakistani site estimates that over the last four years the country’s economy has lost about $94 billion to corruption, tax evasion and weak governance!

All these websites, even if no names are given and the reports therefore cannot be verified, have got an impact. This impact is threatening enough that when similar sites popped up in China last summer, the government stamped them out within a couple of weeks, contending they had failed to register with the authorities. In Bangalore for example, helped to push through reforms in the motor vehicle department. Citizen apply now online for licenses.

Thanks to social media the average person obtained powerful tools to fight endemic corruption. By reading the bribe payers reports you get an idea about the anger and shame people feel by paying bribes to officials. The anonymity provided by the internet gives people the chance to talk about their experiences concerning the contacts with officials in everyday life. These exchanges over the internet serve as an awareness raising instrument. People get aware of other concerned people who are totally upset about this corruption. Social media gives them the possibility to demand change. Corruption is therefore no more seen as a problem that ordinary people cannot do anything about it. Based on this awareness social movements against corruption can grow and corruption can be tackled by harnessing the collective energy of citizens.

Sabrina Stucki

[1] The following information is based on the article „Web Sites Shine Light on Petty Bribery Worldwide“, The New York Times, 06.03.2012 and on the webpage