Paul Walsh defends Diageo’s social responsibility

July 29, 2008

Paul Walsh, chief executive of the world’s biggest drinks company, defends Diageo’s social responsibility policies

In a wide-ranging video interview with BBC’s Robert Peston, [July 28th 2008] Paul Walsh examines the social responsibility policies of Diageo, and provides a glimpse of his leadership style.

The loyalty of a lifer

Mr Walsh is one of a disappearing breed, a corporate lifer in the fashion of Henry (Hank) McKinnell of Pfizer. His tenure as CEO is also substantially beyond that of current norms. In this interview, he did not appear to be under pressure to justify his belief in the social responsibility of his company. The question was framed around public debate in Great Britain on the vexed issues of underage drinking and its social consequences.

Not in the witness box but bearing witness

On this matter, as elsewhere during the interview, Mr Walsh was not so much in the witness box, as someone bearing witness, given an opportunity to share his personal faith in the company and its values. This is a claim that comes more easily to the corporate lifer, whose commitment has been demonstrated by decades of loyalty.

Diageo? Most of us (including many financial commentators) still refer to Diageo by its centuries-old earlier name Guinness. You can see the attraction of moving to a name that avoids preserving an image of a single-product company. The brand shift occurred at a time when creativity in branding seemed to have been at a low ebb, and when rebranding decisions tended to favour the Rorsachean over the impactful and memorable. But that’s another story.

Admitting a mistake

Watch out for how Walsh deals with a recent commercial decision. ‘We got it wrong .. we listened .. we put it right’. Walsh seems quite relaxed and invulnerable to the risks of revealing something about himself or his company.

The boys with the black stuff

Some years ago, when the company was known as Guinness, spent some time working with its marketing and corporate managers in several different countries. In those days, the culture was a remarkably coherent one. In Ireland, the job as ‘Guinness rep’ brought high social status. The parish priest was not unknown to use his pulpit to mention job vacancies in the company. But arguably, the strong and dominant image of Guinness was beginning to restrict strategic transformation.

Success was recognized through hard-won achievements as the ‘boys with the blackstuff’ spread the word and the product as successfully as their Christian brothers around the world.

But transformation to a global force has not been accompanied with the replacement of leaders who put financial ratios above the products which have been the lifeblood of the organization.

Facing the media

Robert Peston has argued that business leaders are too reluctant to put themselves forwards for public scrutiny.

In this interview he demonstrates again his claims that such exposure is desirable and valuable for the corporation.

The Need for Creative Ideas

However strong its leader, Diageo faces problems of social responsibility raised at the interview. The firm will need more than good image management to strengthen its global brand. Creative ideas will be a necessary part of the product mix.