For this portion in our series, everything is about to come together because we focus on having a solid fit between all business activities, including corporate social responsibility (CSR). The more your business's activities fit together, the stronger your business's advantage will be against competitors.
We have alluded to fit in previous portions of this series in some of our CSR examples.
When looking at these CSR activities, they all fit to their other business activities and their corporate strategies.
Porter claims, "While operational effectiveness is about achieving excellence in individual activities, or functions, strategy is about combining activities" (10). By combining activities together, you create a strong "link" that makes both replication by competitors very difficult and numerous trade-offs. According to Porter, there are three orders of fit.
Make sure each activity of your business, including your CSR, matches your overall strategy. This makes your strategy easy for all stakeholders to understand, act on, and follow the vision leadership that your business has laid out. For example, at Nordstrom, their strategy is to be consumer-focused and they use their customer service as the main activity to carry this out.. From this, there have been amazing tales of what Nordstrom has done to provide that service and why they are always known for this.
When Nordstrom decided to take their CSR to a strategic level, they spoke with those customers to find out what was important to them. The causes they chose to support and the means of doing that all became highly customer-focused and, again, fit with their strategy. With your business, set a strong vision and culture so that all stakeholders know what to expect of your entire business.
Second Order of Fit: Activities are Reinforcing
Recently, Nordstrom saw its sales in stores decreasing while online and mail order purchases were increasing. They had to be creative in how to still provide top of the line customer service. They did so with a business acquisition of Trunk Club, an exclusively online retailer where online shoppers receive personal, online stylists. The addition of Trunk Club fit with the Nordstrom strategy and the trends they were seeing in the clothing retail industry. The activities of Trunk Club are very similar and reinforcing of Nordstrom's other activities.
In terms of CSR at your business, are employees volunteering in the community encouraged? Does your business support the volunteering in any capacity? Do they provide monetary support? Do they provide paid time for volunteering? Do they recognize your work it in a company newsletter?
Your business needs to ensure that proper incentives and rewards are clearly outlined in order to encourage positive behaviors.
Third Order of Fit: Optimization of Effort
Porter defines optimization of effort as sharing information and communicating properly across the entire company so that activities are not repeated and human energy is not put to waste.
Lets return to employee volunteer programs, but lets examine Prologis' Impact Day. On May 16, 2014, 1,400 Prologis employees from around the world completed a volunteer project. This was the second year of Impact Day. Each location was in charge of their own volunteer project, but, with a coordinated effort from the top of the organization, successes/challenges from the previous year as well as ideas were shared with all locations. With a worldwide project like this, a lack of communication could have really wasted those resources, limited the positive impacts in those communities, and gave employees a negative feeling towards the project.
When these orders of fit are connected, your business will have its own advantage that will be sustainable and difficult for competitors to try to copy, according to Porter. Competitive firms that try to copy will end up having to make numerous trade-offs, most likely ending their replication in failure.
The more that activities at your business, including CSR, are connected, the stronger your advantage will be. Support your strategy and vision with reinforcing activities and policies. Communicate your successes and best practices so that your stakeholders understand and can follow.
- 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" - Click here.
- Part 4: "Fit Drives Both Competitive Advantage and Sustainability"
- Part 5: "Rediscovering Strategy" - Click here.
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.