Being Socially Responsible Offers Opportunities, Says Nike's Hannah Jones
STANFORD GRADUATE SCHOOL OF BUSINESS—When Nike came under scrutiny for the labor practices in its contract factories in the late 1990s, the company was both unprepared and defensive. "We became the 'poster child' for all things having to do with poor working conditions," said Hannah Jones, Nike's vice president of corporate responsibility. "It was deeply painful from an internal company perspective, as well as a brand perspective, to come under such attack."
Critical media attention spurred the firm's corporate responsibility efforts—initially from the "risk management" perspective. Today, however, Jones told the lunchtime audience at the Socially and Environmentally Responsible Supply Chains conference at Stanford University, Nike is beginning to look at corporate social responsibility as another engine of innovation for the company. "We're blurring the edges of what corporate social responsibility is, and we're looking at business models as a force for massive social change," Jones said.
From a focus on manufacturing codes of conduct, Nike is now considering how the company can positively influence mega-trends facing society. "We're having significant conversations around how our business model might intersect with issues such as people's access to food, water, energy, as well as questions of climate change and poverty," Jones said.
The business case for doing so is a strong one, Jones argued, given than such mega-trends will inevitably also impact Nike's value chain. "We're a business that relies on resources like water and oil," she said, noting that threats to such commodities, as well as environmentally related developments such as changes in people's overall heath and epidemics, ultimately could close down Nike's supply chain and affect its customer base.
Moreover, she insisted, "With the new, more activist consumer, never has corporate responsibility and transparency been more important." Implying that companies essentially no longer have a choice as to whether they will be good global citizens, Jones said that the real question has become, "How deep into the business model can you push CR?"
The one-day conference drew 200 corporate and academic supply chain management experts to the Stanford Graduate School of Business to exchange ideas and best practices aimed at making the global supply chain more sustainable. The session was co-sponsored by the Global Supply Chain Management Forum and the Center for Social Innovation, both at Stanford Graduate School of Business.
Jones's message was one of optimism. "As a country, we've got to reduce our carbon emissions significantly by 2012--that presents Nike with a massive opportunity to be among the winners in carbon trading, for example," she added. Addressing issues of poverty in emerging economies, she said, will allow the company to get a foothold in new markets. Tremendously creative opportunities also exist in the world of digital media for fostering both social change and product and service innovation.
In Jones' view any social or environmental problem poses a business opportunity--not just for Nike, but for all companies. She believes the most cost-effective solutions, however, are those that address "root causes." "It's easier to prototype innovative systems than to retrofit solutions." She called such an approach "return on investment, squared," a catchy formula expressing the idea that linking social investment to the bottom line will inevitably lead to overall improved products and a stronger company.
Jones cited Nike's soccer balls as a case in point. Initially designed to be manufactured using toxic solvents, they posed both safety and environmental hazards in contracted facilities. "The traditional solution would be to monitor workers to wear protective garments," she said, which would be a labor-intensive, costly, ineffective effort aimed at the symptom.
The more creative solution--one that addressed the root cause and that also led to product innovation--was to redesign the product so that it did not rely on chemical-based solvents. In another case the reconfiguration of a footwear product so that its manufacture no longer would release a particularly noxious carbon gas resulted in a revolutionary new "air pocket" design. Score one for Nike; score one for the planet.
Thus, Jones challenged the audience to consider "how high up on the supply chain" its own CSR efforts could penetrate in order to address social and environmental problems at the core--or prevent them altogether. "Aim for radical collaborations," she advised, rallying the audience to befriend and partner with company CEOs and other internal executives, as well as with NGOs and governmental agencies.
"I see a fundamental sea of change happening here," she said. "In five year's time, as a result of the convergence of all of these areas, we won't recognize the business models," she concluded.