Earlier this week we reviewed HIP Investor by R Paul Herman. The HIP approach (Human Impact +Profit) is a tried and packaged method for assessing companies for their ability to simultaneously make better profits BY making a better world. I had a chance to ask a few follow up questions of Paul.

What was the Genesis of the HIP idea?

Herman: I was having frequent conversations with entrepreneurs who were giving to charity but feeling frustrated. They were also seeking a social impact with their business investment. They were genuinely curious about how to “do good” and have a profitable portfolio at the same time.

I offered to find them some deals for investing in which they could do both. In my search I found good investments particularly in the micro finance world that were very attractive. They were low risk with good returns. I offered them as part of their new responsible portfolio they were building.

But I was surprised when their financial advisors nixed the investments claiming, “If it is social, it could not make money”. As quantitative people they were ignoring the data and results that proved them wrong. [Read more →]

By R Paul Herman A Book Review

R. Paul Herman has written a highly practical book. It is also educational. He has developed a system for scoring the combined profitability and responsibility of a company. This is useful for investors who want to make decisions with conscience and also desire to grow their own security and wealth. What’s more, he bridges that gap by making it clear that what helps the social and ecological side of business, are the same things that help businesses financially. The research behind it gives us solid footing and confidence in its methods. HIP stands for Human Impact plus Profit.

Herman identifies five elements for scoring on the human impact side. [Read more →]

Vestas Wind, the global market leader in manufacturing wind turbines, posted a $185m loss in its second quarter, blaming delays in clean energy projects. Investing is a tricky business under any circumstances. When your retirement plan or the companies future reserves are involved, it has an added dimension of stress because so much rides on it. But if you are an investor or a company who seeks to be responsible, there is another layer of consideration to be taken. For the most part individual investors and corporate investors have treated these a two different sides of investing, even as separate types of concerns with different audiences. But as investors become more informed and companies reposition themselves to be social responsible, there is a demand for a new way of assessing choices.

Most investors, corporate and individual, depend on third parties to certify compliance with certain responsibility criteria. There are organizations for almost every possible cause, skilled at certifying the practices of a business in regard to that cause.—from green supply chains to child labor practices. And of course, when you add them all up, it creates investing trade-off challenges. What can we live with and what is not acceptable? And can we grow our investment by our choices? It is not an easy decision which becomes obvious as companies that seemed primed to lead the new responsibility offerings falter on their returns even though true to their philosophy and mission. What guidelines and systems are there to help? [Read more →]

Sam Ford is a Fast Company expert blogger at the intersection of business, digital and culture. I raved about his blog yesterday in a review. I posed some questions to Sam and here are his replies. Check out his multi-disciplinary take on twitter @sam_ford or his blog.

1. How does thinking shape the PR world? e.g. what are the core beliefs or premises behind PR as an idea?

As with any profession, I think it’s the sad but true fact that thinking does not guide us often enough. In an agency world, where the interests of clients shape most of the discussion, or the desire to get new clients, we don’t get to have the “state of our industry” discussions as often as we should have. That being said, the blogosphere and the instantaneous publishing that digital communication affords has given more room than ever, I’d say, to discussions about best practices in the public relations space. Both best practices and, perhaps more often, worst practices have regularly become case studies for marketers of all sorts to discuss what is and is not, or should or should not be, professional ethics, and organizations from WOMMA to the PRSA are finding ways to help guide discussions about what professional standards and ethics in PR look like. I come from an agency, Peppercom, where both co-founders blog several times a week and tackle sometimes weighty issues in our field, which is a blessing (Ed Moed’s Measuring Up and Steve Cody’s RepMan). And, as the walls between various marketing disciplines break down, as well as the divisions between marketing and research, marketing and customer service, etc., discussions of professionals across various fields can happen more now than ever. I think this is key, because public relations is—now less than any time in the past few decades—more truly public relations, as the management of relationships has moved beyond just the press and toward a greater number of stakeholders. That holistic view, in my mind, is where public relations firms/professionals must be headed, to think through ways to think about and communicate with a wide variety of constituents. [Read more →]

Nick Carr argues in his most recent book, “The Shallows” that the Internet is making us less attentive and in general less intelligent. Carr has stirred up some controversy and his concept has certainly not been universally adopted. What if it is not the Internet at all but something else?

“The problem is not the technology but what the mind of the user includes ”, Sam Ford, an expert blogger for Fast Company and Director of Digital Strategy and Insight for Peppercom, a PR and Marketing firm, might say. I have been spending a lot of time on Sam’s blog recently and he offers a powerful perspective I have not seen elsewhere. He writes from a cross disciplinary window drawing on cultural patterns that offer a richly textured look at how humanity takes on life and where businesses need to pay better attention. His advice can help a business whether it is on or off line. Businesses need to include more in the thinking to be smarter. Sam thinks we can get smarter and more ethical by how we consider culture as it informs business. [Read more →]

As I read three articles in close succession, I found a tough pull between three really important concerns. The Financial Times on August 11,( Alan Beattie in Washington and Alan Rappeport in New York)  reported that the trade deficit has risen to its highest level in 21 months.  We are building a huge national debt by allowing foreign import sales to outnumber our exports. It can bankrupt a nation and future generations, making it hard to provide global leadership and meet our obligations at home and abroad. So maybe we only buy American?

But we have to at least maintain our social responsibility to developing nations and buy from them with an eye to fair trade, right? This way, nations can become more self-reliant and a part of the world order that prospers when nations are economically stable. We need to support fair trade as a model for how democracies work and responsible business is conducted. Pay fair wages and treat people decently, a basic principle of our nation. So do I buy foreign products if they are fair trade certified and hope they don’t tip the debt over the edge? [Read more →]

We all like to think of ourselves as rationale, but so often we are not. So why are we surprised when Executives like Mark Hurd of HP make bad choices. It does raise the question about what drives irrational behavior. And how this behavior can include some irresponsible choices. Work that Rom and Ori Brafman have pulled together gives clues in this book review. Plus I add some commentary.

Our Major Challenge is:

Blinders: Producing Irrational Behavior

Without consciousness, we see our identity and reputation as having to be protected and this protecting serves as a psychological force that will steer us off the path of reason. There are an array of such psychological undercurrents which are much more powerful and pervasive than most of us realize. The interesting thing is that these forces, like streams, converge and become even more powerful. Three core blinders:

• Loss aversion  (our tendency to go to great lengths to avoid possible losses)
• Value attribution (we imbue a person or thing with certain qualities based on initial perceived value)
• Diagnosis bias (our blindness to all evidence that contradicts our initial assessment of a person or situation) [Read more →]

1. How did the recession effect your business and your thinking about business? How do you see yourself as having responded differently than most businesses have?

CollinsWoerman is a regional architectural firm employing approximately 100 people. The recession has hit our industry very hard with approximately 60% of the architects in the state of Washington unemployed. CollinsWoerman has routinely fostered a very diverse practice by being regionally competitive in five markets: healthcare, science and technology, interiors, planning, mixed use commercial. Because of our diversity, we have fared better than most in Seattle. It was clear to my partner and me that this recession would not be typical. Having managed our business through two prior recessions in the last 23 years, we believed this recession would have a significant impact on restructuring the economy especially commercial construction. We saw these circumstances creating a tremendous opportunity. After Lehman’s collapse in September 2008, we felt now was the time to rethink design and construction. Many of the business models inherent in our industry would need to change. We concluded that by making strategic investments in new ideas, we could reduce the time to construct a building by 50%, reduce costs by 30%, and build in sustainability that was previously unachievable.

2. How did you think differently about the project you undertook? What effect might it have on growth of local economies to take on such thinking and projects? [Read more →]

The Wall Street Journal reported Mark Hurd, Hewlett Packard CEO, resigned for improper conduct with a female contractor. The company was quick to explain that he didn’t violate the company’s policy regarding sexual-harassment but rather submitted inaccurate expense reports that were intended to conceal what the company said was a “close personal relationship” with the contractor. There were cries for review of the policies and procedures to see if future such incidents can be prevented. It is as though people really believed that the policies themselves, if framed well enough, could prevent errors in judgment.

The problem is not that such policies and procedures are absent from the executive’s mind at the time. This executive clearly tried to protect himself from appearance of violation of the policies with misreporting. The problem is not one of forgetting the policies or not having made them tight enough to avoid loopholes. The policies were forefront in his mind. The real challenge is to have the executive hold enough in his or her mind to consider the impacts on the world around them and therefore temper one’s choices. Hurd was only thinking about himself. As long as any of us has only the implications for ourselves as the primary standard, there will be “gaming the system”—no matter the rigor of the policy. There will never be enough refinement in wording to protect him from himself and his bad choices, much less the fallout to the business, the families involved and the workers who trusted them as leaders. So, how can a company protect against such behavior? [Read more →]

Monday, we talked about why and how to change our conception of growth in business and economic terms. For a business to create evolutionary growth, rather than only expansion or only a twist on the known offerings, it requires an organization built to innovate. To have a business that can be tuned to such thinking is rare. Even when the key principles are found and offered, they are often ignored or excused as not fitting an industry or company.

Gary Hamel with Bill Breen produced an excellent piece of research on what such work systems look like in The Future of Management. They found several themes that reoccurred across their three cases—Google, Gore and Whole Foods. First, innovation is systemic— from strategy into product and service offerings and into operations. It is seamless. The innovation is focused on difficult to duplicate advantages. Plus the company designs and builds a management model that can keep the innovation alive in the delivery. I. E. Innovation is everyone’s business. This calls for a highly engaged work environment with the ability to be nimble and flexible in the extreme.

What does such an organization look like? [Read more →]