The economic necessity of corporate involvement

fedgazette Editorial

Ian A. Martin

Published July 1, 1991  | July 1991 issue

The following column is excerpted from a speech before the National Retiree Volunteer Center during its Launch '90 campaign by Ian A. Martin, deputy group chief executive and a director of Grand Metropolitan PLC, the London-based parent organization of Minneapolis' Pillsbury Co.

The topic of the speech, corporate responsibility and volunteerism, is a topic of special interest to the Minneapolis Fed, which inaugurated its new volunteer program (FEAT—Fed Employees Action Team) this spring.

Following an old professorial principle, let me define my terms before I discuss them. What exactly do we mean by public/private partnerships? I believe we mean the joint efforts of corporations, governments, communities and non-profits, combining their resources to achieve common goals. These partnerships have historically been formed by some of the great philanthropists of all time—Andrew Carnegie, the Rockefellers, the Mellons—the list goes on and on. And philanthropy was, in my view, the primary motivator of the great works which these giants left as their legacy. Philanthropy was, in fact, the prime mover to improve the state of society in the purest and most literal sense.

Today, I believe things are different. Clearly, philanthropy is still alive and well in our land. However, I believe a new actor has arrived on the public/private partnership stage. A new motivator which, in harness with altruistic philanthropy, will influence, shape and, perhaps most important, accelerate the partnerships of the future. That new actor is the changing face of brand marketing, the rapidly increasing influence of consumer power over corporate behavior.

Many years ago, the legendary ad man David Ogilvy cautioned against simple-minded sales themes, saying "The consumer is not a moron, she is your wife." Today, of course, this very warning against arrogance itself seems patronizing. But if anything, this further dramatizes my point: that companies deal with individuals in a complex variety of different roles simultaneously. At a basic minimum, that means that there is no practical difference between a company's duty to customers as a purveyor of goods and services, and its responsibility to society as a good corporate citizen. Chances are, if a company is seriously deficient in the latter capacity, it will be seriously punished in the former.

Historically, consumers have always recognized some type of relationship between a corporation and its brands. For many years, consumers have been asking a series of questions before selecting a product:

  • Is this a credible and believable company?
  • Are their products safe?
  • What have my personal experiences with this company been like?

But in the past, this "corporate evaluation" process has been almost reflexive. Passing the test simply meant that the company's brands were one of several acceptable choices. But, more and more, the relationship between the corporation and the brand is changing. Consumers are making the corporate evaluation a conscious effort and not a reflex action. They are expanding the criteria they use to judge the corporation and they are using their dollars to show support or dismay over corporate actions.

The consumer who will not stop at an Exxon filling station because of the Valdez accident is not responding to the product. This consumer is using economic clout to send a message about expectations of the corporation. Consumers who stopped purchasing tuna because of the dolphins killed were able to send an economic message to an entire industry.

Consumers have also used their brand choices to register support for corporate actions. Many of those consumers who came back to Tylenol after the tampering scare cited Johnson & Johnson's response as a significant factor in their decision.

The fact is, consumer opinions and perceptions about a company's brands are becoming synonymous with and indivisible from the consumer's view of the company's corporate behavior, in both an ethical and environmental sense. Responsible corporate behavior has, in essence, become part of the brand mix.

For a company to succeed in today's competitive arena, it MUST take this into account. It must be seen as responsible to the environment, and to the communities in which it operates, every bit as much as to its shareholders and customers.

Of course, moral obligation and a genuine desire to do good motivates all of us; but this is not the only impetus. It is a combination of moral and commercial goals which propels us to be responsible, ethical employers. And I believe that is not only right, but preferable.

I believe that the real power in public/private partnerships lies in this basic truth: that managers of corporations must inevitably come to believe that community involvement ... is good work, to be sure, but that it is also good business. Then and only then will corporate leaders have the will and determination to reach out to partners in the community to form mutually agreeable goals and set out with vigor to achieve them.

The corporate manager who believes he is doing the "right thing" in the broadest sense — serving both his moral and commercial goals — will make corporate responsibility a primary, integral and permanent part of his business. ...

Pillsbury/GrandMet has taken up the mantle and will launch our own national volunteer program called the Pillsbury Points of Difference. Our aim is to become a model for corporate volunteers in the United States.

Four principles will guide this program:

  • We will foster an environment that promotes, encourages and recognizes volunteering by all employees, retirees and their families.
  • We will encourage every major location where we operate to have a formal volunteer program for employees and retirees. We plan to roll out our Points of Difference program in plant communities and larger headquarters cities throughout the United States.
  • We will support diverse volunteer opportunities, including those which focus on our charitable giving.
  • We will be driven and managed in this effort by employees and, to a very large extent, retirees.

In fact, a key component of the Points of Difference will be Pillsbury's Golden Ambassadors, our core of 800 retiree volunteers who banded together in Minnesota in 1983, and have been an effective force in Pillsbury-sponsored and independent community programs ever since.

Our Golden Ambassadors will be absolutely pivotal to the success of our Points of Difference program. They will be involved in every stage of the project—from creating the programs, to implementing them, to motivating other retirees and employees to take up the call and make a difference.

Of all the partnerships we have formed at GrandMet—and there have been many—I am personally most proud of the Points of Difference. I am proud, quite frankly, that we have had the creativity, the courage and the foresight to develop a partnership which is hugely dependent on volunteers for its success. The Points of Difference program is our stake in the ground, our testament to our belief in volunteerism as an essential and permanent component of our corporate activity. ...

As I said earlier, I believe all corporations today—to remain competitive—must make corporate responsibility an integral part of their business planning. The day has finally come, some 20 years after Marshall McLuhan made the prediction, when the medium really is the message. The image of the corporation, in my view, has become permanently identified with its brands. I believe partnerships, properly formed and executed, are the win/win approach to corporate responsibility. Successful partnerships can produce solutions which:

  • break new ground in their creativity
  • reach new heights in their achievement, and
  • exceed all limits, in terms of personal reward to the people involved.

In closing, I would like to address myself specifically to the retired members of the audience who will determine the success of many public/ private partnerships in the 1990's.

I believe I speak for many of my colleagues in the United States, the United Kingdom and around the world in asking you to continue and expand your fine work, both on your own and in partnership with all of us.

Today, more than ever before, we need your experience, your energy and your commitment to help us form partnerships, find solutions and truly make a difference.

Martin is also chairman and chief executive of Grand Metropolitan Food Sector and led the acquisition of The Pillsbury Co. in 1988. He also serves on the boards of several Minneapolis organizations, including United Way and the 1991 Special Olympics.