The social licence, part 2

In a previous post (here), we looked at what the social licence to operate, or SLO, is, but to briefly recap, "the ongoing acceptance or approval of an operation by those local community stakeholders who are affected by it" (Moffat et al., 2016, p. 480).

When the SLO becomes inequitable, or is inequitable from the outset, locals may feel compelled "into direct action against resource projects" happening where they live, through a local perceived risk to the commons (Moffat et al., 2016, p. 477). Our "communities [a]re becoming more active in challenging the nature and fairness of the costs and benefits associated" of these businesses coming to a town near us (p. 477). Locals activate, making their feelings known, usually through some form of protest. Think risky land or water use, such as nuclear power plants, strip mining, forestry slash, fossil fuel extraction; or predatory business behaviour from monopolies, incidences of corporate deceit, off-shoring of profits or bankruptcy, or risking the lives of locals through unsafe practices (Brettkelley, 2025).

But are there internal organisation measures allowing the valuing of "the ethical, economic and social contribution [...organisations make in] service to society"? (Luna-Arocas & Danvila-del-Valle, 2024, p. 1395). I am not sure that we created organisations in such a way that allows this: most organisations have one duty in New Zealand: to aim to make profit (legally). Businesses do not have to make a profit: they just need to set out in a manner that means they are trying. In the USA, 'corporations' when granted a charter simply need to make a profit for their shareholders (Achbar et al., 2004). Our organisations, existing in a complex world, have a simple focus: profit.

Yet the world is not simple, and a simple, singular focus is often what gets organisations into trouble. The Pike River Coal's mine on New Zealand's wild West Coast is where 29 mine workers died in 2010. The company went bankrupt, and the mine remains closed. Bereaved whānau had to fight to have investigations made, to try to hold anyone accountable. A management theory analysis of what went wrong found a complex melange of management issues: in-groups; outgroups; groupthink which knitted the management team "together (and kept them blind); [...]conformity bias, organisational silence and obedience kept the much larger out-group quiet"; "hedgehog attitudes" which "dislike dissonance and prefer to organise the world into neat evaluative gestalts" (Logan et al., 2024, pp. 3, 11, 13). Management didn't manage the mine as a Knightian risk operation. Staff were 'hoping' shifts would be error-free, despite repeated and increasing workplace problems: perhaps inured, aka 'boiling a frog'. Further, the "culture of silence and lack of power was exacerbated by having a high number of inexperienced workers, a high number of foreign workers and a high number of contractors. There was a high turnover of staff and middle management throughout the entire period" (p. 11). So in-house expertise was regularly walking out the door, with new hires thinking what exiting staff had thought was unacceptable risk was now just business as usual.

The Pike River Coal top team, despite a strong narrative of being a 'leading edge' modern mine, had "hedgehog attitudes" leading to "unquestioned inductive biases and the unquestioned reference narrative [which] meant that there were unrecognised uncertainties, since both simplifications focus on the known and certain, without understanding that by doing so, they overlooked or underappreciated uncertainty and risk" (p. 12). They needed staff - who would be LISTENED to - possessing leavening "fox attitudes"; problem-seekers with an understanding of Knightian uncertainties suitable for a high risk environment (Logan et al., 2024). Knightian uncertainties are wicked problems arising in a changeable environment where there are many, many unknowns; so goals are more cautious, allowing for a broad array of risks coming from unexpected quarters.

Instead our single-minded societal creation followed the simple path, and the social licence to operate has been withdrawn. As communities, we need to be able to create organisations which operate in risky environments in a complex way so they can be fully accountable to the societies in which they operate, and the SLO will be more enduring.

Nothing like 20:20 hindsight.

Sam

References:

Achbar, M. (Director), Abbott, J. (Director), & Bakar, J. (Writer). (2004). The Corporation. Zeitgeist Films/Big Picture Media Corporation.

Brettkelley, S. (2025, October 14). When social licence is revoked. Newsroom. https://newsroom.co.nz/2025/10/14/when-social-licence-is-revoked/

Luna-Arocas, R., & Danvila-del-Valle, I. (2024). The impact of talent management on ethical behavior and intention to stay in the organization. Journal of Management & Organization, 30(5), 1392-1407. https://doi.org/10.1017/jmo.2022.64

Logan, R. J., Cavana, R. Y., Howell, B. E., & Yeoman, I. (2024). Why do key decision-makers fail to foresee extreme ‘Black Swan’ events? A case study of the pike river mine disaster, New Zealand. Systems, 12(1), 34, 1-15. https://doi.org/10.3390/systems12010034

Moffat, K., Lacey, J., Zhang, A., & Leipold, S. (2016). The social licence to operate: a critical review. Forestry: An International Journal of Forest Research, 89(5), 477-488. https://doi.org/10.1093/forestry/cpv044