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April 2007
"As business leaders we have the obligation, both individually and collectively, to make our enterprise not only a source for economic wealth, but also a force for positive social change in the conduct of our business. This principle of responsible commercial success is embedded in our more than 150-year experience, and continues to anchor how we operate today."
These words are the foundation of Levi Strauss & Company's "profits through principles" approach to business, and they are woven throughout the company's values, vision, and everyday decisions, actions and behaviors, explained Robert Hanson in the first keynote address of The Center's 2007 International Corporate Citizenship Conference.
Hanson, who is the president of Levi Strauss North America, leads the company’s businesses in the U.S., Canada and Mexico, and is a member of the company’s worldwide leadership team, which sets the company’s global strategic direction.
 Back to the beginning
"Levi Strauss himself was the original corporate citizen, and corporate citizenship is still woven into the fabric of the company," said Hanson as he gave a brief history of the company.
Levis Strauss, who founded the company as a wholesale dry goods business 154 years ago in San Francisco, was known as a philanthropist. When he passed away in 1902, the largest paper in the city ran the headline, "Levi Strauss, merchant and philanthropist, dies peacefully at his home." The subhead read, "His life devoted not only to fostering the highest commercial conditions, but to the moral social and educational welfare and development of the young men and women of the state."
"The underpinnings of the values with which he started the company are the values with which we're running our corporate citizenship efforts today: philanthropy and altruism, always alongside of the commercial. Focusing on issues that are critical to the enterprise, to the people that work in the enterprise, and to the community that we service. Issues such as diversity, workers' rights and community engagement," said Hanson.
"This theme of doing well by doing right, doing right by doing well, and profits through principles are the principle by which the company is run."
The mouse that roars
In market terms, Levi Strauss & Company is relatively small, said Hanson. "But because we have tended to focus on frontier issues, we often can be the mouse that roars. We take positions on issues that can influence governments and other commercial enterprises to behave differently over time."
As an example: In 1940, 24 years before it was mandated by the federal government through the Civil Rights Act of 1964, the leadership of the company chose to integrate its production facilities. In 1972, it was one of the first companies to put together a minority purchasing program, then relatively unheard of.
Levi Strauss was also an early pioneer on AIDS and HIV, and has provided more than $37 million in funding for HIV/AIDS services, education and prevention organizations worldwide. The company's work in this area has been recognized as one of the most important efforts by a Fortune 500 in fighting the global epidemic of HIV and AIDS.
Shaking the bushes
With this intrinsic philosophy as backdrop, many of Levi Strauss' early corporate citizenship activities have grown out of employee interests and concerns.
The company's Community Involvement Teams, or CITs, began in 1966 when employees in its San Jose factory and distribution center wanted to work as a group and as representatives of the company for the benefit of their local community. Today there are 75 CITs working on six continents.
Levi Strauss's involvement in HIV/AIDS began in the early 1980s with a group of employees who formed a CIT around the issue. One of the first companies to develop comprehensive HIV and AIDS education and health services for employees and their families, Levi Strauss's commitment would lead to the development of groundbreaking workplace policies that would be shared with and adopted by hundreds of U.S. and global companies.
The Red Tab Foundation, found in 1981 by Jerry O’Shea, a former Levi Strauss marketing executive, is a unique non-profit organization that assists Levi Strauss employees and retirees during unexpected emergencies, and provides education and proactive programs to help individuals maintain their financial, physical, and emotional health.
Even the company's "Terms of Engagement" – its supplier code of conduct – grew out of employees' concerns that the people making the company's clothes in contract factories weren’t being treated with the same dignity and respect as its own employees.
"We were the first Fortune 500 company to require that any of the contractors making our products worldwide treat their workers with dignity and respect, provide them a healthy, safe working environment, support them within the level of the law for the local communities in which they operated, and provide the workers the opportunity to understand their rights and to essentially be able to contribute positively and build a better living and a better life for themselves and their dependents. It was a groundbreaking document that has been improved upon over the years with the addition of specific environmental protection requirements and strengthened freedom of association guidance, among other items. Supplier codes of conduct are now ubiquitous in the apparel sector and many others."
These are examples of ideas that came just from "shaking the bushes," said Hanson, and it's something other companies can do as well. "Provide employees a clear understanding of the values of the company, and give them the chance, through their own ability, to be innovative and lead," he advised.
Developing a corporate citizenship value proposition
In his remarks, Hanson was candid about the fact that Levi Strauss has faced some difficult business challenges over the last 10 years, but he credited the company's corporate citizenship with helping it weather these times.
"We believe our extraordinary past efforts and reputation for solid corporate citizenship helped us through the toughest of times," said Hanson. "Research indicates that consumers and other stakeholders wanted us to succeed – largely because of our reputation for quality and responsibility."
Over time, he explained, the company had developed many citizenship initiatives, but what was missing was a framework to help integrate citizenship into the business, guide its integration, and break down the silos.
The company already has value propositions in place for each of its brands, and employees are familiar with how they are used to drive strategies and decision-making. Using the same approach for corporate citizenship, the company created a corporate citizenship value proposition that would define the strategy for the company for every single employee.
"We started by developing a global positioning statement – intended to reflect how we practice corporate citizenship at our best. It is based on our 'profits-through-principles' operating philosophy of responsible commercial success."
They tied the strategy to Levi Strauss’s values, which already serve as a guide for all decision making. They then focused on the global character of the value proposition – the behaviors that need to be modeled to advance the global positioning statement.
From there they defined the strategic priorities for success – the five building blocks:
1. Business practices that reflect the diversity of the world we serve
2. Supply chain practices that respect the workers who make our products
3. Environmental initiatives that support sustainability
4. Societal engagement that contributes to positive social change
5. HIV/AIDS initiatives that protect employees, workers and consumers
The new strategy was deployed in the middle of 2006 in the Levi's brand and several other organizations around the company.
Hanson described two programs that integrate the new strategy with the Levi’s® brand perspective by tying the company's corporate citizenship to its consumer products:
- 501 Reasons to Get Involved: An international volunteerism day (named for the company's flagship 501 jeans) that kicks off on May 1, 2007. The campaign is designed to create volunteer opportunities for consumers as well as employees.
- Levi's Eco Collection: A collection of product made of 100% organic cotton, and in most cases, fully recycled packaging, that was introduced in 2006.
Lessons and learnings
Hanson described some of the learnings along the way as Levi Strauss introduced the new corporate citizenship value proposition.
"Engagement has to be invited, not forced," he said. "Employees must be ready to engage. You assume they know everything you do, but they don’t, so it has to start with a deep, deep dialogue with the employees. You have to engage their minds, their hearts, and their values."
Do that through storytelling, he advised, through the evidence and the experience of your company rather than just trying to help people understand strategy.
There needs to be a deep understanding of how to deploy the strategy in a way that is actually going to achieve goals. "We worked very carefully on the programs that we chose to deploy and rooted them in areas that we felt we had authentic credentials," explained Hanson.
Another learning: Accountability needs to start at the top. "It has to be absolutely advocated by a leader, someone who has significant business accountability."
Once that buy-in is achieved, hand it over to mid-management and the employees themselves, and engage them in innovative thinking about how they can bring the strategy to life.
"What we ended up getting at the end of this was a much more deeply connected leadership and employee base within the Levi's brand. Because most of them understood the reputation of the company, but they didn't deeply understand why the company deserves the reputation that it has. And now they do. And they're the best ambassadors for this that the company has."
Personal purpose and values
Hanson ended with a few personal insights into what drives him at Levi Strauss. "I've aligned my career and my own personal values with Levi Strauss and Company because I believe that this is a company who wants to do well by doing good and do good by doing well. I've stayed with this company because I believe it has the aspiration to be an extraordinary example of corporate citizenship, and it puts into practice the strategies and values from which it operates."
He advised conference participants: "As you work with people who are in positions like mine, try to help them define what drives them commercially. Help them define the values of the enterprise they work in. But most importantly, help them define how their personal values align with the values of the organization and the commercial objectives of the organization."
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