Column: It’s Time to Take Full Responsibility

Are you ready for the new era of end-to-end responsibility? It’s no longer good enough to do your job well, satisfy customers, and generate financial returns. In the future you will be held accountable for the supplies you use and where they came from, what your customers do with their purchase and whether it improves their lives, and the costs and benefits to the countries and communities touched along the way. Increasingly, companies and leaders will be assessed not only on immediate results but also on longer-term impact—the ultimate effects their actions have on societal well-being. This trend has been coming in small waves for years but now is surging because of the Gulf oil spill, rising U.S. health care costs in conjunction with declining health, and the role of complex financial schemes in the global recession. It will be a boon to accountants, who must devise new metrics and reporting methods. It will change boardroom dialogues, classroom discussions, and managerial mind-sets. Selling a simple cup of coffee, for example, already requires much more knowledge than how to brew and serve it. Where was the coffee grown, under what labor conditions, and with what pesticides? Is the cup made from recycled paper, and how many trees were cut down and how much water was used to manufacture it? Does the plastic lid leak toxins, and does it snap shut well enough to prevent burns from spills? Signs of this trend are everywhere. The recently passed U.S. financial reform bill holds banks responsible for the consequences of their practices long after a financial transaction. Companies face pressure to defer bonuses until longer-term results are clear. If retailers like Wal-Mart succeed in requiring suppliers to disclose the environmental impact of their manufacturing processes, carbon footprint data will soon appear on price tags. To reassure consumers that their contents are healthful, yogurt packages display photos of the bucolic farms and contented cows producing the milk. Firms are being urged to report not just what they spend on health insurance but also the health status of the people they cover. Companies such as IBM have upgraded values concerning customer satisfaction to include dedication to customers’ success in achieving their goals. In this new era, industrial-age segmentation will be trashed like the waste that companies now have to account for. Obsolete systems of sequential processes, in which each group performed just one step, with no responsibility for what happened before or after, have given way to more integrated, simultaneous planning and management, with every group, including suppliers and distributors, bearing a share of responsibility for the end product and not just for a specialty. Chains of command are being replaced by circles of influence, business fortresses by collaborative business ecosystems. Chains of command are being replaced by circles of influence, business fortresses by collaborative business ecosystems. It will be harder to say “That’s not my job” or to leave a mess for a successor. When BP’s then-CEO Tony Hayward tried to blame contractors for the oil platform explosion in the Gulf, the reaction was public (and government) outrage. BP was responsible for the cleanup anyway, and Hayward was soon out of a job. Disclosure of impact will not by itself produce behavioral change, but it will raise questions, open conversations, and prompt legislative sanctions. History suggests that those who take end-to-end responsibility will gain in reputation but might also bear higher costs, and so they will want others to adopt the same high standards. Big companies, which can no longer look pure by outsourcing activities with negative societal consequences, will pressure suppliers. Once the new metrics are out of the box, there will be no turning back. So pick up your recycled cup of fair-trade coffee, and get ready.

Column: It’s Time to Take Full Responsibility

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