“The Case Against Corporate Social Responsibility,” by Aneel Karnani, associate professor of strategy at the University of Michigan, appeared this week in a special supplement of  The Wall Street Journal, produced in collaboration with MIT Sloan Management Review.

In the article, Dr. Karnani argues that corporations that focus on social responsibility will “delay or discourage more effective measures to enhance social welfare” and characterizes these efforts as a tax on shareholders.

With all due respect to Dr. Karnani, the argument he put forth is wrong. Moreover, his essay has exposed the futility of an ideological debate pitting the free market against the common good as if they were wholly separate entities.

This is not a hypothetical conversation. The world is full of real problems that threaten the corporate sector.

We face unconventional threats and irregular enemies, and we spend enormous sums at home and abroad for a semblance of security in which to conduct business.

While we may have averted a financial catastrophe, we are plagued by high unemployment, our natural resources are under siege, and our social safety nets are clearly stressed. And there are those who argue that our institutions—government, media, educational organizations, and even corporations—are not up to the task of solving these grave problems.

Dr. Karnani’s argument relies on an obsolete framework that assumes the free market requires managers to maximize profit and create enduring value for shareholders regardless of the corporation’s social impact. While this has defined the debate for the previous century, it will not and cannot define the future because of one undeniable fact: profit and shareholder value are not created in a vacuum.

The Changing Roles of Institutions
The proliferation of online and mobile communication offers myriad new tools and channels through which to debate social issues. These tools, however, do not solve problems on their own.

To understand and address the complex challenges that exist in the world today, we need a new framework of thinking and approach.

We need to recognize that the ubiquity of technology and the increasing speed at which information travels does not just shift how we communicate, connect, and collaborate but it also fundamentally changes the nature and work of the institutions that exist within our society.

The tools that empower a more active, engaged global citizenry can create new opportunities to solve old challenges when combined with reorganized and refocused institutions.

We are witnessing the rise of a more nuanced, multidimensional marketplace that is breaking monolithic entities into groups of networked individuals.

People and organizations that choose to ignore this reality and cling to their ideology will be doomed to fail. The one-to-one conversation is not between artificially constructed corporate brands and the collective populace, it is between corporate brand ambassadors (internal and external) and individual consumers. This shift requires a new framework and new approaches to profit, enduring value, and social responsibility.

Dr. Karnani’s case and two other recent high-profile editorials in The Washington Postand The Wall Street Journal assailing corporate social responsibility efforts fail to recognize this fundamental shift. But they aren’t alone. Most corporations, nonprofit groups, and government entities are trying to solve the world’s problems using structures and systems designed on past experiences, not present and future possibilities.

New Ways to Determine Value

Dr. Karnani’s argument also fails to realize profit derived from extracting value at the expense of employees, customers, and the greater social good leads only to profits in the short term, not enduring value over the long term.

Now that employees, customers, shareholders, watchdogs, and government regulators all have access to easy-to-use media tools and ubiquitous access to the Internet and handheld devices, it is much more difficult to hide from the glaring spotlight that can erase shareholder value overnight. Corporate leaders need to embrace the cleansing properties of sunlight and find new ways to create profit and enduring value for shareholders.

Dr. Karnani and I do share common ground on one fundamental point: Corporate social responsibility is a vague concept.

Like so many other worthy, and necessary, elements of corporate life in the digital age, the terminology related to corporate social responsibility has become unclear. Such a variety of practices have been lumped under the same umbrella concept that it is difficult to understand what is, and is not, part of the conversation.

Historically, corporate social responsibility programs, along with corporate philanthropy, government affairs, and cause-marketing activities, have been sequestered in different silos within corporate structures. They have been kept away from operational decision making, seen instead as a marketing opportunity or a reputation management necessity. This type of approach and thinking is inherently flawed—especially when the world is no longer about controlled messages and imagery.

Earnest concern for the common good is not a dangerous illusion; it is the cost of doing business in a connected society.

In the broadcast era, the distance between the boardroom and the kitchen table was much greater and shielded managers from the scrutiny of the community. In a connected society, how a corporation makes its profit and how it helps address wider social problems matter. The more connected we become, the more aware those who make profit possible are aware of who is adding to the social burden, who is ignoring community problems, and who is working to create solutions for them.

The Financial Opportunity of Creating Social Good
Characterizing corporate social responsibility as a tax on shareholders misses its true financial opportunity for corporations.

Effective corporate social responsibility recognizes the importance of strengthening and buttressing the community, which makes profit and enduring value possible.

The savvy corporations understanding their refocused role will not settle for lip service and lukewarm commitments. Rather, the vanguard will raise the standards of success to new heights, thereby opening the doors to exponential growth of profit and shareholder value.

For taking on their redefined role, the connected society will reward savvy corporations with sustained growth fueled by the attraction and retention of talent, intellectual property spun off from efforts to solve vexing social issues, capital influxes from socially responsible investment funds, increased value of the brand, and the invitation to enter new, burgeoning markets in need of their products, services, and social commitment.

Like the real problems facing the world, these growth factors are not hypothetical. They are real opportunities. Just ask IBM about the $3 return on investment it gets for every $1 invested in corporate-citizenship initiatives.

Do all corporations need to be socially responsible in a connected society? No, just the ones that want sustained profits and increased shareholder value.

A More Detailed Exploration:
Meaningful relationships take time and effort to cultivate. You can’t manufacture them at large scales like some industrial factory by just pushing buttons while staring at a screen. You need to get your sleeves rolled up and hands dirty to forge the emotionally rewarding personal interactions Homo Sapiens need to thrive.

An allure of social media is that it will make it easier for us to stay connected with a wider circle of people. In our quest to build our follower count, “friends”, LinkedIn connections, and page views, we have artificially increased our Dunbar numbers. Our wider reach has come at a cost that can be seen in the decreased depths of our relationships. While rich in reach, we are deficient in depth.

This is the equivalent of choosing between a plate of artisanal cheese and a case of Cheez-Its.

While a piece of aged cheddar costs more per ounce, it has a better nutritional impact and will offer an amazing multi-sensory experience.  On the other hand, you can munch on those Cheez-Its wherever you go and trick your body by filling it with empty calories.

For the past two years, I have delved into the issue of hunger in America thru my work on pledgetoendhunger.com and WeCanEndThis.com. It’s been an eye-opening experience on many levels, but perhaps the most profound understanding I have gained is that hunger in America is tied to the same root cause as obesity: nutritional deficiency.  Calories are plentiful now – what’s not plentiful is the availability of nutritionally balanced food.

When it comes to survival, calories are crucial.  Unlike the vast majority of our history, we live in a time where food is plentiful. Even 100 years ago, our ancestors were burning 70-80% of their calories in their quest to eat.  Now, we can dial a few digits and food gets delivered to us.  The only calories burned are walking to the front door.  By choosing Cheez-Its, juicy drinks, and fast food over seasonal, locally sourced balanced meals, obesity becomes a much more likely outcome.

Before anyone comes to the wrong conclusion, let me explain the title of this post. “Social Media Obesity” is a metaphor that speaks to the rising use of social media to replace real life interaction.  We cannot allow ourselves to continue down this path.  Rather, we need social media to complement and enhance our daily interactions with those around us.  It’s your challenge to figure out new, innovative ways to build and cultivate meaningful relationships that provide what we need for this new age.

It’s time to put down the Cheez-Its, gather around the artisanal cheese, and feed our souls with the nourishment they need.

What is your organization doing to promote more rich, meaningful interactions?  Or are you getting a case of the social media munchies?

Today, charity:water launched what has become its annual social media outreach campaign. Since its inception in 2006, the September birthday campaign has helped charity:water grow its base of supporters by embracing social media and providing the platform and tools for individuals to lead their own campaigns.

Through this year’s campaign, charity:water seeks to raise enough money to provide clean drinking water to the Bayaka people, a marginalized tribe of hunter-gatherers in the Central African Republic. Some of the last hunter-gatherers in the world, the Bayaka people have lost the ability to sustain themselves because of the encroachment of logging operations into the forests they have inhabited and sustained themselves.

“The Bayaka have an incredible story, but almost no access to clean water,” stated Scott Harrison, founder and CEO of charity:water, “And so today begins our campaign to give every single one of them access to clean water. While we’re at it, we’ll keep going and reach 70,000 of their neighbors. It’ll take us $1.7 million and 1,700 September birthdays to get there.”

While these numbers may seem audacious, charity:water has a track record of success. It all started when Scott Harrison donated his own birthday to help raise the initial funds that launched his fledgling non-profit, charity:water. He chose to create his own, instead of working with an existing charity, because he believed he could do more by building an organization from scratch.

What started as a commitment to radical transparency has grown into a vibrant community that has helped provide over 1 million people with clean drinking water in 17 countries. Their success offers lessons for companies and non-profits seeking success in rallying supporters online.

Harrison cites three factors that have propelled their success:

1. Their decision to direct 100% of general donations to building wells, not overhead costs.

2. Tying individual donations to the GPS coordinates on a Google map of the well that person has helped build.

3. Embracing online media and providing a platform and tools for individuals to personally rally their friends and families.

If you’d like to see these principles in action, you can learn more at http://www.charitywater.org/september.

Several months have passed since we gathered at the Smith School for the 2010 Social Enterprise Symposium and feasted on a variety of perspectives and ideas shared by presenters, panelist, and audience members alike.  One particularly profound perspective deserves further reflection and consideration.

In recent weeks, two separate op-eds ran in the Washington Post and Wall Street Journal deriding corporate social responsibility initiatives.  Both commentators framed their arguments around the maxim that corporations must place the creation of value for shareholders as its primary objective.  While Matthew Bishop and Michael Green offered a solid rebuttal to the two critiques, something we learned at the Symposium needs to be included in this debate.

Stanley Litow’s keynote address about IBM’s decision to center their core strategy on corporate citizenship provided substantial proof on the prudence of corporate citizenship.  What was most compelling was his statement that IBM reaps a 3:1 return on investment for their corporate citizenship efforts.

By devoting their best and brightest minds to tackling some of the world’s most vexing issues, Litow claimed IBM can trace its ROI to five sources:

Talent – recruitment and retention of their knowledge-based workforce.

Investments – IBM has seen sizeable investments in its stock from Socially Responsible Investment Funds (SRIs) that account for $1 trillion in assets and must invest in socially responsible organizations.

Technology innovation – the world’s biggest problems require new solutions and breakthroughs, many of which IBM can use to solve similar problems for their paying clients and generating revenues from licenses and patents in the broader marketplace.

Brand – the major emphasis of their advertising and marketing campaigns center around their corporate citizenship efforts and helps them stand out from their competitors

New market entry – they have found much greater success in gaining entry into new countries and regions by leading with their corporate citizenship initiatives

The ability to generate $3 for every dollar invested in corporate citizenship initiatives is important and noteworthy.  Because it is IBM making the claim, we social entrepreneurs can take great comfort in their validation of the notion that doing good can translate into doing well.

What do you think? Is this noteworthy or not worthy?

Metaphorically, the antennas on the hilltops (broadcast media) have been joined by the beacons in the valleys (social media). The former provide for greater reach, require greater resources, and are limited to one-way experiences. The latter reach smaller pockets of people, are much less cost-intensive, and are inherently conversational. Working in coordination, the two can create profound outcomes. A lack of coordination leads to detachment, confusion, and diminished influence.

At a fundamental level, we are witnessing a shift from a hierarchical communications system to a networked architecture. This shift poses significant challenges to those organizations not anticipating the broader shifts that are also required – culture, strategy, policy, structure, and staffing. Without accounting for all five elements, your organization will not be able to optimize its potential to communicate and advocate.

How is your organization addressing these five elements? Are these the right elements to address?

Thanks to everyone who helped shape and inform my Innovation Lecture Series presentation to NASA yesterday.  You’d be encouraged to know that the comments and ideas you shared in my original post were read and shared by a wide circle of NASA leaders.

While I make the return trip home, I wanted to let you see the slides I used for my presentation.  I don’t have the time to add commentary or context, so read into them as you please.  Rest assured, I plan to articulate key sections in a series of blog posts here and syndicated thru other blogs, too.  This presentation has produced a watershed of new thoughts and ideas for me.

In the meantime, feel free to offer up your thoughts, ideas, critiques, and challenges here.

The era of the oversized check is over. Showing up for a community relations photo op without altering your operations isn’t enough anymore. In fact, words without action are one of your greatest risks in the networked marketplace.

Your company’s filings with OSHA, EPA, USDA and other federal government agencies have created digital footprints. Customers, employees and activists are talking about you online, and this new generation of word of mouth isn’t contained by time or distance. Sooner rather than later, this mosaic of information will be available to everyone—investors, customers, regulators, employees and competitors alike.

Are you ready for the greater intimacy and immediacy that the networked marketplace demands? More specifically, are you ready for how the networked marketplace expects you to care about broader community issues?

Thanks to ubiquitous Internet access, a proliferation of mobile devices and easy-to-use web apps, the executive suite’s relationship to the rest of the world has changed. Corporations are able to engage with their stakeholders like they’re a corner store rather than a faceless multinational. That means the days of separate silos of communication are over. Corporate social responsibility, cause marketing and corporate philanthropy can no longer operate independently as if they serve different audiences. This is especially true for companies that profit from any services or products that contribute to social ills.

It is time for a unified approach to caring, driven by an awareness that your company is part of a larger ecosystem and community. Not only have these audiences converged, their expectations of companies have changed. You need to demonstrate an authentic commitment to the social causes your company has chosen to support. And your operations need to demonstrate this commitment just as much, if not more, than your marketing and communications.

What’s the cost of not aligning operations with marketing when it comes to doing good? As Umair Haque of the Havas Media Lab stated in a recent post, “In a disconnected world, the costs of evil are minimal.” Continuing this logic, Jeff Jarvis, author of What Would Google Do?, proposed a new term: “Haque’s Law” Its meaning? “As interaction explodes, the costs of evil are starting to outweigh the benefits.”

While “evil” might seem a harsh word, social issues carry with them implicit and explicit morality. One cost of business in the networked marketplace is exposure to moral judgments from individuals and organizations at an increasingly faster pace.

The Timberland Company is an example of a business trying to move beyond just marketing. Founded in 1952, Timberland has grown into a $1.5 billion company and a leader in effectively integrating corporate citizenship and cause marketing. The company gives 40 hours of paid time off for community service to each employee each year, coordinates an annual company-wide day of service, supports City Year and other nonprofits and has committed to reaching a neutral carbon footprint in all its operations.

After years of walking the walk of corporate citizenship, Timberland overcame its hesitancy to talk about the walk and made citizenship a central theme of its marketing and advertising. In 2008, the company launched Earthkeepers, an eco-line of products, with a comprehensive marketing campaign making sustainability and corporate citizenship the cornerstone of the Timberland brand. The centerpiece of this campaign has been Earthkeeper.com, an online community integrated into all the major social media networks that draws individuals who share the same values and commitment to sustainability. In addition, the company issues a quarterly Earthkeeper report, detailing its progress toward its community goals.

Rather than hide from the greater intimacy of online media, Timberland CEO Jeff Swartz has embraced it. He is frequent user of Twitter, sharing his thoughts, ideas and reactions to what’s happening in the world. For instance, immediately following the Haiti earthquake, he traveled on a humanitarian mission organized through the company’s partnership with Yéle Haiti, a foundation started by Haitian-American musician Wyclef Jean. With company funds originally intended to support an ambitious reforestation initiative, Timberland showed flexibility in redirecting the monies to support the rebuilding of Haiti’s infrastructure.

After he returned from Haiti, Swartz shared his experience in a blog post. On the three-month anniversary of the earthquake, he accompanied former Senator Bob Kerrey and Billy Shore, CEO of Share Our Strength, on a trip back to Haiti to help scores of amputees created by the earthquake begin the process of regaining their lives.

While Timberland is not without its blemishes, those leading it realize the importance of a unified approach to social good.

The #1 Thing You Need to Learn from This Post:
This is your opportunity to influence the NASA culture.

A More Detailed Exploration:
This is an experiment to learn the challenges and advantages of formulating thoughts and ideas in a networked environment. My modus operandi is to spend great lengths of time pondering, drafting, and shaping my thoughts before publishing them with the greater world.  However, I am evolving my habits and shifting how I use Rally the Cause to make it more of a networked thought experience.

To that end, I am putting one of my upcoming opportunities on the table to test the viability of this approach.  If you’re going to go, why not go big?  That’s the entrepreneur in me talking.  Here’s your chance to inform and shape a major presentation I am making to NASA on July 28.  I’ll be at the Johnson Space Center and my presentation will be beamed to NASA centers across the planet as part of the Innovation Lecture Series hosted by the Space and Life Science Directorate. [Added: They're the folks responsible for the health and productivity of humans in space -- and they are quite interested in collaborations and partnerships.]

Before you begin to think I’m getting lazy, I’ve already started developing my thoughts and ideas. But, I think I would be doing the entire Social Entrepreneur ecosystem a disservice if I didn’t reach out to the broader community to give everyone the opportunity to share their perspectives and ideas, too.

What’s in it for you?
This is YOUR chance to bring our way of thinking into the NASA culture.

Of course, I’ll attribute your ideas. You’ll get access to the final presentation on SlideShare. You’ll be involved in a pretty cool discussion with other social entrepreneurs.

So what’s the topic?
It’s pretty big. Are you ready for it? Open wide and take a bite.

How Meaning Shapes Mission: Inside the Social Entrepreneur’s Mind

Key insights:
- the social entrepreneurism trend and its driving factors
- social entrepreneurial models
- by-products of addressing complex social issues
- profiles and case studies
- strategies and tactics that can be used by anyone

Ready to get started?
Start posting your thoughts, links, ideas, counter-points, and general comments here.

And, remember, failure is not an option. Or is it?

Chase Giving Contest Keeps On Rolling Despite Critics

Will Old Spice Guy Leave Alyssa Milano at the Altar of Her $100,000 Donation Request?

Feel free to comment here or on Technorati.

A More Detailed Exploration:
To help save the endangered galvao bird of Brazil, just tweet “Cala Boca Galvao” and 10 cents will be donated to the cause. Or, not.

It was bound to happen. Our seemingly unending need to spread awareness of important social issues has led to a spontaneous prank by a loose network of Brazilians on unsuspecting Twitter do-gooders.  Watch for yourself:

In case you’re wondering, “Cala Boca Galvao” is roughly translated into “Shut up, Galvao.” Who is Galvao?
According to the New York Times, he is “Brazil’s leading sports announcer, Galvão Bueno, a man who, to the ears of some Brazilians, is a bombastic cliché machine.”  With the start of the World Cup, many Brazilians will be uttering these words many times over the coming weeks.

This faux-lanthropy campaign illustrates the power of networked people working in loose coordination with each other.  What started as a trending topic on Twitter led to a couple creatives to concept and produce the video (in 32 hours with no sleeping). Others have added their creative touches including a poster.  It’s snowballed into one of my favorite memes of the year.

One second to tweet. One second to save a life.

Genius. Pure, networked comedic genius.

If you want to join in on the fun, just tweet this out: 
Help #bra Save the Galvao Birds.  http://bit.ly/galvaocpn