The CMO Show:
The CMO Show: Why corporate...

When you’re running a business, it’s often hard to step back and ponder big picture issues like corporate social investment and philanthropy. But as The CMO Show hosts Mark Jones and JV Douglas discover, it’s actually the best place to sow seeds of opportunity and encouragement in your business.  

This week Dr David Cooke, managing director at Konica Minolta, drops by to share his insights on corporate social investment and giving back to get more. Cooke, who has a PhD in building social capital through corporate social investment, has a strong belief in the power of building your brand through community investments.

Cooke has witnessed the impact of corporate social investment during his research and at Konica Minolta where he’s reframed the company’s approach to giving back.

“When I became managing director, I wanted all of our staff to be more engaged and I set about doing certain things,” Cooke told Jones and Douglas. “But little did I know that the single most powerful thing I could do is to actually work with the not-for-profit sector and for that to have a massive increase in staff engagement and pride in the company.”

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Participants – Mark Jones (MJ)
Jeanne-Vida Douglas (JVD)
David Cooke (DC)

JVD:   Welcome to The CMO Show– today we’re joined by David Cooke who’s the Chairman and Managing Director of Konica Minolta in Australia. Thank you so much for joining us.

DC:     Good morning.

JVD:    Can you tell us a little bit about your own journey into understanding more about why large companies invest in corporate social responsibility and what that discovery process was like for you?

DC:     Yes. I read a book called Giving It Away by an academic called Denis Tracey and it was about philanthropy in Australia, largely focused on individual giving and foundational rather than corporate. But there was a quote in there which was from the Australian Shareholders’ Association and it went back to 2002 admittedly so it’s a while ago. But their position at that time was that no Australian publicly listed company should give any money to the not-for-profit sector and this particular gentleman went on, he was one of the directors, went on to say that he regarded it as shareholder theft.

I just thought to myself when I read that, “No, no, no. He doesn’t understand. He doesn’t understand the company isn’t just giving the money away on some…altruistic whim.

I bet most of these companies are so-called giving their money away because there’s actually a return on investment on corporate social responsibility. Now that’s a very crude way of describing it but I intuitively felt big companies don’t just give money away for the sake of it.

JVD:    Otherwise they wouldn’t be big companies. Let’s face it.

DC:     So it kind of has got to make sense on the level of the heart and the mind. So I intuitively felt that and I actually in a moment of craziness went to a university, said I want to do research into this and I began a doctoral thesis on corporate giving in Australia.

MJ:      This is before you were managing director?

DC:     Yeah. This was 2005, became the managing director in 2013 I think it was.

JVD:    What were your, what were your I guess fundamental findings and also what were some of your ‘aha’ moments?

DC:     No matter who I went to, the biggest mining company in Australia, BHP Billiton, one of the biggest banks, Westpac, partnerships like PriceWaterhouseCoopers, the biggest telco, Telstra, it didn’t matter where I went, the fascinating thing for me was that everybody immediately responded when I asked them the simple question, “Why do you give your money away?” They all said, “Oh, we had a problem and we sat around and we talked about that problem. We had a look at how we could potentially overcome it and we came up with the strategy of improving our brand as being a good corporate citizen and we believed it would help us overcome that problem. Now the problem was different for the mining company to the, you know, accounting and auditing partnership or whatever but…

MJ:      Were they public perception problems or financial problems?

DC:     They were largely public perception. So in the case of the mining company, the head of their CSR program said, “You’ve got to appreciate that mining companies have a big target on them. We all like to flick on a light switch and the light comes on. We all like to use products made of steel but nobody likes us digging the stuff out of the ground” and so they call it ‘buying a licence to operate’.

MJ:      Like a moral licence.

DC:     A moral licence, yeah.

What I say though is that my research in speaking to the biggest and most successful companies in Australia suggests that this is one very, very important lever towards greater profitability and greater success. So please, amidst your mix of marketing of a traditional nature, opening more branches, being more accessible, whatever it might be, please don’t ignore the very, very powerful returns that can be gained if you can enhance your brand through your involvement with the community.

MJ:      So in other words, self-interest to the corporation as a way to kind of get these things to happen is a greater driver or, you know, impetus for change than altruism because if you go back, you know, another, you know, sort of 10 years ago or something, there was this big movement of CSR. It was all about – it was largely the altruism. It was save the world and so on and so on and so on.

DC:     Let’s say for argument’s sake, you give anonymously and completely hide that under a bushel that you gave that money away, so it’s very difficult for there to be a return unless there are some cosmic forces at work that produce a good karmic effect for you or whatever, then that may not be sustainable. If you, if – and this is the difference between corporate philanthropy, philanthropy being the love of giving, and corporate social investment. With investment you expect a return and the more common term being used these days is impact investing. So you don’t just give with the expectation of a return, you give with the assurance of a return…

JVD:    And you track that return, yeah?

DC:     Yes, you track that return. You possibly work with that not-for-profit partner to assist them to be more impactful in their work thereby increasing their returns and your returns as one of their investors. Now, some people will say to me, “Oh, I think that’s very sad. I just think companies should just give their money away because, you know, they’re generally such bad entities, you know, these big profit-making companies and they pollute and all of that, you know…”

But, but it’s just not, it’s not necessary. I mean, to me it’s a complete virtuous circle. When they give in this way, they get a very strong return and they keep giving and in the case of BHP, they give even more and they even get a bigger return. So I absolutely can’t see anything wrong with the model whatsoever. Everybody wins out of it.

JVD:    How do you combat though the cynicism, both from the point of view of marketers and perhaps the general public more broadly, so, “Oh, the only reason the company is doing this is to get a good reputation.” Like, how do you – and maybe within – if you can tell us a little bit within Konica Minolta how you actually went about selecting how to – what programs to invest in and how to engage your employee base in those programs.

DC:     The very pragmatic side of me says, “I don’t care whether they’re giving away overtly to get a return, just give it away and help…”

DC:     That’s one side of me. The other side that’s a slightly smarter marketer perhaps says if all you do is buy a logo and stick it on your drink bottle and stick them in the fridge and sell them and hope that people see the logo of the charity and buy more, then you’re probably not going about it in a very smart way because the buying public are pretty astute these days and as was mentioned, CSR-type stuff’s been around for a while so you almost have to differentiate yourself within the community of companies that are supposedly doing good things.

Now, in the case of Konica Minolta what we did was we took a very egalitarian approach.

We had staff vote on whether they would like us to have not-for-profit partnerships and if so, vote for who those partners should be” and they chose them in the fields of environmental, social and health and, and then shortly after that I actually found myself overseas in Cambodia and I came across an organisation over there run by a Cambodian woman called Somaly Mam who’d spent 20 years of her life rescuing young girls from human trafficking and sexual slavery and I came back and I said it in front of everybody again and I said, “We’ve now got a fourth category. It’s called humanitarian and I’ve already filled it. We’re going to help kids in Cambodia”

JVD:    Now right at the beginning, you’ve mentioned the Shareholders’ Association and their initial stance on corporate social responsibility being in essence theft. That changed and there was a very, very big, very tragic event that changed that. Can you talk us through what happened there?

DC:     Yeah. So that statement was by a director in 2002 who regrettably passed away shortly after that. But in 2004, Boxing Day 2004, there was the tsunami that hit Southeast Asia. So it hit our new neighbours. It hit Sri Lanka and Thailand and parts of Indonesia and so on, resulting in the deaths of many, many thousands of people. Now, that statement by the Shareholders’ Association was still up on their website at that time but they were inundated, they were flooded with calls from outraged shareholders in Australia saying, “How dare you tell companies not to give? There is massive need here” and these are the places where we go on our holidays. These are the – we play cricket against the Sri Lankans.

And the Australian Shareholders’ Association immediately realised they were out of step with society’s thinking now. There was a lag there and so they changed their policy position completely, they advocated and encouraged companies to give where they saw need and the government wasn’t taking up the slack there and in my research I interviewed the then managing director and I said to him, “So would you see that as being something that Australian companies should do in regions where they have no commercial presence? So if you happen to be a bank and you don’t have branches in Sri Lanka and there’s a catastrophe in Sri Lanka,

DC:     “Is it relevant to what you do?” and he thought for a moment because he was making policy on the run. So he paused for a moment and then he said, “Yes, absolutely, wherever the need exists.” Now there’s a guy who got it. He kind of understood the sort of the halo effect, you know, somebody’s going to choose a bank in Australia or they’re going to choose a consumer product in Australia and they have heard that this particular company does good things in society, it resonates well with them and out of the various choices they have available to them, they choose to reach for that particular product or bank with that particular company.

MJ:      To bring it back to your company, we actually haven’t covered off what are the actual specific things that you do and then we – we should go there, right?

JVD:    Yeah.

MJ:      And what have been the benefits.

DC:     Yeah. Well, I mentioned our charity partners and the intention was to stick with four but I’m a bit tardy when it comes to sort of painting within the lines I think so we’ve got a lot more than four now.

DC:     So environmental, it’s Landcare and our staff go and volunteer doing bush regeneration. With health, it’s the Breast Cancer Network of Australia who help women with breast cancer. In social, it’s a large Australian charity, The Smith Family who some years ago changed their model from poverty alleviation to keeping kids at school as a way of hitting the root cause of a lot of poverty that exists and then in the humanitarian area it’s an Australian fundraising organisation called Project Futures who return a lot of the funds that they raise here to AFESIP in Cambodia which is the organisation I mentioned earlier.

I know a number of people that have chosen to join our company because we do these things. That’s how they made the selection, in the same way that somebody might choose, “Who will I bank with?”, people choose, “Who will I work with?”

DC:     I held a dinner for everybody that had been in the company for 25 years or more when I took on this role and flew people in from interstate and so on and most of the people who’d stayed for that extended period were in the technical side of the business so they were our field service engineers that went out and fixed things in people’s offices and so on and um, and there were about 15 people, we were in a public restaurant and at the end of the meal, one gentleman said, “Could I please say something?” and I got a sense immediately that this is probably the first public speech he’d made in his life and he stood up and other people in the restaurant could see what was happening and they could hear him and he just said, “I’ve worked in the company obviously for 25 years. That’s why I’m here at this dinner. For 25 years I never told anybody where I worked because I couldn’t see any relevance to that. It’s just a place that I went, I earned a reasonable salary and that’s what supported myself and my family and it had no other impact on my life and he said, “But now I tell everybody that I work for Konica Minolta and the reason I do is that I feel so proud to work for a company that would care about young women in Cambodia who are being trafficked into sexual slavery”

When I became managing director, I wanted all of our staff to be more engaged and I set about doing certain things. But little did I know that the single most powerful thing I could do is to actually work with the not-for-profit sector and then that would come back to having a massive increase in staff engagement and pride in the company as a spinoff of doing that and that gentleman enunciated it very well, I think.

MJ:      And how often are you seeing those sorts of stories on the customer side?

DC:     Oh, quite regularly and it takes a while I guess to get a reputation for being kind of a good corporate citizen and, you know, get cut through and sort of get above the noise and what have you. But there’s a bit of momentum now and we coined a bit of a phrase for internal usage only but it’s kind of leaked out and that is, Konica Minolta, a company that cares. We care about our staff, we care about our customers, we care about our community.

MJ:      And company performance-wise? Are you seeing it on the bottom line?

DC:     So when I was appointed, the company was in mild decline. We were a few percentage points behind where we’d been the year before. Our industry, it’s a very flat market. There’s very little growth there and since I took over, we’ve been growing by 8 or 9% a year for the last two years. We’ll grow by at least that this year and our profit position has improved considerably as well, as has our market share. So all of the financial indicators are there and I think the irony of that in a way is that in my first 12 months, what I focused on between staff, customers and community is I focused on staff and community.

My view was you can’t be a customer-centric company unless you’ve got customer-centric individuals inside the company and so what I did was I focused on the staff and we talked about what sort of company we wanted to be and what does that mean in the way that we answer the phone and deal with clients and – I hadn’t actually gone to the customer piece yet and of course we worked with the community partners and low and behold, what happened is the bit in the middle, the customers, started spending more money with us.

There’s a real, a marriage between head and heart that’s producing the sorts of results that I’m paid and appointed to produce.

JVD:    Is there something about a CSR focus that enables storytelling, that empowers your customers, your staff, your senior executives, your community, to tell your story and for you to tell theirs? Is that why it’s so successful?

DC:     So, you know, my feeling is that you kind of can’t just help the community or help some not-for-profit organisations and not genuinely be trying to make your own organisation better on the inside as well because you’re a part of society. So I’ve had a strong focus on things like gender equality – there were no female senior managers in our organisation for 35 years and now 50% of my team are women. Why are they? Well, it’s a mathematical reason, because 50% of the people in society are women, 50% of the people who applied were probably women and it turned out that 50% of the best applicants were men and 50% of the best applicants were women. It was a bit of a no-brainer. I just picked the best people. So we’ve sort of worked on that piece.

I also didn’t move into the former managing director’s very large office, detached from everybody else, city views. I turned it into a quiet room for staff, got some soft furnishings and it’s a room where people can just go and sit quietly. We, we had, you know, the lunch rooms and a café at the bottom of our building and places for people to congregate and talk and so on but I also wanted to appeal to the probably roughly 50% of people in the company who were introverts, who would recharge during breaks by having a quieter place to be. So we turned the old office into a place for them and anybody who wanted to use it and, and I just moved into a much more modest office but in a high-traffic area near the lunch room. So these were overt signals that things are changing and this mantra of, “We want to be a company that cares” has some substance to it.

MJ:      What’s your advice for people who want to follow this path? It’s easy to be inspired because it’s a great story. Much harder to do it.

DC:     I think the main thing is, just sit with it for a little while. Just reflect on it and see if it feels right for you, see if it’s something that you can undertake from a very genuine and authentic place and if it is, then just get your staff together, tell them broadly what you’d like to do, use all of their ideas because there’ll be great ideas out there. You can put your own unique sort of flavour to things and, and out of that will – out of that genuineness and authenticity will come a fantastic program that will be great for you and great for society.

JVD:    David Cooke, thank you so much for joining us on the The CMO Show.

DC:     Great. Thanks very much.

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