Thursday
May 28
2009

Mark Beckford

Educating in Unforgiving Times

For those of you who read the print version of BusinessWeek, you know that Jack and Susan Welch write a weekly column on the last page. This week’s article is “Corporate Social Responsibility in a Recession” or his edgier online title “Giving in Unforgiving Times.” It’s a good primer on corporate social responsibility (CSR), which they categorize nto three types:

  • Donating money, products or services
  • Community involvement
  • CSR as a corporate strategy

Its conclusion essentially states the obvious: in tough times companies will likely have to cut back their CSR activities, just as they will have to streamline other areas of business.

But what caught my eye is the calling out of CSR as a specific corporate strategy. The cynical view of CSR is that large corporations do it just to make themselves look good, or to help in some way to improve revenue growth or the bottom line. The opposite is what you read on the company CSR reports or web pages, like this one:

“By working with others, we are finding opportunities to apply our technology and expertise to help tackle some of the world’s greatest challenges-from climate change and water conservation to education quality and the digital divide. Paul Otellini, CEO letter, Corporate Responsibility Report 2008. Growing a profitable business AND doing good in the world do not have to be mutually exclusive. I learned this by experience: by starting a business group that developed products that will help bridge the digital divide.”

CSR has to be part of a larger corporate strategy that will support the core business (creating and delivering products and services that will bring tremendous growth and profitability). Many large, successful technology companies do that today. About a week ago, this announcement went over the wires:

“The Intel Foundation today announced top winners of the world’s largest pre- college science fair, the Intel International Science and Engineering Fair (Intel ISEF), a program of Society for Science & the Public. Tara Adiseshan, 14, of Charlottesville, Va.; Li Boynton, 17, of Houston; and Olivia Schwob, 16, of Boston were selected from 1,563 young scientists from 56 countries, regions and territories for their commitment to innovation and science. Each received a $50,000 scholarship from the Intel Foundation. This year, a record number of 1,563 high school students from over 50 countries representing 1,226 projects will be competing for nearly $4 million in awards and scholarships. Intel International Science and Engineering Fair Finalists are selected annually from more than 550 affiliated fairs around the world.”

$4 million seems like a lot. But keep in mind that is only the the awards. The Intel Foundation spends about $100 million a year on education initiatives such as Intel Teach, a program to train teachers how to incorporate computers and digital content in the classroom. Cisco has its Network Academies in which they have the capacity to train and certify 1.2 million future networking engineers in %7E 9,000 institutions in 165 countries. Microsoft also has a slew of education programs. Collectively, we’re probably talking about a billion dollars or so, collectively spent by the IT industry to enable ICT skills in schools and institutions around the world. Clearly there is a calculated strategy behind each and every one of these programs. For Microsoft and Intel, both companies revenues and margins hinge on continued demand for PCs (their efforts to expand into mobile devices and other businesses not withstanding). By creating brand awareness and PC skills in schools around the world with programs that in the end are a mere rounding error on their respective revenue streams, they are hoping to create future demand. In the same way, countries around the world benefit as their people gain skills for the knowledge economy.

If you believe that technology is an economic development “enabler,” then it’s likely that you see this as a good thing. Tech companies fund education initiatives that lead to future demand that raise up individuals, countries, and companies extra level. [One caveat on this analysis: Intel, Microsoft, and Cisco have healthy margins that allow them to do broader, deeper and costlier programs than many others in the tech industry. You do not hear as much from HP, Dell, Asus, Acer and others given their relatively slimmer profit margins. The “rich” have the ability to give more, whether they are an individual or a corporation.] The common thread here is education. Two chapters in Thomas Friedman’s The World is Flat were the scariest for me: “The Quiet Crisis” and “This is Not a Test”. In them, Friedman lectures the government AND parents, in the United States, about the importance of investing and focusing on education.

“In 2004, the Intel Science and Engineering Fair attracted around sixty-five thousand American Kids … How about in China? … The president of Intel China <said> … there is a national affiliate science fair that acts as a feeder system to select kids for the global Intel Fair. There are almost six million kids competing.”

He asserts that we are in a crisis (a quiet crisis), and that things will get worse before they get better. In addition, it takes about 15 years for the impact of improving education to ripple through the economy. This makes sense. If you go to college, you will spend a minimum of 17 or more years in school. Friedman ends the chapter with:

“What can happen is a decline in our standard of living, if more Americans are not empowered and educated to participate in a world where all the knowledge centers are being connected. We have within our society all the ingredients for American individuals to thrive in this world, but if we squander those ingredients, we will stagnate.”

Education is THE foundation for individual, company, and country-level competitiveness. If you don’t know how to read, your glass ceiling is very low. To be competitive, you need to learn how to win. And winning companies are built on “winning” individuals. As Jack and Susan Welch put it in their column:

“Winning companies create jobs, pay taxes, and strengthen the economy. Winning companies, in other words, enable social responsibility, not the other way around.”

The fact that companies like Intel and Cisco have made education CSR initiatives a part of their corporate strategy is a really good thing. And because it is an integral part of their corporate strategy, they will likely continue to be funded, even during these unforgiving times.

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