“The New World of Corporate Responsibility:
120 Years of Learning from a Global Classroom”

Remarks prepared by David Hutchens

for

the CEO of a Fortune 100 Company

to a leadership lecture series at a large university.

Note that, in order to protect client confidentiality, organization-specific details have been removed from this speech.

Why should we talk about corporate responsibility? Why have this conversation now?

Is it because this subject has become news? It’s a topic that continues to dominate headlines. Cable news has offered countless prescriptions for the current “crisis of trust.” Many Americans are now having conversations about business ethics at the dinner table. It’s an important subject that has entered the national dialogue, and the time is right for an exploration.

Do we do this as an academic exercise? Questions of right and wrong certainly spark lively exchanges… especially in a learning environment as rich as this. Evaluating possible responses to ethical situations – real or hypothetical – flexes our thinking, reveals our values, and builds depth of self. There is learning to be found in this discussion.

Why do we talk now about corporate responsibility?

Perhaps this discussion is prompted by a heightened sense of urgency. A lot of people have been betrayed as they watched the promises of their organizations evaporate, along with their savings. And the rest of us have struggled in an economy bruised, in part, by the misdeeds of a few. So now we react. We say something must be done; someone must be held accountable; systems must be put into place. Why hasn’t anything been done sooner?

And these then are all valid reasons for exploring the responsibility an organization has to its world.

Today, people are demanding accountability. They want to see results, delivered responsibly.

Societies are demanding accountability. Global businesses are simply unable to move through the social and economic landscapes of other cultures without leaving a mark on them in some way. We must find ways to leave only opportunity, without the scars.

And today, our constituents are demanding a public response to health matters like the current epidemic of obesity in the U.S. and the U.K.; human rights issues, such as how companies treat their labor force; lawsuits, like those in the food industry that many companies face; and many other pressures.

More and more, global organizations are being called upon to address concerns of humanity, often publicly. No company can ignore these dynamics and stay in step with the times.

But, despite the urgency, there is something that must be said: Though newsworthy, this discussion is not new. At our company, this has been an important discussion for more than 100 years. Today, the spotlight is brighter, that is all.

I realize that when corporations begin talking about responsibility, there are those that respond with a degree of skepticism. Unfortunately, many organizations have confirmed the assumption that companies are driven solely to make a profit. Responsibility is attractive to them only if it delivers a return.

So which is it? Do we explore ethics because it’s good for business? Or simply because it’s the right thing to do?

Frankly, I do not separate the two. I think it’s both. We sense that integrity of behavior is good and just, at a human level. But the natural product of integrity is growth, which brings opportunity, which brings rewards. So yes, it is the right thing to do. And it is good for business. At [our company], the connection between corporate responsibility and corporate performance is innate.

As we seek to define our own role in cultivating a prosperous 21st century, we find ourselves in an uncertain landscape. What are the rules? What is the template? How do we repair what has been damaged? How do we contribute to a healthier future? I’d like to reflect on these things by drawing upon the lessons of the past at [our organization], and considering some new ideas we are experimenting with.

If you’re expecting a prescription for success, then I will certainly disappoint you. There are no canned scripts for responsible leadership. But what I can do, as I reflect on both the stumbles and the successes of this organization, is suggest some principles that have continued to serve our organization well, that have been put to the test over more than a century, and proven themselves in every country and culture in the world where we do business. Today, I’d like to share with you a few things we have learned so far.

[VIS: Our Promise. And Our Values.]

I believe that the organizations that will provide sustained and responsible leadership are those that are highly driven by purpose. By purpose I mean a shared, singular focus on who we are as an organization, and what results we want to create.

It isn’t enough just to be driven by financial results. To inspire people to achieve results that endure, an organization must also aspire to benefit people, the environment and society overall. This is every bit as important as financial returns.

Further, organizations that are attuned to this inclusive sense of purpose are able to engage their members at a very deep level.

I have a desire to exercise my influence to make the world better. That’s why I choose to spend many of my waking hours at this organization. I truly believe it is a place where people can find meaning, relevance and a legacy.

Most who articulate the purposes of organizations tend to focus on products and services. If you were to ask most people what the business of [this organization] is, many will say that we sell [consumer products].

But after more than three decades in this company, I have observed a deeper purpose that drives our organization, and it is this: We’re in the business of relationships. We make connections, between people, organizations, and entire countries. That’s the business we’re in. And that’s the kind of purpose that unleashes an extraordinary energy in people.

We have articulated our organization’s purpose as our “core promise.” It says “We exist to benefit and refresh everyone who is touched by our business.”

Yet this promise only works in practice when we operate from these four enduring values:

“Benefit the marketplace.” This means we invest in local economies and drive marketplace innovation.

“Strengthen the community.” We contribute our time, expertise, and resources to help develop sustainable partnerships with local leaders.

“Enrich the workplace” We treat each other with dignity, fairness and respect.

“Preserve the environment” We conduct our business in ways that protect and preserve nature.

Day in day out, an observer should be able to see these values in action as we pursue our promise. These values must drive our actions everywhere we operate, in our relationships with everyone we touch. Let’s take a closer look at each.

[VIS: Benefit the MARKETPLACE]

We operate in 200 countries around the world, and countless communities. But in these places, “benefit” doesn’t just refer to an occasion when someone [connects with one of our products]. It also means we invest and invigorate local economies, renew marketplace innovation, and build deep connections with the communities in which we operate.

[Detail several examples of how this organization is building connections with communities all around the world.]

It is our intention to enable, empower and elevate the communities where we do business. That’s what we mean by “benefit the marketplace.”

[Vis: STRENGTHEN THE COMMUNITY]

This year, we held our annual meeting in New York City. One of our guests at that meeting was the great actor Donald Sutherland. In his address to the audience we had assembled there, he claimed that he was about to reveal the secret element of our products.

That element, he said, is connection. He was right. The thing that this company tries to do every day, in every interaction, is to connect with consumers, with business partners and with each other. Every day, we seek to meet, to listen, to care and then to serve.

Relationships are the foundation of our success.

In the Steven Spielberg movie Saving Private Ryan, a team of U.S. soldiers in World War II goes behind enemy lines to search for a single man, Private Ryan. In the movie, members of the team question the logic of putting the lives of several men on the line to save just one life.

I appreciate the paradoxes set up by this scenario. Because it reveals the utter inadequacy of “return on investment” thinking when applied to human relationships. You can’t quantify the value of one life… much less compare it to another. That’s why radical commitment to relationship is always justified.

It’s a commitment that starts here at our corporate headquarters. That’s why, in our Community Reading Day program, among our more than 1,000 employees who participate, you might see a member of our Executive Team leaving the office for the afternoon to read story books to a third grade classroom. Some have asked, isn’t there someone else who could read to the kids? Why someone with such a high-stakes involvement in a global operation? Our answer is, simply that a commitment to relationships is always justified. In fact, our next Community Reading Day happens to be tomorrow… and I suspect you’ll see members of our Executive Team among the others who are supporting reading-aged children all across the city.

And our commitment spans the globe. In rural Mexico, for example, many children must walk across a rugged terrain to attend school – sometimes as long as six hours, every morning. Then they do it all over again in the afternoon to return home to their families. These children are, in effect, penalized by their rural heritage, which is an important part of the fabric of Mexican culture. So members of our organization partnered with an organization called the National Indigenous Institute to build more than 18 “school shelters” all across Mexico. A school shelter is a place where students can live during the school week, and return home on the weekends. The Institute reports that the children show improved learning, better nutrition, and lower incidence of illness… all while maintaining their cultural identity. The actions of our employees, along with the institute, have been so fruitful that they’re now funding the construction of 16 new schools to serve remote areas.

Last year, we connected with people around the world on billions of occasions. The numbers are huge. But, despite our reach, we face the same unending challenge as every other organization, large and small: cultivating relationships, one human being at a time.

[VIS: Enrich the workplace]

Organizations that lead responsibly in the 21st century will be those that embrace diversity – a diversity of ideas, ways of living, cultures and business practices.

This is an issue of innovation. Our success is directly linked to our creativity… and our creativity is directly linked to the diversity of our people. New ideas don’t emerge in contexts where everyone is the same.

Our products place us in all walks of life in more than 200 countries. Thus, diversity is not optional. It is a requirement for doing business. As you might suspect, we have long been attuned to the lifestyles of our customers around the world. We make it our business to know them. Take a look at this commercial, and you’ll see what I mean.

[video: French commercial.]

Did you follow that? What you should know is that that commercial is an enormous success in France. You may have had a hard time connecting with it through an Americanized lens. That’s the point. This is not a commercial steeped in American culture. Its mindset is purely French. That is as it should be.

Today, our challenge is to be as skilled at leveraging diversity inside the organization as we’ve been at leveraging it outside. We’re in an era in our history where our corporate headquarters, for example, has a more diverse profile than ever before. But what we’ve found is that “diversity” is not a destination. It’s not a goal that is achieved, and then left so that you can attend to other things. Rather, “diversity” is a journey, never ending, with constant opportunities for growth, learning, and improvement. Today, diversity is one of our key strategic initiatives. And we continue to take steps, every single day, to increase our breadth of diversity inside the organization. For example, we have founded the Employee Diversity Advisory Council, which today makes recommendations ranging from breaking down communications barriers, to creating a diversity management curriculum.

But the journey to diversity is more than just a business imperative. I believe it is a responsibility that extends to our community as well. [Insert detail of initiative begun by the company to build diversity locally.]

As you can see, we have broadened the boundaries of our discussion to extend beyond diversity of people and cultures, to include diversity of ideas. Organizations that learn to leverage the local knowledge, depth-of-experience and diverse perspectives that come from a diverse workforce will encounter endless opportunities for learning.

I believe we’re just beginning to truly tap into such opportunities. Our employees in Indonesia, for example, needed specialized management training. There were programs available that could have been fitted to their needs. Instead, they were invited to develop their own. What they created were dozens of training modules on such subjects as maintaining high-quality standards, conducting problem-solving research and forming cross-functional teams to support the local system. The ideas and insights they generated were fresh, and rich… and, frankly, far more valuable than any solution we could have designed for them.

I’ll say it again. Diversity is not optional. It is at the very heart of our business strategy.

[VIS: Preserve the environment]

Organizations do not exist in a vacuum. Each operates in a business context, within an industry, within a society, within the world. Responsibility extends upward and outward, just as it extends inward.

There’s an intriguing illustration of the nature of influence that says that a butterfly flapping its wings in, say, Brazil can produce a thunderstorm in America. In other words, one simple event can lead to a series of amplified consequences that may produce remarkable outcomes. This is an incredibly empowering thought. The possibility for global influence lies, literally, in the hands of any individual human being who chooses to take purposeful action.

At [this organization], we believe in flapping our wings. We are committed to investing in local economies while being careful stewards of their natural resources. To this end, our people find opportunities, and then seize them.

It’s critical to note the power of the “butterfly effect,” and the spirit and actions of the individual people who work for us.

I could share many, many stories with you. I could tell you how employees are helping the China Youth Development Foundation plant a million trees to reforest critical zones that preserve both agricultural and desert lands in China.

[VIS: SHOW STILL PHOTOS OF THE EVENTS DESCRIBED.]

There are many more stories I could share with you. But each follows a simple template: Somebody saw a need. Somebody responded.

And it is only with a basic, shared conviction of our responsibility to the world around us that people are able to discern these kinds of opportunities, and then mobilize the resources to act on them. Conviction breeds possibility.

[VIS: Trust and integrity.]

I’d like to speak for a few moments now about the subjects of trust and integrity.

A fair amount of the current discussion about corporate transparency and accountability focuses on organizational systems. And systems must facilitate trust. That’s why this organization recently took a stand in reporting employee stock options as an expense on our balance sheets, where our shareholders could openly examine them. That was a change to a system that increases our transparency to our shareholders. It’s a system that helps to build trust.

But to focus the discussion solely on systems is short sighted. At their best, organizational systems can only create an environment that is hospitable to integrity of behavior. What they cannot possibly do is set the internal compass of each individual member of the organization.

This is a people challenge. Integrity, then, is the most fragile of organizational characteristics, one that can only be built upon the commitments of each member of the organization, every day, in every action.

A survey this year by Starwood Hotels and Resorts showed that 82% of CEOs admit to cheating at golf. 82%. What do we do with this statistic? Do we laugh and dismiss it? Or, if we truly do accept that corporate integrity is only as strong as each individual action, do we instead embrace this as a personal challenge to hold our own individual choices to a high standard?

Just for the record, in case you’re wondering … I don’t play golf. However, the challenge to test each of my actions against the core values of our company is one that I must embrace every day.

Here, we seek to build an institutionalized integrity. By that I mean an integrity that is built into our culture. It’s our identity. We do the right thing, because it is who we are. For integrity to take root in an organization there must be careful attention and consistent action over a very long period of time.

Our company’s legacy is built on stories of integrity that go back to our earliest days. These stories are powerful, because they embody our sense of ethics, and keep them alive so that they may continue to live through our organization’s history.

[Insert story of integrity from the corporate archives.]

[CONCLUSION]

So have the rules for corporate responsibility changed as some suggest? I don’t believe they have. It is the landscape that has changed. There are new challenges, requiring new and creative responses. But what remains remarkably constant are the same basic principles that have served this organization well for more than 120 years.

Only now, we are learning how to put these principles into practice even more powerfully.

As we step into the future, we’re finding new ways to refresh the marketplace; strengthen our communities; enrich our workplace; and preserve the environment… all driven by the power of individual people who have the courage to flap their wings.

Responsible leadership is as simple, and as difficult, as that.

Before I conclude, allow me to redirect the focus from our company to you. The principles we’ve explored today are appropriate for every type of organization… and that includes this university, for instance. What would it take for you to use these commitments in a way that builds a cadre of 21st century business leaders?

Permit me to get even more personal. What might these commitments mean to you personally as a young business leader? Here are a few questions you might want to jot down, as you begin that important process of envisioning your own future role in this global village.

(VIS: THESE QUESTIONS APPEAR ON SCREEN AS SPEAKER READS THEM.)

• How will you define your own purpose as a professional? How will you frame your own aspirations in terms of the social and environmental returns you wish to deliver?
• How will you foster the kind of relationships and partnerships that enable your organization to be productive, healthy, and resilient?
• What will you do to inspire innovation, diversity, and learning as a natural part of doing business?
• What do you stand for? What are the unshakeable promises you will make to your customers, your colleagues, your organization… and your world?

Consider these questions your call to responsible business leadership. One day you will have the opportunity to put your answers into action. I believe that by then, you will have many models of responsible behavior to emulate. It is my intention that my organization is one of them.

Thank you.

At this time, I’ll take your questions.

Copyright (c) David Hutchens, 2007