This Is The Age of Damage: 3 Things You Can Do To Survive

First came the Age of Image, soon to be followed by the Age of Advantage. Today, we are entering headlong into the Age of Damage - an era that for many companies brings unprecedented risk of a damaging crisis or even of failure.

So says David Jones, the relatively new boss of Havas, an advertising giant. He argues that for businesses, being part of the solution to the biggest problems facing the planet, rather than part of the problem, has evolved from being a relatively fringe issue of "corporate social responsibility" into one of the central factors that will make or break a company in the 21st century. He may be one of the world's top Mad Men, but I think his arguments deserve to be taken seriously.

I met recently with Jones at the Nasdaq Marketsite to interview him for Newswire.FM. You can watch a soundbite from our conversation about this huge challenge to traditional business practices by clicking the picture below:

Jones reckons that the proliferation of social media has "taken corporate social responsibility out of the silo and put it firmly in the P&L statement. It isn't about charity or about compassion. Fundamentally, if as a business you want to be successful, the new price of doing well is doing good and if you don't set out to do good you will no longer be able to do well."

This is very different from the 1990s, Jones's "Age of Image", when companies could claim to do good, but did not really change their behaviour much. Jones says that BP, with its "Beyond Petroleum" slogan and flower logo, was the poster child for this phase of corporate engagement with society. No wonder this version of CSR was viewed so cynically by the public.

It is different too from the first decade of the 21st century, when a few companies - Chipotle, Patagonia, Whole Foods and Marks & Spencer among them - felt that there was a business opportunity in becoming genuinely more sustainable and embedding that in their brand. The mantra in this Age of Advantage, says Jones, was "if we are more socially responsible as a business there is a competitive advantage for us in that."

In the Age of Damage, though, the threat due to social media is potentially a matter of corporate life and death. As Jones told me, the public now has "access to unlimited amounts of knowledge and information about businesses and the power to build mass movements against them." I recently wrote articles in The Economist (here and here) about two of the leading activist social media organisations that businesses now have to worry about, Change.org and Purpose.com, both of which ironically are themselves for-profit companies.

As yet, there is nothing inevitable about a company being caught up by one of those fast moving attacks that can make it the subject of headlines in a flash. Yet the risk is increasing fast. As Jones says, it seems that "literally every week there is another case of somebody who behaved the wrong way and paid the price."

As the penny drops and companies realise they are living in the Age of Damage, they are struggling with two questions in particular, says Jones. They say, "we know we need to be responsible, but how do we do it? And we are being more socially responsible, but how do we talk about it?"

In recent weeks, I have spoken to lots of retailers in the aftermath of the deadly factory collapse in Bangladesh that killed over 1,100 workers, and found that Jones describes well the sort of confused state they are in. They do seem to understand more than before that there is a need to do something significant to improve worker safety. But they are far from clear how much to do, and why exactly they are doing it. This may explain both the unprecedented willingness of retailers to work together on a joint approach to the problem and why American and European retailers have fallen out over exactly what that approach should be (a disagreement I wrote about here for The Economist).

What should firms do? Jones suggests three useful rules:

1. Authenticity: Being socially responsible should not be seen as marketing or branding, but as a way of life. How exactly social responsibility should be defined remains a matter of debate, but even if it is relatively narrowly defined at your firm it should include obeying the law and telling the truth.

Is this really possible, I wonder? Jones says that the public "do not expect perfection, but they do expect honesty". I'm not sure the public is always so understanding, but all the more reason therefore to behave as well as possible.

2. Transparency: Firms should assume that anything they do could become public knowledge. I would not go so far as Jones when he says that that "nothing is off the record" anymore. But firms should not proceed on the basis that they can cover up behaviour that is wrong or simply embarrassing. As the management guru Don Tapscott once told me, regarding his book on transparency called "The Naked Corporation" (read my article here), good corporate behaviour will be increasingly necessary because "If you're going to be naked, you'd better be buff."

3. Speed. Social media's viral power means there is no time to dither. A problem dealt with fast can boost a firm's brand; hesitation can be fatal. Jones cites approvingly the instant firing by Dior of designer John Galliano after he made anti-semitic comments but he criticises Starbucks for responding too slowly to public outrage over its low tax payments in Britain (see my article in The Economist here).

Readers of "Philanthrocapitalism", my book with Michael Green, will know that I have long argued that companies should behave better and play a bigger role in improving the world, not for charitable reasons per se but because it is in their enlightened self-interest. Given that the advertising industry has often encouraged firms to sell all sorts of things that people do not really need, and which often have a harmful impact on the planet, it is an encouraging sign that one of its new leaders is so outspoken about the need for change. Here's hoping his clients are listening.

Photo: Getty Images