Companies Must Shut Down Their CSR Departments: Prasad Kaipa & Navi Radjou

Interview with CEO advisor and coach & fellow, Judge Business School, University Of Cambridge

They should instead focus on re-engineering value chains to bring sustainability in their business models, Kaipa and Radjou tell Rohit Nautiyal

What are some of the gaps in management education that come in the way of nurturing innovators?

Prasad: Consider this: I need to learn traffic rules to be able to drive safely on road. At times, I may end up breaking a lot of these rules to survive the chaos. Invest time in learning and then decide what all should be processed for unlearning or ‘selective forgetting’. I have a PhD in Physics and no business degrees to boast of. Yet this has not come in the way of my teaching in business schools across the world. The main purpose of education is to create a structure through which information gathering can be processed. For instance, if your intention is innovation, do not waste time in getting an MBA degree which will serve the purpose for someone who wants to be successful in a big business. Today social networking businesses like Facebook and Google are breaking all the rules taught in B-schools. One cannot expect a student to internalise what she has learnt in cases. Even the new dean of Harvard Business School, Nitin Nohria, is encouraging students to spend more time in gaining on-the-job experience rather than mulling over cases and participating in debates only.

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Navi: India is full of people who have not had the opportunity of higher education. As discussed in my last book Jugaad Innovation, this lot has a higher purpose in life and understands the local demands. Innovators reject success formulas in favour of what’s appropriate in the context of the local community. Applying the best practices and being action-oriented without ethical clarity will create problems for companies. This is not being taught in many B-schools currently.

You have explained the concept of ‘noble purpose’ in your book From Smart to Wise. If companies find noble purpose, will this result in corporate social responsibility (CSR) becoming obsolete? Or is this concept is too utopian to be true?

Navi: Our concept of noble purpose is not utopian at all. I believe companies must shut down their CSR departments. We have many examples already. Ramon Mendiola Sanchez, the CEO of Costa Rica-based food and beverage company Florida Ice & Farm, decided to do away with the CSR department by rolling sustainability in the firm’s business model. New KPIs (key performance indicators) were introduced so senior managers could take the right kind of decisions that contribute towards water conservation which eventually helped the firm save money and pass the benefit to consumers. Not to mention, this initiative helped Florida Ice & Farm become environment friendly. Unilever’s CEO Paul Polman wants to double the company’s revenues and reduce the environment impact by 50 per cent. Both the examples explain how this schizophrenia (increasing profitability and creating a moniker like CSR) can be eradicated by finding a noble purpose. Companies must walk the talk by getting over with PR exercises on CSR initiatives and focus on re-engineering their value chains.

So what you are essentially saying is that overhauling one’s business purpose can be a solution for the ongoing CSR debate.

Prasad: Yes. Let us try and understand this with an example. As part of its product portfolio, PepsiCo sells both obesity inducing drinks and healthy products. Hypothetically if they choose to do a CSR initiative in schools, distributing healthy products like Gatorade and Quaker Oats will make sense. Clearly Indra K. Nooyi has a purpose integrated in PepsiCo’s strategy. On the other hand, Coca-Cola does not have that balance in its product portfolio.

What role can an effective human resource department play in addressing leadership concerns in companies? Is this completely missing in India?

Prasad: Indian HR departments are way more compassionate in dealing with people compared to their Western counterparts. At the same time, HR job profiles in India are limited to ensuring day-to-day functioning. Ten years ago, due to financial irregularities in some companies, the CFO became as powerful as the CEO. There is need to find out how the human resource head will become as important as the CEO. Talent management should go beyond hiring and retaining and focus on providing motivation and career development.

Navi: For a country that has 14 million people joining the workforce every year, India needs to take a strategic approach towards talent management. Research establishes that the employee engagement level in India is one of the lowest in the world. This shows that young employees are not actively engaged by leaders in serving an organisation’s larger purpose. Sadly, many times companies do not have a larger purpose or a vision. Such companies face high attrition rates. In this scenario, the HR function can play a key role in attracting and retaining the millennials. Since there is no dearth of young talent, the focus area for many companies has been quantity over quality. The IT industry in India is already facing the repercussions of this lopsided approach. While the education system is creating thousands of engineers every year, IT experts believe that only a small percentage has the desired skills. This lot is cherry picked for the ability to learn and unlearn fast. This is crucial as the Indian IT outsourcing moves to the next level where clients will demand innovations more often.

How open are today’s leaders to feedback?

Prasad: There’s no person in authority who likes feedback in the beginning. The real problem lies in the way feedback is provided; it usually involves shutting up the receiver. In India, either employees do not feel the need to give feedback or they say things bluntly. Both fail to find an audience. There is a need to be empathetic about such conversations. It’s not about being politically correct but figuring out how to be effortlessly compassionate. You have to be intelligent while creating a context to share feedback. As a CEO coach, I realised how rightly one has to understand this for a successful relationship with clients. I listen 10 times more than what I speak. At times I have to hold back what I am itching to say. My job is done if these conversations add value to client needs.

Navi: Collecting employee feedback on various organisational challenges is the next big trend across the globe. Research shows that employees get cynical if leaders don’t follow through after seeking their inputs. Gradually the quality of ideas drops. If organisations learn to value feedback and ideas, employees will push themselves to come up with better insights.

Coopetition is unheard of in India as the new generation of young entrepreneurs takes pride in expanding the categories they operate in single-handedly. What is your opinion?

Navi: In 1999, after Infosys became the world’s 21st company to receive CMM level 5 certification (Capability Maturity Model Level 5 represents the top level of certified software development process), co-founder NR Narayana Murthy shared the company’s experience of the certification process with his Indian competitors. At this juncture, the IT sector in India had not made it big. In sharing this information, Murthy’s logic was to make his competitors as good a quality supplier as Infosys. In doing so, he empowered not only his competitors but customers who could now exercise their choice while selecting the best supplier. By pooling resources and sharing best practices one can learn to adopt the idea of enlightened self interest. It’s about the ability to move between ‘what’s in it for me’ to ‘what’s in it for us’. Business leaders must focus on what works for the industry.

(Sourced from Business Standard, 3 June 2013)