10 June 2007

The New New Math: Corporate Responsibility...

The "New New Math" (N2M) is the evolution of economics and return on investment in the modern day organization. Is it a hybrid equation of a previously published and patented algorithm? An upside down or inside out way of justification for new resources or or just new emphasis on the latest shareholder suit. The N2M is something all too often found in the most successful corporations across the globe and it's starting to see the light of day as a result of increasing Operational Risks.

Another way of looking at and understanding the "New New Math" for investment can be found in the roots of what some would say is just good old fashioned Corporate Social Responsibility (CSR):

Corporate Social Responsibility (CSR) is a concept that organizations, especially (but not only) corporations, have an obligation to consider the interests of customers, employees, shareholders, communities, and ecological considerations in all aspects of their operations. This obligation is seen to extend beyond their statutory obligation to comply with legislation.

CSR is closely linked with the principles of Sustainable Development, which argues that enterprises should make decisions based not only on financial factors such as profits or dividends, but also based on the immediate and long-term social and environmental consequences of their activities.

So the N2M on Return on Investment is now being considered across the enterprise and the Board of Directors meetings. ROI discussions are shifting away from the typical GAAP dialogue and more directed at whether new strategic initiatives are "The Right Thing To Do." When you have executives nodding their heads in the meeting about making positive decisions to invest millions of dollars in corporate initiatives based upon it's "The Right Thing To Do" justification, you are experiencing the "New New Math" (N2M)

Making strategic decisions on CSR and N2M is quickly becoming the emotional reasoning and rationale for many corporate enterprise investments. Measuring the ROI doesn't always come in a percentage of dollars invested or a normal way of thinking about getting a return. Many times the executives who champion these initiatives have an underlying reason for doing so that reaches into their personal lives. So when you invest in more robust security for the company or significant programs to increase the protection for key employees, that ultimate driver could be as simple as losing a fellow colleague to kidnapping or the latest law suit.

How your organization is perceived internationally may dictate the degree of risk for your traveling executives. The attack on an employee may be an attack on your "Brand" and what the general public believes that you stand for, in the "minds eye" of the media blur.

Why us?
Where businesses are the target of terrorism, it is usually because of what they represent, rather than anything they do or don’t do themselves. Global brands can assume symbolic significance for terrorists. The US National Counterterrorism Center’s list of significant terrorist events describes 24 attacks on McDonald’s restaurants between 1993 and 2005 worldwide.

Of the minority where responsibility was claimed, motivation for the attacks included nationalism, anti-globalisation, religion and Marxism – but in each case the perpetrators objected to the restaurant as a symbol of America, not a purveyor of products. Mr Jenkins notes that, before 9/11, the two best correlated predictors of whether a US firm would suffer an attack were size and familiarity to the public – corporate behaviour, even philanthropy, was inconsequential. Added to this is the very real possibility of risk displacement: business targets are often easier to hit than government facilities or sites.

Attacks on your organziation or employees don't always have to take a violent twist. Many times these are orchestrated under the cloak of a "personal scandal" or even the filing of a civil Intellectual Property litigation. Legal Risk is a consistent threat to the enterprise and is far often the most effective way of bringing down the house in terms of putting a cloud of uncertainty and speculation about a company that may be in, a competitors "cross hairs."

A week after the public learned of Qualcomm Inc.'s bombshell admission that it withheld potentially thousands of important documents in a high-stakes patent trial against Broadcom Corp., many in the intellectual property community are still buzzing about the gaffe.

The case is even more striking because the attorney who has publicly apologized for Qualcomm's error has a strong reputation in his field, as does his firm. Yet several attorneys say it's still too early to assign blame for the error.

"Whenever there are accusations of concealment of evidence and they prove to be true, there definitely is going to be harm to the lawyers and the parties," said Anup Tikku, an IP associate with Kirkpatrick & Lockhart Preston Gates Ellis, who has followed the case closely. "What I find difficult to understand is how Qualcomm interviewed witnesses, put them on the stand and did not realize these documents existed."

Corporate Social Responsibility extends to Enterprise Litigation Governance and goes well beyond just understanding electronically stored information (ESI). The "New New Math" on doing the right thing in preparation for legal risk are taking on new dimensions as the implications of judgements in favor of the plaintiff set new legal precedence and case law. The Board of Directors and executive management are getting the message that protecting their employees from violence and politically motivated terrorism is just as imperative as preparation for adversarial law suits.

When you hire a defense firm and they get blindsided about eDiscovery or Enterprise Content Management (ECM) and your own Records Management and IT personnel are scratching their heads, your "Brand" is going to take hit. The operational risks associated with a lack of preparedness and a limited strategy for preemptive action calls for the "New New Math." It's coming to a board room near you and when it does, don't be surprised that the investment decisions are based more on emotion than on your controllers 27 pages of hard numbers.

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