| In our second installment of this series, we discovered how differentiation is a key element of creating a strong, competitive advantage. We also saw how corporate social responsibility (CSR) can be one of those ways to differentiate your operational activities. For today's examination of CSR into Michael E. Porter's "What is Strategy?" we talk about trade-offs. New opportunities are all around you and the opportunity cost can be too great to say no to. It is necessary that you do ensure you are picking the opportunities that best align with your future vision. Trade-offs are important in strategy because they help prevent competitors from trying to copy some or all of what your business does. If they did try to copy your business and there were not any trade-offs, all businesses would try to copy each other. With trade-offs they have to take a bigger leap to try and copy you - and they may likely fail because the activity you are doing may not align with their brand as well.. In your CSR activities, it may be easy to set up a quick and easy event that can help any charity - like a monthly campaign where portions of your sales go to a new charity each month. However, if you can focus on a few charities that relate to your organization's strategy, the impact will be bigger for those organizations. You end up trading-off being able to help everyone a little bit for helping a few charities more significantly. |     |
Porter believes trade-offs come from three factors (p. 9):
Essentially, do not try to be all things to everyone, stick to your strengths, and go for what aligns with where you see your business going so all stakeholders can follow and act towards your vision.
To use a current example, let's examine Vail Resorts' CSR program, Epic Promise (formerly known as Echo). In their guidelines, they strictly define their giving to nonprofits who work with youth or the environment and are located in the communities in which Vail Resorts operate. Through their Epic Promise program, they grant around $6.5 million to 224 charities (nearly $30,000 per charity). The youth and environmental nonprofits align with several of Vail Resorts's business operations. With the focus on these groups, they can make a bigger impact to helping youth and the environment. In addition, they are 100% wind-powered and take several steps to reduce waste. All of these CSR activities relate to and are incorporated into their strategy and everyone involved can follow the company's vision.
Vail Resorts trades-off not being able to help several other amazing causes. They, perhaps, trade-off putting resources towards the customer's overall experience. With what they have chosen to do is add and strengthen their brand. Sure, there are other resorts that do these things, but since Vail Resorts does these activities together at all of their resorts, they gain a stronger competitive position, they connect with their communities more deeply, and create a more loyal relationship.
For your business, do you have guidelines for the causes you support? What causes make sense for your business to support?
It is tough to say no to a cause that is looking for support. However, if you have detailed guidelines, it will make it easier to say no as well as help the right nonprofits find you.
- Inconsistencies in image or reputation
- Activities
- Limits on internal coordination and control
Essentially, do not try to be all things to everyone, stick to your strengths, and go for what aligns with where you see your business going so all stakeholders can follow and act towards your vision.
To use a current example, let's examine Vail Resorts' CSR program, Epic Promise (formerly known as Echo). In their guidelines, they strictly define their giving to nonprofits who work with youth or the environment and are located in the communities in which Vail Resorts operate. Through their Epic Promise program, they grant around $6.5 million to 224 charities (nearly $30,000 per charity). The youth and environmental nonprofits align with several of Vail Resorts's business operations. With the focus on these groups, they can make a bigger impact to helping youth and the environment. In addition, they are 100% wind-powered and take several steps to reduce waste. All of these CSR activities relate to and are incorporated into their strategy and everyone involved can follow the company's vision.
Vail Resorts trades-off not being able to help several other amazing causes. They, perhaps, trade-off putting resources towards the customer's overall experience. With what they have chosen to do is add and strengthen their brand. Sure, there are other resorts that do these things, but since Vail Resorts does these activities together at all of their resorts, they gain a stronger competitive position, they connect with their communities more deeply, and create a more loyal relationship.
For your business, do you have guidelines for the causes you support? What causes make sense for your business to support?
It is tough to say no to a cause that is looking for support. However, if you have detailed guidelines, it will make it easier to say no as well as help the right nonprofits find you.
This is an installment of a five-part series where we apply corporate social responsibility (CSR) to one of the top business strategy articles, "What is Strategy?" by Michael E. Porter, to determine CSR's role and what needs to be done to make CSR an effective component of your strategy.
- Part 1: Overview and "Operational Effectiveness is Not Strategy" - Click here.
- Part 2: "Strategy Rests on Unique Activities" - Click here.
- Part 3: "A Sustainable Strategic Position Requires Trade-offs"
- Part 4: "Fit Drives Both Competitive Advantage and Sustainability" - Click here.
- Part 5: "Rediscovering Strategy" - Click here.
About the Author
Brian Phipps is the Founder and a Strategist at Confluence in Denver, Colorado that consults small and mid-size businesses to increase their positive impacts and community connections in their corporate giving and social responsibility practices. To find out more go to www.ConfluenceLLC.com.
Brian Phipps is the Founder and a Strategist at Confluence in Denver, Colorado that consults small and mid-size businesses to increase their positive impacts and community connections in their corporate giving and social responsibility practices. To find out more go to www.ConfluenceLLC.com.
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