New Normal: Strengthen your Social License to Operate

November 16, 2010

An Adaptive Organization is deliberately designed to survive in tough times. In the new volatile business climate today it is important to think of adaptability in business as you would in nature; it’s a key to survival.  Many leaders think their organizations are fit and competitive, but how adaptable are they to sudden changes in the business environment?

Consider a new and virulent threat to business in First Nation activism. Consider TransCanada Corp, who at present is finding out the hard way that its social license to operate can’t be ignored, or left to chance. TransCanada Corp. (TSX:TRP) is in a dispute with the Lubicon First Nation, a northern Alberta aboriginal group over a proposed pipeline. The pipeline is planned to go across Lubicon territory, land which the Lubicon claim they never ceded to Canadian government. The Lubicon have gone on a major blitz and as a consequence, their approval is going to be required for any development. The strategy of TransCanada was first to ignore the Lubicon, claiming they had no jurisdiction in the matter, and then to deal with them as a problem.  Neither strategy has worked particularly well, as a consequence the fate of their billion dollar Northern pipeline project hangs in the balance.

Given this and similar events of the past few years, it’s becoming obvious that CEO’s are going to have to pay more attention to the ‘softer’, sides of their businesses. In particular many businesses are going to have to identify the important asset quality in their ‘social license to operate’ – and start to treat it like the important asset it is.

This kind of problem is not confined to local resource based companies. British Petroleum is facing a similar hurricane of bad press, litigation and demonization, as a result of its handling of the Gulf ‘blowout’ disaster, which is seriously affecting its ability to operate in this important market. We should remember the words of Pierre Lassonde, President of Newmont Mining Corporation: “You don’t get your social license by going to a government ministry and making an application or simply paying a fee… It requires far more than money to truly become part of the communities in which you operate.’

The lesson many companies refuse to learn is the social license is rooted in real relationships with real people: customers, employees, government officials, the media and the public. In the particular case of TransCanada it’s a function of their relationship with the Lubicon people. Clearly they’re failing the test.

Things to Think About

  1. Adaptive Organizations accept change, adapting as required to new circumstances. It is important to avoid becoming trapped by your own often outdated ‘winning strategies’. This applies to organizations large and small. Consciously avoid an automated repetition of older success strategies; face the new and unfamiliar realities head on.
  2. If you’re in business, particular in the resource business in Canada, it’s time to think ahead and start becoming part of the solution instead of the problem. For instance with First Nations;  business could support programs at a very personal level, perhaps utilizing charitable organizations to work directly with First Nations helping identify youth leaders on reservations, building programs to reach disaffected youth, helping native leader discourage harmful addictions and other bad practices. It might just help build relationships of the most important kind, trusted personal connections rooted in our common humanity. This may not be the complete answer to the problem but it could strengthening the social license to operate so that when, not if, you need a friend, you might actually have one.    

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