Pearson's lesson in shared value

A global corporation’s new strategy has broken down my wall of scepticism….

Big business can be a force for social good as well as a generator of economic value. Indeed, arguably, some of our big corporations take a more robust and consistent approach to issues like environmental sustainability and international human rights than many governments.  Jon Miller and Lucy Parker championed corporate good deeds in their recent book and talk ‘Everybody’s business’. As they report, the spur for a company’s serious focus on social value is often soul searching following some kind of reputational disaster.

Over the longer term, as Michael Porter and Mark Kramer and many others argue, the most powerful and resilient approach to corporate responsibility is to build it into the core business model (Porter and Kramer call this approach ’shared value’).

Before the credit crunch banks gave away hundreds of millions of pounds in sponsorship and charitable schemes, while at the same time enriching their senior employees by shortchanging both their customers and the global economy, thus providing  a classic example of tokenistic corporate responsibility.  Various people now working with banks as they seek to salvage their reputation tell me the financial sector still finds it almost impossible to accept there is no future in selling profitable products which are bad for people and society.

Any robust strategy has to recognise and candidly confront the inevitable tensions between profit maximisation and social impact. I recently gave a talk to an energy company whose mission statement asserted its top goal was giving customers a great service. In reality, of course, the company’s goal is to make a profit while – one hopes – giving customers the best service possible. To fail to recognise and face up to that tension creates a barrier to the kind of robust self-examination corporations should welcome and encourage.

This is one reason I was so impressed by the strategic turn taken by the global education corporate Pearson - an initiative led by my former Number Ten colleague Sir Michael Barber and his colleague Saad Rizvi. Pearson has committed to a big goal and to a thoroughgoing long term process of organisational change involved in delivering it. The goal is ‘efficacy’: by the end of the change process every Pearson product and service must have ‘a measurable impact on improving peoples’ lives through learning’.

Unlike the energy company with its vacuous mission, Pearson recognises explicitly the challenge of combining the ultimate aim of efficacy with providing a return to investors. The issue is not so much whether or nor to be self-interested. The strategy  is based on a calculation that long term it will be efficacy that matters most and this goal has to drive out short term pressures to design and sell stuff that makes a profit but doesn’t work for learners.

Pearson’s commitment is not simply a vague goal declared by company bosses. A very thorough project – laid out in the report – has been undertaken to develop an efficacy framework and then to roll this out to tens of thousands of staff in every division worldwide.

It is well worth reading Pearson’s own account of their journey, an account whose credibility is enhanced by a recognition that it is far from complete and an invitation to educationalists, the company’s partners and clients to comment on the goal and the process behind it.

There are many challenges ahead, not the least of which is the lack of strong evidence for the efficacy of almost all existing educational interventions, but I genuinely think that what Pearson is trying to do marks a new frontier in responsible corporate strategy. Unlike so much other well-meaning CSR, this is the risk-taking institutional innovation to which businesses should aspire.

I was saying as much to a friend last night who is a senior executive in a company that provides major services to Government and who is – in the face of his own company’s reputational challenges – recognising the need for new ways of doing things.

He was intrigued by the Pearson approach and while he didn’t rule out simply copying it he asked whether his own company might develop an alternative mission to efficacy. My suggestion was trust:-

‘How would it be’ I asked ‘if you committed not to provide a service or product unless you had strong evidence-based and publicly-declared reasons for believing that to do so would enhance trust in your company, the service and the agency paying for the service’?

‘It’s a great idea’ he said ‘but there’s one problem; if we were serious we would have to stop bidding for most Government contracts’.

BTW -in case you are wondering, Pearson is not currently funding the RSA.