Clarkson Principles

The Clarkson Principles of Stakeholder Management originate from four conferences that were hosted by the Centre for Corporate Social Performance and Ethics in the Faculty of Management [now called: the Clarkson Centre for Business Ethics & Board Effectiveness or CC(BE)] between 1993 and 1998.

In these conferences, management students gathered to share ideas on stakeholder theory, a then emerging field of study examining the relationships and responsibilities of a corporation to employees, customers, suppliers, society, and the environment.

The Clarkson Principles represent an early stage general awareness of corporate governance concerns that have been widely discussed in connection with the business scandals of 2001-2003.


Principle 1
Managers should acknowledge and actively monitor the concerns of all legitimate stakeholders, and should take their interests appropriately into account in decision-making and operations.

Principle 2
Managers should listen to and openly communicate with stakeholders about their respective concerns and contributions, and about the risks that they assume because of their involvement with the corporation.

Principle 3
Managers should adopt processes and modes of behavior that are sensitive to the concerns and capabilities of each stakeholder constituency.

Principle 4
Managers should recognize the interdependence of efforts and rewards among stakeholders, and should attempt to achieve a fair distribution of the benefits and burdens of corporate activity among them, taking into account their respective risks and vulnerabilities.

Principle 5
Managers should work cooperatively with other entities, both public and private, to insure that risks and harms arising from corporate activities are minimized and, where they cannot be avoided, appropriately compensated.

Principle 6
Managers should avoid altogether activities that might jeopardize inalienable human rights (e.g., the right to life) or give rise to risks which, if clearly understood, would be patently unacceptable to relevant stakeholders.

Principle 7
Managers should acknowledge the potential conflicts between (a) their own role as corporate stakeholders, and (b) their legal and moral responsibilities for the interests of stakeholders, and should address such conflicts through open communication, appropriate reporting and incentive systems and, where necessary, third party review.

The Clarkson Principles should be regarded as “meta-principles”, encouraging and requiring management to develop more specific stakeholder principles and then to implement those in accordance with the Principles.

Competitive Strategy Model

The Competitive Strategy Model of Porter learns that competitive strategy is about taking offensive or defensive action to create a defendable position in an industry, in order to cope successfully with competitive forces and generate a superior return on investment.

According to

Michael Porter
, the basis of above-average performance within an industry is sustainable competitive advantage.

There are 2 basics types of competitive advantage:

- Cost leadership (low cost), and
- Differentiation.

Both can be more broadly approached or narrow, which results in the third viable competitive strategy: focus.



Cost leadership

A firm sets out to become the low cost producer in its industry.
A cost leader must achieve parity or at least proximity in the bases of differentiation, even though it relies on cost leadership for it’s competitive advantage.
If more than one company aim for cost leadership, usually this is disastrous.
Often achieved by economies of scale

Differentiation

A firm seeks to be unique in it’s industry along some dimensions that are widely valued by buyers.
A differentiator cannot ignore it’s cost position. In all areas that do not affect it’s differentiation it should try to decrease cost; in the differentiation area the costs should at least be lower than the price premium it receives from the buyers.
Area’s of differentiation can be: product, distribution, sales, marketing, service, image, etc.

Focus

A firm sets out to be best in a segment or group of segments.

Focus refers to Cost focus and Differentiation focus.

Usually a recipe for below-average profitability compared to the industry
Still attractive profits are possible if and as long as the industry as a whole is very attractive
Manifestation of lack of choice
Especially risky for focusers that have been successful and then to loose their focus. They must seek for other niches rather then compromise their focus strategy.

From a Value Based Management point of view, the Competitive Strategy model helps to build a relative competitive advantage, together with Porter's Value Chain framework.

Taken together, they can be seen as one of two dimensions in maximizing corporate value creation.

The other value creation dimension is the Market/Industry Attractiveness for which another model from Porter is often used: the

Competitive Forces model

Conflict Management Resolution Transformation Strategy of Conflict By Schelling

Conflict management refers to the long-term management of intractable conflicts. It is the label for the variety of ways by which people handle grievances — standing up for what they consider to be right and against what they consider to be wrong.

Diverse Phenomena

Those ways include such diverse phenomena as gossip, ridicule, lynching, terrorism, warfare, feuding, genocide, law, mediation, and avoidance. Which forms of conflict management will be used in any given situation can be somewhat predicted and explained by the social structure — or social geometry — of the case.

Conflict Management, Conflict Resolution & Conflict Transformation

Conflict management is not the same as conflict resolution. The latter — conflict resolution — refers to resolving the dispute to the approval of one or both parties, whereas the former — conflict management — concerns an ongoing process that may never have a resolution. For example, gossip and feuds are very common methods of conflict management, but neither entails resolution. Neither is it the same as conflict transformation, which seeks to reframe the positions of the conflict parties.

Social Control

The scientific study of conflict management (also known as social control) owes its foundations to Donald Black, who typologized its elementary forms and used his strategy of pure sociology to explain several aspects of its variation. Research and theory on conflict management has been further developed by Allan Horwitz, Calvin Morill, James Tucker, Mark Cooney, M.P. Baumgartner, Roberta Senechal de la Roche, Marian Borg, Ellis Godard, Scott Phillips, and Bradley Campbell.

Father of Conflict Management

Utilizing a multidisciplinary approach and avoiding semantic discussions, we could also state that the father of conflict management is Thomas C. Schelling, an American economist and Nobel Prize winner, who authored the Strategy of Conflict in 1960. Schelling’s main goal was to lay the foundation for a theory of conflict that would include the fields of economics, psychology, sociology and the law.

Omnipresent Trait

Conflict is an omnipresent trait of human societies since it is almost impossible to find two parties with entirely overlapping interests, thus a general theory for bargaining and negotiation to address conflict is useful not only in the field of international politics or business management, but also at the personal and intimate level.

Continuous Improvement Kaizen

Kaizen (改善, Japanese for "change for the better" or "improvement"; the English translation is "continuous improvement" or "continual improvement").

In the context of this article, Kaizen refers to a workplace 'quality' strategy and is often associated with the Toyota Production System and related to various quality-control systems, including methods of W. Edwards Deming.

Kaizen Aim

Kaizen aims to eliminate waste (as defined by Joshua Isaac Walters "activities that add cost but do not add value"). It is often the case that this means "to take it apart and put back together in a better way." This is then followed by standardization of this 'better way' with others, through standardized work

Principles of Kaizen

Kaizen must operate with three principles in place: process and results (not results-only); systemic thinking (i.e. big picture, not solely the narrow view); and non-judgmental, non-blaming (because blaming is wasteful).

Kaizen Format

The format for kaizen can be individual, suggestion system, small group, or large group.
The "zen" in Kaizen emphasizes the learn-by-doing aspect of improving production. This philosophy differs from the "command-and-control" improvement programs of the mid-twentieth century.

Kaizen Methodology

Kaizen methodology includes making changes and monitoring results, then adjusting.Large-scale pre-planning and extensive project scheduling are replaced by smaller experiments, which can be rapidly adapted as new improvements are suggested.

Kaizen Cycle

The cycle of kaizen activity can be defined as:

Measure the standardized operation (find cycle time and amount of in-process inventory)
Gauge measurements against requirements
Innovate to meet requirements and increase productivity
Standardize the new, improved operations
Continue cycle ad infinitum.
This is also known as the Shewhart cycle, Deming cycle, or PDCA.

Core Competencies Model

The core competencies model of Hamel and Prahalad is an inside-out corporate strategy model that starts the strategy process by thinking about the core strengths of an organization.

Where the outside-in approach (such as Porter's five forces model) places the market, the competition, and the customer at the starting point of the strategy process, the core competence model does the opposite by stating that in the long run, competitiveness derives from an ability to build, at lower cost and more speedily than competitors, the core competencies that spawn unanticipated products.

The real sources of advantage are to be found in management's ability to consolidate corporate-wide technologies and production skills into competencies that empower individual businesses to adapt quickly to changing circumstances.

As core competence can be seen any combination of specific, inherent, integrated and applied knowledge, skills and attitudes.

In their article "The Core Competence of the Corporation" (1990) Prahalad and Gary Hamel dismiss the portfolio perspective as a viable approach to corporate strategy. In their view, the primacy of the Strategic Business Unit is now clearly an anachronism. Hamel and Prahalad carry on to argue that a corporation should be build around a core of shared competences.

Business units should use and help to further develop the core competence or core competencies. The corporate center should not be just another layer of accounting, but must add value by enunciating the strategic architecture that guides the competence acquisition process.

Three tests to identifying a core competence are:

provides potential access to a wide variety of markets,
should make a significant contribution to the perceived customer benefits of the end product(s), and
a core competence should be difficult for competitors to imitate.
Core competencies are built through a process of continuous improvement and enhancement (compare: Kaizen).

They should constitute the focus for corporate strategy.

At this level, the goal is to build world leadership in the design and development of a particular class of product functionality.

Top management can not be just another layer of accounting consolidation, but must add value by enunciating the strategic architecture that guides the competence acquisition process.
Once top management (with the help of divisional and Strategic Business Unit managers) has identified an overarching core competences or core competences, it must ask businesses to identify the projects and the people closely connected with them.

Corporate auditors should direct an audit of the location, number, and quality of the people who embody the core competence.

Core competence carriers should be brought together frequently to trade notes and ideas.

Cultural Dimensions Theory

According to Geert Hofstede, there is no such thing as a universal management method or management theory across the globe. Even the word 'management' has different origins and meanings in countries throughout the world.

Management is not a phenomenon that can be isolated from other processes taking place in society. It interacts with what happens in the family, at school, in politics, and government. It is obviously also related to religion and to beliefs about science.

The cultural dimensions model of Geert Hofstede is a framework that describes five sorts (dimensions) of differences / value perspectives between national cultures:

Power distance (the degree of inequality among people which the population of a country considers as normal)
Individualism versus collectivism (the extent to which people feel they are supposed to take care for or to be cared for by themselves, their families or organizations they belong to)
Masculinity versus femininity (the extent to which a culture is conducive to dominance, assertiveness and acquisition of things versus a culture which is more conducive to people, feelings and the quality of life)
Uncertainty avoidance (the degree to which people in a country prefer structured over unstructured situations)
Long-term versus short-term orientation (long-term: values oriented towards the future, like saving and persistence - short-term: values oriented towards the past and present, like respect for tradition and fulfilling social obligations)
To understand management in a country, one should have both knowledge and empathy with the entire local scene.

However, the scores of the unique statistical survey that Hofstede carried out should make everybody aware that people in other countries may think, feel, and act very differently from yourself, even when confronted with basic problems of society.

Any person dealing with Value Based Management or Corporate Strategy is well advised to bear the lessons from Hofstede's Cultural Dimensions Theory constantly in mind (human beings have a tendency to think and feel and act from their own experiences), especially when working internationally.

Deming Cycle Plan Do Check Act Modern Quality Control

PDCA ("Plan-Do-Check-Act") is an iterative four-step problem-solving process typically used in quality control. It is also known as the Deming Cycle, Shewhart cycle, Deming Wheel, or Plan-Do-Study-Act.

PDCA was made popular by Dr. W. Edwards Deming, who is considered by many to be the father of modern quality control; however it was always referred to by him as the "Shewhart cycle."

Later in Deming's career, he modified PDCA to "Plan, Do, Study, Act" (PDSA) so as to better describe his recommendations.

PLAN
Establish the objectives and processes necessary to deliver results in accordance with the specifications.

DO
Implement the processes.

CHECK
Monitor and evaluate the processes and results against objectives and Specifications and report the outcome.

ACT
Apply actions to the outcome for necessary improvement. This means reviewing all steps (Plan, Do, Check, Act) and modifying the process to improve it before its next implementation