Sustainable Brands: Expectations on the Rise as Goals, Partnerships and Promises Begin to Stretch

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Sustainable Brands 2014 featured key themes constellating around concerns facing global companies and the people they serve:

When it comes to sustainability, what is possible and what is necessary?
What is an appropriately aggressive vision of sustainability?
What are the concrete actions that result in sustainable products and companies?
With new government regulations preventing superficial (and often spurious) claims of sustainability, what is a meaningful path going forward?

Expectations of More
One year ago at Sustainable Brands 2013, the need to be more aggressive was a recurring theme. In writing about the conference, Jo Confino of Guardian Sustainable Business quoted Amy du Pon, head of strategic planning at Havas:

In an age of transparency and empowerment, brands are not meeting people’s requirements. People expect large companies to be involved in social problems and their quality of life but companies are not delivering on this new social contract.

At this year’s meeting, we had a window into how large companies are starting to rise to meetStretch Goals expectations within and outside their walls. Brands must now choose how to respond to a world where shared problems—inequality, climate change and resource scarcity, among others—require more aggressive collaboration than business as usual. Some brands and companies are farther down that path than others.

Stepping Up: Three Indicators

Based on my experience, certain indicators point to organizations that are stepping up to the sustainability challenge. Here is a quick checklist of questions.

Is your organization:

1. Engaging with partners inside and outside both your industry and comfort zone to address sustainability and social impact challenges?

2. Driving collaboration and decision-making deeper into the organization, creating broader ownership of change and breaking down silos across the extended enterprise?

3. Recognizing that “stretch goals” can be used powerfully to create creditable change, attract allies and alter trajectories? (For more on this approach, see Steve Denning’s article, In Praise of Stretch Goals)
No speaker used the term “stretch goals.”

On the other hand, multiple presenters spoke about making commitments significant enough that they could not achieve them alone or with supply-chain-only partnerships. They reiterated that while they did not know today how to reach the objective, the commitment is to find a way.

Jerry Michalski, founder of REX, introduced the concept of the “trusted ally”: Groups that include customers, collaborators and society. That phrase quickly spread on social media and reflects a shift in thinking away from a consumer-centric approach to one that is more aligned with a mutual stepping up together.

New Alliances and Stretch Commitments

In a variety of sessions, executives from Sodexo, Unilever, Microsoft, Coca-Cola and others referenced corporate goals that are driving new partnerships and innovations. To the credit of some companies, the “stretch goal” journey began a few years ago. Efforts now are building on earlier commitments and cooperation with multiple supply chain, NGO and innovation partners.

The role that NGOs play in these partnerships is a complex balancing act. They are advocates for change but alsosustainable business allies must be at the table early to infuse new thinking when corporations are exploring possibilities – as discussed recently in the New Yorker.

Unilever: An Energy Vision

Unilever recently announced that Unilever U.S. would source 100 percent of its energy requirements from renewable energy by 2020. Working in partnership with NRG Energy, this vision exemplifies all three of the stepping up indicators. Jonathan Atwood, Unilever’s VP of Communications and Sustainability, candidly admitted they do not know everything needed to achieve this goal. But Unilever has chosen a key partner and jointly they are working toward the commitment.

Making a commitment of this scale also attracts allies.

Kees Kruythoff, President of Unilever North America, said good progress is being made with the Unilever Sustainable Living Plan in the U.S., “but we must do more to drive system change.”

This transformational partnership with NRG to move all of our U.S. operations to 100 percent renewable energy will make our business more resilient, sustainable, and profitable. It is our hope and expectation that our collaboration with NRG will also inspire a broader acceleration and uptake of renewable energy technologies.

McDonald’s: Addressing the Elephant in the Room

Over the past year, one corporate sustainability journey that has received extensive attention is centered on McDonald’s. Beginning nearly five years ago, McDonald’s has been partnering with its suppliers and the World Wildlife Foundation (WWF) to define and source more sustainable beef.

Other partners include Cargill, JBS and Wal-Mart. And beginning in 2016, McDonald’s will begin a major shift to source more sustainable supplies, a goal that is expected to take more than a decade to achieve. Bob Langert, VP of Sustainability, has been interviewed widely and been consistently clear about both the challenges involved and the importance of taking a lead in this effort.

GreenBiz’s Joel Makower has provided extensive coverage on the multiple ways McDonald’s leadership is engaging an entire industry in addressing the challenges of the resource intensity of beef as a protein source. In one interview Makower asked Langert if the meat-eating public would even care about these efforts. Langert believes they will.

From the research we do, consumers really care about where their food comes from,” he told me. McDonald’s has done private consumer research with the firm GlobeScan. “What comes through very strong is high expectations for companies like McDonald’s across the board in CSR and sustainability.

At the top of the list, he says, are nutrition and obesity. Just below that is food sourcing, such as animal welfare and the use of antibiotics — likely more focused on health and ethics than on planetary concerns. Where the environment is mentioned, the top issue is waste management and recycling. ‘We think they’re going to vote with their feet more and more on this issue,’” said Langert.

Largent’s response suggests that a focus on sustainability will bring customers to McDonald’s door, but it also makes the case that elephant in the roomMcDonald’s must lead on sustainability regardless.

Slowly but surely, the resource intensity and animal welfare challenges of beef consumption will change behavior for some consumers. But for a corporation that serves 69 million customers each day, a proactive drive to be as sustainable as possible is essential.

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The Whole Company Matters Now

Many more enterprises are moving in the direction of stretch goals because their customers and allies are asking them to do so.

Piecemeal efforts around sustainability will have less and less impact on customers going forward. That was the core message of John Friedman’s excellent post, They’re Not Buying It—Because They’re Not Buying It:

A trend that Suzanne [Shelton, CEO of The Shelton Group] describes as ‘really compelling’ is that consumer attitudes have shifted from looking at ‘green’ products to ‘green’ companies. Five years ago the environmental reputation of the company was the eighth most important factor in green product decision making. Today it is second. So companies that wish to play successfully in this space need to move beyond offering one or two ‘green’ products and start ‘baking it into your entire corporate story. You have to buy in, green up, your entire operation.’ Therefore, companies have to commit fully to ‘green’ and not just offer it as a secondary or niche product.

Another significant reason that companies should lead and stretch for measurable results is a more pragmatic one.

In a session on Natural Capital Accounting, SASB’s Director of Stakeholder Engagement Katie Schmitz Eulitt announced that SASB is committed to providing data and benchmarks for companies’ environmental and sustainability risk exposure.

Forty-nine standards will be out by the end of 2014, she said. With this data, investors will be able to compare companies and see who is moving to mitigate risks and which risks are most critical. The bottom line according to Eulitt:

Environmental and sustainability issues are not being ignored by investors. They want benchmarks and data that are comparable. Investor actions will drive baking this into the DNA of companies and getting management on board.

Getting on board means addressing critical global issues while stretching to meet expectations that are on the rise. By the time next year’s conference rolls around, the stakes will be even higher.

“Real” Sustainability: Tipping Points to Leadership

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At the recent Harvard Business School Africa Business Conference, Ibukun Awosika, CEO of The Chair Center Group, spoke at a session on empowering women. She was forthright in her advice to an audience of young women who hope to make a difference in the future: “You are all too comfortable to be dreaming.”

In the first “Real” Sustainability post, I suggested one path to sustainability was to focus resources on scaling innovation solutions and the first question to be asked is, “Are resources focused on the most innovative and scalable solution to this challenge?”

In the spirit of Awosika’s concern then, is the dream big enough?

Sustainability Innovation Needed

For corporations, this question is more important than ever. Recently released data from the Ceres Roadmap to Sustainability makes it clear that implementing innovative models is not yet a priority in most corporations:

Additional innovation is needed to drive sustainable products and services. Of the 419 companies evaluated for this expectation, 14 percent (57 companies) have formal programs to invest in and promote sustainability products and services, compared to 10 percent in 2012.

The report’s conclusion is to the point: “We are still not seeing the speed of change that is required – or the scale of innovation that is possible. Incremental progress in tackling global climate change and other sustainability threats is simply not enough.”

Jumpstarting Sustainability Innovation

Reading the Ceres report—and others—suggests sustainability innovation may need more jumpstarts from outside.

Most large companies maintain innovation groups and many have a chief innovation officer. These efforts bring a wide range of designers, entrepreneurs, technologists and other innovation gurus into the company to shift viewpoints, seek out partners and models, and break down silos. Why should it be any different for innovation around sustainability?

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Three Possible New Approaches

The modest progress since the 2012 Roadmap argues that new approaches are needed. A few to consider:

1. Partner with on-the-ground innovation and sustainability leaders – those working in the environments that will suffer most from food and water security and climate change – to bring the reality of these issues to the forefront.

2. Gain a more global view of the challenges. IBM, Dow Corning, John Deere and many other companies are enabling their executives to volunteer in countries where their skills can solve a range of challenges. Choosing to focus talent on impactful sustainability solutions in Africa or Asia—where some of the worst outcomes of climate change will be seen—can open eyes about the global sustainability landscape.

3. Shift talent and resources to social enterprises that can scale and build partnerships that use company and NGO platforms to drive greater investment and scale. This leverages more company capabilities to create progress that is more impactful and opens up dialogues about sustainability innovation inside the organization.

Getting to the Tipping Points

While progress is slow, the news isn’t all bleak. As Carl Pope pointed out from the Skoll World Forum on Social Entrepreneurship in April, there are some Sustainability tipping pointbright spots:

Even six months ago I could have written, ‘we’re still waiting.’ But somewhere around Christmas the Simpa Networks is one of the social enterprises taking on this challenge and building trust (something that many early entrants did not do) using models designed with that purpose. Schneider Electric is an early corporate partner providing design support and discounts on key components of the Simpa solar home system.

A second partner, the HILTI group has provided grants to accelerate product development and cordless power drills that are critical to high quality installation. Going from a few thousand customers to 30-40,000 customers across three Indian states is the next scale step.

Another interesting “pay-as-you-go” model will launch in Rwanda this fall. With financial support from the Dutch development bank, WakaWaka will distribute a powerful yet highly portable unit that requires no installation and will bring light and phone charging to several thousand individuals followed by tens of thousands.

JIVA: Sustainability that Changes Minds and Hearts

The intersection of food, water and energy security presents many opportunities to engage with innovative organizations working on solutions. One way to start is to ask how the skills within your company could engage partners and co-develop models that can be tested at scale.

The leader in skills-based volunteering is Pyxera Global and their annual conference each April is a showcase of their corporate partners’ skills-based efforts. Most of the leaders mentioned by Ceres in their report are also skills-based volunteer leaders.

Coincidence?

Pyxera Global’s Integrated Community Development model enables communities to lead and own the efforts they will co-develop with Pyxera and the corporate volunteer team. For example, the Joint Initiative for Village Advancement (“JIVA”) is an integrated development program supported by the John Deere Foundation and implemented by Pyxera Global and local partners in three rural villages of Rajasthan, India.

JIVA means “livelihood” or “life” in the local dialect. JIVA’s approach looks at the system as a whole, working to address overlapping challenges, leverage more resources, and maximize participation.

Starting with income security, JIVA works with farmers to increase their agricultural productivity. JIVA’s “Train the Trainer” approach allows farmers to become change agents in their communities.

In addition, JIVA’s 2012 baseline study found that 72 percent of school-age youths had dropped out. Establishing after-school tutoring programs in each village now provides access to education during off-school hours. JIVA also trained local teams to construct new toilets and washbasins at village schools.

At the intersection of water and food security, JIVA also reconstructed an old defective check dam that is expected to recharge 100 percent of the villages’ wells. For sustainability, JIVA trains local carpenters and masons in construction and maintenance, and works with beneficiaries to develop long-term funding plans.

John Deere invests in their skills-based volunteering because their employees become better leaders while bringing something valuable to society. Seeing how these programs can expand to reach more villages is the next step.

Future Tipping Points

Not all the opportunities will be as obvious as using the sun to turn on the lights at night. But the right partners and investors now at the tipping point for off grid solar could light up Africa in just one decade.

The corporations that work with leading social entrepreneurs to come up with the single decade collaborations will enhance their leadership and innovation across multiple sustainability challenges.

There are ample opportunities to test at scale and to find new tipping points. Another promising challenge is bringing digital connectivity to the two billion people at the base of the pyramid.

Concero Connect

Concero Connect, a Grameen social business, recently agreed with the International Telecommunications Union (ITU) and the Universal Postal Union (UPU) to test technology in Post Offices in South Africa. Their program will enable content and transactions (not phone calls) to flow to and from villagers at 90 percent lower costs.

Using the existing postal infrastructure and out-of-commission satellites, Concero Connect will open up a range of sustainability tipping points in local services such as solar power, health, education, training and entrepreneurship. Energy savings will flow from local services, reduced need to travel and bypassing dependence on cell towers for content and transactions.

Searching for these tipping point opportunities in demanding environments is a unique kind of problem solving and one that can permanently change the way an individual sees the world. Organizations change when the leadership does, and it is the wisdom of problem solving leaders that will move companies beyond incremental thinking to serious sustainability innovation.

“Real” Sustainability: The New Disruptors

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The CSRwire community recently participated in a Twitter chat in response to this query: “What will disrupt your year?” Leading experts gathered to discuss CSR and sustainability trends in 2014.

Over an hour’s time, a range of assumptions and common frames emerged. In spite of the challenge to explore the concept of disruption, please judge for yourself whether most of the responses were disruptive or best described as incremental.

Industry Ripe for Disruption

In their breakthrough publication, Competing for the Future, Hamel and Prahalad made the trenchant observation that when leaders of an industry come to share a common set of rules and frames about how things must operate, that industry is ripe for disruption.

In light of that insight, perhaps the more critical question to be asked is this: Does the world of corporate sustainability/social responsibility share common rules and frames that make it ripe for disruption? If the answer is yes, who will the disruptors of CSR be, and what will the disruptions look like?

Frames and assumptions reflect a particular viewpoint so let me say upfront that I am a champion of social innovation and view social enterprise as a key source for both solutions and sustainable disruptions. After four years of seeking both globally and financial-riskcross sector for the most innovative social enterprises with sustainable and scalable solutions, I am partial to frames and disruptions that move resources to these opportunities. That said, here are two frameworks that appear ripe for disruption.

Framework One: Risk Taking in Sustainability

As stated in my 2012 article, The New Triple Bottom Line:

Many companies fall victim to the equivalent of mission creep that plagues the non-profit world. Creeping incrementalism in both environmental and philanthropic activities falls short in three ways:

- Essential focus and risk taking never happens, and under-resourced efforts yield inadequate progress.
- Instead of focusing on innovation and testing sustainable approaches, attention drifts to smaller and easier approaches and/or unsustainable activities (often with high visibility).
- As a result, real challenges—like measuring water risk without addressing water stewardship—are avoided altogether. Too many resources are spent communicating small wins and covering up a lack of progress. The focus on perception vs. reality becomes a resource sink and can actually do more harm.

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Risk Avoidance Frame

What does the risk avoidance frame look like?

Let’s ask the CEOs of a thousand companies as reported in the Accenture CEO Sustainability Survey and shared at the tri-annual UN Global Compact Leaders Summit:

CEOs see business caught in a cycle of “pilot paralysis” – individual, small-scale projects, programs and business units with an incremental impact on sustainability metrics – and while they see a role for business in promoting sustainable development, their responsibilities to the more traditional fundamentals of business success, and to the expectations of markets and stakeholders, are preventing greater scale, speed and impact.

Pilot paralysis risk avoidance is not limited to corporations. These characteristics are replicated across multiple organizations in the non-profit and foundation worlds as well. Many experts have discussed the impact of this lack of social risk taking. As I noted in Changing Business As Usual: Three Questions for Nonprofit & For-profit Innovation Leaders:

Lucy Bernholz, a Stanford professor speaking at the Global Philanthropy session, of the Council on Foundations Annual Conference last year, pointed out that while philanthropy has been managed by the rules of money in the past, in the next century it would be driven by the rules of data.

Clara Miller, CEO of FB Heron Foundation, questions the basic assumption of what to measure with the data. In The World Has Changed and So Must We, Miller describes the “rude awakening” of the post crash economy:

Decades of effort to bring the poor into the mainstream where a “healthy and growing labor market” would enable a steady income (and for some, even prosperity) have been shattered as “more Americans experience poverty today than at any time in the 53 years the Census Bureau has published such figures.”

In addition, Chris West, head of the Shell Foundation, told Skoll attendees last year that corporate foundation capital should be the most risk capable capital in the world. In practice however it is some of the most conservative.

Who Will the Disruptors Be?

What will the disruptors look like? The disruptors on the sustainable social business front are already at work. Typically they have won awards for their innovations a few years ago and are continuing to refine and improve their effectiveness. They have also been designing for scale and are now doing just that in one or two locations or countries.

Corporate Partners to Disruption

Innovation and scaling is attracting corporate “disruptor” partners, a few leaders who realize the immense opportunity to leverage a select pool of proven social enterprises to drive disruptive innovations. These innovations are able to align with their brand and engage their current and future customers.

It’s early and these disruptors are organizing to leverage these opportunities. The strongest tone from the top does not mention CSR – see Unilever’s Sustainable Living Plan. But leadership has created numerous experiments and test-at-scale spends in multiple countries (see Reel Gardening and Unilever in South Africa).

These commitments to sustainability have C-level executives meeting with founders of innovative social enterprises around the world and line of business leaders are breaking down silos and testing new models in Global South countries where most of the future growth is located (see Allianz-EFU and Naya Jeevan).

Scaling Up Disruptive Sustainable Models

Leaders are discovering the innovations in business modeling, technology application, asset utilization and resource efficiency at the base of the pyramid will not flow from their executives but are being developed by innovative leaders (and their future partners) who are already solving these challenges.

Disruptor investments in supply chain, marketing, CSR. philanthropy, etc., are concentrating on the most innovative disruptions, and innovation and scale leaders are shifting away from small grants and dilutive activities. By investing in the scaling of disruptive sustainable models, they can help create social brand assets that pay dividends to all stakeholders for decades to come.

Framework Two: Corporate Brands and Leadership Addressing the “Olympic” Challenges

The Olympic games demonstrate the power of focus in driving success in sports competitions. Early identification of talent, seeking the best technology, looking for innovative ways to train and finding the leaders to remove the roadblocks are all part of success. Success then attracts governments and global corporations to bring all manner of talent and resources to the table as well. BMW’s leading innovation on bobsled design for the United States is a just one example.

In the world of global social problem solving, scale is like an Olympic event. Unfortunately the way most companies approach global problem solving and scaling looks more like the bush league.

What will the disruptors look like?

Disruptors will ask different questions. To shift resources to scale will require recognition by leaders and resource holders that the current resource investment processes are not working. How often I am reminded of Einstein’s famous definition of insanity: Doing the same thing and expecting different results.

USLP_1

Five Ways to Know if Scaling Is Being Taken Seriously

So is scaling being taken seriously? Here are five ways to positively answer that question:

- Are resources focused on the most innovative and scalable solution to this challenge in the world?
- Is this solution already scaling where it was founded and is it moving towards sustainability in that environment?
- Will this solution add value to peoples’ lives and the supporting systems in ways that create jobs and income leading to virtuous cycles?
- Are the leaders guiding this solution already attracting partners, donors, investors and governments that want the solution to spread across a continent or the globe?
- Do leaders and partners have plans for several times growth increases over multiple years whose success would make them “household names.”

Creating the First Household Name in Social Enterprise

These are the questions that the disruptors are asking. They intend to disrupt by scaling in a way that can create the first household names in globe-innovatorsocial enterprise solutions.

Disruptors will no longer focus on seed stage. Competitions, fellowships, mentoring programs, are only interesting if they further the scaling plans for participating social enterprises.

Disruptors know that pilots do not lead to scaling or sustainability. “Do more good” efforts that only help the people around a localized facility fall far short of the innovation and impact needed to solve real social challenges. Philanthropy efforts that spread funds across hundreds of small grants are non-scalers and non-starters.

These new disruptors are consolidating their efforts, risking real failure to reap real scale and investing in models and management teams that can absorb significant capital – and more importantly, their best talent and capabilities – as they go global.

Leveraging the Against Position: How Two Leaders Are Driving Sustainability

Against-position

Most articles work up to a conclusion, but the conclusion of this article is right up front, stated by Gavin Newsom, former San Francisco Mayor and current Lt. Governor of California, in his keynote address at the California Economic Summit: “You can’t continue to do what you’ve done and continue to get what you’ve gotten.”

As my last post pointed out, the results of the Accenture CEO Sustainability Survey were recently reported at the tri-annual UN Global Compact Leaders Summit in New York City. Included in that survey were quotes from CEOs expressing concern about the mediocre progress most corporations are making in addressing issues of sustainability. That lack of progress is causing CEOs across nations and industries to lose confidence.

From the survey:

CEOs see business caught in a cycle of “pilot paralysis” – individual, small-scale projects, programs and business units with an incremental impact on sustainability metrics – and while they see a role for business in promoting sustainable development, their responsibilities to the more traditional fundamentals of business success, and to the expectations of markets and stakeholders, are preventing greater scale, speed and impact.

Ending Pilot Paralysis Through SocEnt Innovation

We constantly advocate that global corporations can learn from social entrepreneurs in order to build business in emerging markets and improve Against-positionthe societies that in turn give them life, creating the virtuous cycle on which all success is predicated. Interest in this SocEnt innovation source revealed itself in 2012 when Social Entrepreneurship & Social Innovation: Not the Same Thing became the second most read blog post on Talkback.

Although that post dealt with the comparison of for-profit (or hybrid) social enterprises with non-profit social innovation, two of the key parameters from the article offer opportunities to innovate and drive sustainability for all organizations:

1. The Against Position

In branding, claiming the against position means using a competitor’s dominant spend and mindshare to carve out an anti-space—the Uncola for example.

Social entrepreneurs are quintessential against positioners. At the New York Forum on Africa held in Gabon, Professor Yunus stated it clearly: “I looked at how traditional banks do business and we did the exact opposite.”

2. Buying Impact/Measuring Success

Jason Saul of Mission Measurement exhorts funders to stop thinking about giving to charities and shift to buying impact.

Funds should flow to the organizations making and reporting measurable progress actually solving key challenges. But impact buying reinforces the prevalent tendency in the nonprofit world to spend significant dollars on measurement. Funding those added “measurement investments” makes solutions more expensive and less sustainable.

Successful social entrepreneurs create business models where measurement is integral to the normal course of solving a challenge. This one innovation actually can make the difference between a profitable and a non-profitable model.

Social enterprise models have to operate in low resource environments, and they have to scale without big capital investments. These are two of several reasons why they must do the opposite. Several of the most profitable global scale successes have followed low fixed cost scaling. Google as the prime example through their data center in a container model – doing the opposite can happen in many different ways.

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The Against Position: Doing the Opposite—Hauling Assets

“My greatest weakness is that I have never run a local operation. My greatest strength is that I have never run a local operation,” said David Steiner, CEO of North America’s largest trash hauler, Waste Management, in his keynote speech at BSR.

Steiner outlined how the company faced increasing pressure a few years ago with the emphasis on low or zero waste. Many Waste Management executives felt that advocacy was an attack on their raison d’etre. Many chose fighting environmentalists as the way to execute the corporate reinvention that was required. A lack of vision was demonstrated by previous management, as they spent more of their time cooking the books than creating the recycling and renewable energy recipes that now power the company.

Taking the opposite approach in less than two decades, Waste Management has been transformed into the largest environmental solutions provider in North America, serving more than 20 million customers. In their own words, Waste Management is “committed to developing new waste solutions that can help communities and organizations achieve their green goals, including zero waste.”

According to Steiner, Waste Management produces more renewable energy than the entire U.S. solar industry and has converted 134 landfills into wildlife refuges.

The company’s future was transformed when they realized that billions of dollars in value were locked up inside their “collection and transfer vehicles” and begin to shift significant resources to realizing that value. Doing the opposite has also resulted in Waste Management being named to Ethisphere’s World’s Most Ethical Companies for six consecutive years. They will continue to “develop strategies to extract value from waste, which both minimizes our environmental impact and saves our customers money,” said Steiner as he accepted the most recent award.

Measuring Success: Make the World “Run Better”

Expanding SAP’s tag line from “Run Better” to “Make the World Run Better” did not begin in the marketing department. The beginning of the thinking is represented in this statement from a September 2010 interview with Peter Graf, named SAP’s first CSO (Chief Sustainability Officer) the previous year:

What is SAP’s sustainability strategy?

Simply stated we have a two-part strategy: First, become a role model for how a large company can address sustainability both by policy and principles, and by using technology. Second, enable our customers to address sustainability using our technology.

As we started to develop our own sustainability approach, we found that software tools weren’t very well-developed to gather and collect information as part of a business process. There were no links to common master data, no organized workflow and little built-in reporting standards. So we identified several different opportunities to create or improve existing tools. As a result we established our ‘enabler’ strategy to help customers use software to become more sustainable, and make it much easier to track and report progress, allowing for more time to focus on improvement.

This year SAP published its own integrated annual and sustainability report, putting the company on the cutting edge of sustainability reporting just three years after the 2010 report that experimented with transparency for the first time. It didn’t hurt that sustainability efforts saved SAP $285 million over a similar period.

As Peter Graf shared at BSR, the initial conversations around sustainability did not yield immediate resources to implement the full Global Reporting Initiative standards. “Not interested” was the more common stance. But Graf saw a different vision of the future. His insight was that no software company could help the world’s big companies “run better” if they could not show them how to run integrated-reportingmore sustainably.

Fortunately SAP’s customers were seeing the same things. It came in pieces at first, in managing product safety, traceability and energy management. With a CSO in place, SAP had a focal point for role model awareness and shared their approach with their customers. As customers bought in, resources flowed, schedules were met and standards were adopted. Sustainably managing the business became an integral part of running better.

In Graf’s words:

On Monday we are publishing our very first integrated report, which means we do not report our sustainability performance separately from our annual report. Instead, we are creating one online experience that documents both our financial and non-financial performance in 2012. This allows us to explore the connections between our financial, environmental, and social performance. We see this as a big step in our journey to move from having a sustainability strategy to having a corporate strategy that is sustainable.

As Newsom pointed out, we can’t continue to do what we’ve done. Sustainability is a must, and these two leaders show how to shift, scale and drive corporate sustainability.

Ending Pilot Paralysis Through Scaling as CEOs Lose Confidence in Corporate Sustainability

Sustainability_diagnostic_cover

The results of the Accenture CEO Sustainability Survey were reported this week at the tri-annual UN Global Compact Leaders Summit in New York City. This was an occasion for UN and sustainability leaders to come together to encourage top CEOs to be more participatory in these critical issues.

As reported by The Guardian’s Adam Aston:

In collaboration with some 1,000 business allies, the UN today issued an updated “architecture” aimed at intensifying companies’ role in advancing economic development, improving human health and reversing environmental degradation…Secretary General Ban Ki-moon emphasized the growing need for private companies to coordinate their market efforts with UN’s long-standing development goals.

The business engagement architecture is designed to “drive and scale up corporate actions to directly advance United Nations goals,” Ban said. The blueprint, Building the Post-2015 Business Engagement Architecture, marks a high point in the UN’s ambitions to engage with business. When it was launched in 2000, Ban said, “there was no clear agenda for business.”

Addressing Issues of Sustainability: Mediocre at Best?

With the inclusion of the term “engagement,” it is no surprise that podium pronouncements Sustainability_diagnostic_coverproceeded positively. Yet at the same time, these same sessions also included quotes from the CEOs in the survey expressing concern about the mediocre progress most corporations are making in addressing issues of sustainability. That lack of progress is causing CEOs across nations and industries to lose confidence.

From the survey’s results:

CEOs see business caught in a cycle of “pilot paralysis” – individual, small-scale projects, programs and business units with an incremental impact on sustainability metrics – and while they see a role for business in promoting sustainable development, their responsibilities to the more traditional fundamentals of business success, and to the expectations of markets and stakeholders, are preventing greater scale, speed and impact.

Heavy damage from this paralysis is showing: 45 percent of the CEOs surveyed believe that sustainability will be “very important” to the future success of their business. In 2010, that percentage was 54 percent. In the words of the survey, “This drop is striking in the context of intensifying global challenges…A decline in the perceived importance of sustainability among global business leaders is not encouraging for those working to align business with sustainable development.”

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Throughout the multiple plenary and breakout sessions where the new architecture was presented, familiar refrains were heard:

Leaders must learn from failure.
Fail and learn faster.
Stop repeating what doesn’t work.

UNGC’s Leaders Summit Highlights Need for Change

A new set of guidelines and some positive thinking are just not enough to persuade leaders to push their organizations toward sustainability while their own pilot-paralysisconfidence is waning. Where we are now looks a lot like Einstein’s famous definition of insanity: “Doing the same thing over and over again and expecting different results.”

For me, listening to the speakers at the Leaders Summit reinforced how essential change is right now. The new business engagement architecture is a thoughtful addition, but the disconnects and contradictions from the CEO survey require a straightforward admission that we have lots of learning opportunities to share – mostly from failure – but are nearly devoid of success stories of any kind on the critical topic of scale.

To enhance that learning process and to enable businesses, NGOs, governments and the UN to change the frameworks that are resulting in failure and stagnation, I offer three rules that can address this pilot paralysis. This sequence of rules can also serve as a set of guidelines for any partnerships that are developing through the business engagement architecture.

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Rule 1: The only way to learn to scale is to test at scale.

Rule 2: The only way to test at scale is to concentrate resources around models and interventions that have already proven to be effective and show potential to be sustainable at larger scale.

Rule 3: Once the focus shifts to scale, all resources need to be applied to scaling. Only invest minimal resources in measuring impact or other non-scale activities.

These three rules start with a simple challenge: Learn by doing. But then the program veers into a set of demands that require all players – in corporate sustainability, CSR, philanthropy, development and donor driven organizations – to commit CEOs-CSRan act of heresy. That heresy is this: Scaling requires focus. You can’t do it if you are second-guessing whether you are scaling the right thing, constantly spending valuable resources on measuring impact or paying people to talk about an unsustainable model. (Social Entrepreneurship, Social Innovation: Not the Same Thing).

And the decision about what to scale is based on a variety of evaluative processes: Impact testing, measurement, policy, model, resource and “side effect” testing. That’s how sustainable solutions to one or multiple problems are identified. Once an intervention has proven effective and the business or delivery models are selected, learning to scale must flow from actual scaling. Through the scaling, new challenges emerge which then become the focus of the next round of activities.

ReachScale has developed this three-rule sequence through working directly with a variety of scalable social enterprises. Once the most innovative initiatives have been identified, optimal scaling capabilities are developed to best leverage corporate assets. [For more about this process, see Where Will the Household Names in Social Enterprise Come From?]

When it comes to scaling, you learn by doing. And there is no better way to address the pilot paralysis that is crippling our progress toward a more sustainable world.

From Business As Usual to Creating Social Businesses: Missed Opportunities

The_Future_

At the Sustainable Brands 2013 opening plenary three weeks ago, Tom Shadyac’s movie I Am was shown to the assembled corporate and branding leaders.

For those of you who haven’t seen it, the film chronicles the award-winning director’s quest for happiness and includes interviews with “DoMoreGood” luminaries such as Ray Anderson, Desmond Tutu, Noam Chomsky and David Suzuki.

Shadyac’s search led him to sell off most of the assets he accumulated during his run as a mega-successful movie director, including several large houses. As the opening plenary came to a close, I posed this question to the group:

What is the corporate equivalent of selling the houses?

Missed Opportunity

In the early ’90s, a Princeton graduate embarked on one of the most significant educational experiments of our time. Operating out of the Bronx, Wendy Kopp had proven her model with a charter corps of 500 recent college graduates, and now they were organizing to scale their program across the United States.

Kopp extended invitations to participate to the leaders at 20 top corporations. Many of them were competing for the same top grads Kopp wanted to hire for her project, Teach for America.

These leaders were told that times were changing. They already knew that education was not working for a large portion of their future customers. What may have surprised them was how many of the talented young leaders they wanted inside their own towers would opt instead to go with Kopp to Teach for Americaserve in some of the most difficult classrooms in the country. They would impact millions of the most disenfranchised citizens and they themselves would be transformed in the process, adding to a growing generation of millennial social entrepreneurs.

Some of the corporate leaders who met with Kopp were interested enough to give her efforts some support — a few donations of $20 – $30,000 — before moving back to business as usual. The fact that not one of those corporations stepped up to partner with her is, according to me, one of the largest missed opportunities and branding gaffes in corporate history. Teach for America is now one of the most successful and respected social enterprises in the world.

How could so many corporate leaders miss this opportunity to address one of the most critical problems of our time while creating a billion dollar brand asset for just a few million dollars per year? With a modest investment of time, talent and attention, they could have secured their reputation with current and future customers as well as access to the next generation.

Take a moment before continuing to ask yourself these questions:

Would I be able to recognize the next Teach for America?
How important is it for my organization to align and focus on these social innovation and social entrepreneurship opportunities?
Is identifying these opportunities critical to my brand?
Should it be?

TeachforAmerica

The Social/Commercial Future

In my last post, How Three Quiet, Seismic Shifts Are Changing the Social Enterprise and Social Innovation Landscape, I stated the case for all businesses becoming both social and commercial. Another viewpoint comes from Capitalism at Risk, Re-Thinking the Role of Business (Harvard Review Press 2011.)

We have found that forward looking companies across the spectrum are thinking creatively and learning how to address what have hitherto been regarded as problems for government and NGOs, by developing strategies that enhance the prospects for sustaining the market system and often generate financial benefits for the company at the same time.

…And these actors might do so without a well-developed prospect of immediate financial returns, but with the recognition that it is their self interest to be part of a well-functioning system.

There are significant new skill sets that are needed in a rapidly approaching social/commercial era. the futureThey cannot be taught in business schools.

Realized Opportunity

Nowhere is author William Gibson’s phrase, “The future is already here – it’s just not evenly distributed” more true than in the global space of social business startups. Among the thousands of proven models, there are scalable social enterprises that have been proven in one location or country but are unknown elsewhere. They are also invisible to the corporations that could benefit most from their approach.

Being viewed as a company that can strategically scale the most innovative solutions to global challenges is a great way to enhance reputations, but it is only part of the benefit. Social enterprises offer a variety of new business models to engage with and test, and they expose corporations to models that can produce social and economic success.

They also introduce a new framework for entrepreneurship, one that drives success by moving away from competition and towards collaboration. This is something best learned by working with innovative social entrepreneurs.

Most important and least appreciated—until it is experienced firsthand—is how shifting to a point of view that includes the welfare of all people creates a consciousness that opens up the future to more organizations like Teach for America and leaders like Wendy Kopp. This is a vision that aligns with historian Arnold Toynbee’s backward glance:

The 20th century will be chiefly remembered by future generations not as an era of political conflicts or technical inventions, but as an age in which human society dared to think of the welfare of the whole human race as a practical objective.

How Three Quiet, Seismic Shifts Are Changing the Social Enterprise and Social Innovation Landscape

© Copyright 2010 CorbisCorporation

A year ago, I participated in the Social Innovation Summit (SIS12) that Landmark Ventures, working with the UN, curates so well.

It was the interactions – and lack thereof – at SIS12 that led to my article, Social Entrepreneurship and Social Innovation: Not the Same Thing, the second most read post on CSRwire’s Talkback in 2012.

A couple of weeks ago, CSRwire and Triple Pundit cohosted a Twitter Chat with Unilever Chief Sustainability Officer Gail Klintworth on the progress and challenges in shifting consumer mindsets through Unilever’s Sustainable Living Plan, which attracted over 200 engaged attendees and generated millions of impressions – besides becoming a worldwide trending topic for the day.

The attention paid to my article and the sheer strength of the people who showed up to discuss one company’s sustainability plans on a social media platform that few people had even heard of three years ago, suggests a convergence of trends that could lead to seismic changes as corporate, social innovation and sustainability circles engage.

“What is the largest social enterprise in the world?” Professor Marty Anderson asks his Babson class filled with bright young entrepreneurs. “What firm provides free services globally to rich and poor that enables learning and commerce?”

The answer: Google.

At first there is surprise and then it is obvious. That this social enterprise is highly profitable is a stellar example of the ability to make money at scale when solving global challenges.

While this article won’t go into how thoroughly Marty covers low-fixed cost scaling and a range of entrepreneurshipother innovations that Google deploys around the world, the fact that Google demands that employees spend one day a week working on future solutions outside their scope of work suggests there are a lot of “blue ocean” opportunities still available.

Trend 1: All Business Will Become “Social/Commercial”

There is a long list of social/commercial businesses — Wikipedia, Ebay, Baidu — and they represent the future of business. In the words of Unilever CEO Paul Polman:

“We are finding out quite rapidly that to be successful long term we have to ask: what do we actually give to society to make it better? We’ve made it clear to the organization that it’s our business model, starting from the top.”

© Copyright 2010 CorbisCorporation
Trend 2: Competition to Collaboration

“In branding, claiming the against position means using a competitor’s dominant spend and mindshare to carve out an anti-space—the Un-cola for example. Social entrepreneurs are quintessential against positioners.“

This idea also expands to competition whose well known against position is collaboration. But can we speak of this as a new trend?

At the 2013 Skoll World Forum on Social Entrepreneurship, I reconnected with Ron Schultz who was carrying his new book, Creating Good Work. I immediately handed him £20 so I could read it on the flight back.

The team at Second Muse who wrote Chapter 11 of Creating Good Work makes a compelling case for this “new trend,” something reflected in the comments of leaders at virtually every conference I attend. Here’s an excerpt from the chapter:

The “culture of contest” that results from this is becoming increasingly maladaptive in an age of ever-increasing social and ecological interdependence. These maladaptive consequences can be seen in the growing disparities of wealth and poverty within and between most nation-states, and in the social conflict and instability that results. These consequences can also be seen in the mounting ecological crises that stem from a global race to liquidate the earth’s ecological capital in the name of self-interested, short-term, material acquisition. And collaboration and alienationfinally, these consequences can be seen in the growing epidemic of alienation, depression, and anomy that characterize the most competitive societies today.

In order to move beyond the prevailing culture of contest and create a more just and sustainable social order, we need to critically reexamine the concept of competition itself. Competition, as the term is widely used today, tends to conflate two distinct sets of ideas that need to be disentangled. When people use the word “competition,” they are often referring, simultaneously, to (a) the pursuit of excellence, innovation, and the establishment and productivity within a market system; and (b) the self-interested pursuit of mutually exclusive gains, with resultant winners and losers…

Once we disaggregate conventional notions of competition in this way, we can see that the most valuable aspects of “competition”- the pursuit of excellence, innovation, and productivity-are not contingent on self-interested behaviors, and they need not result in winners or losers. On the contrary, they assume their most mature form within a framework of cooperation and mutual gains-or a framework of collaboration.

This is a new framework for entrepreneurship. The broad diffusion of this reality that will take place over the next decade will create dramatic systemic change.

© Copyright 2012 CorbisCorporation
Trend 3: Unlocking the Entrepreneurial Human Spirit

At the World Health Care Congress, I had the privilege of moderating a panel on the rise of social business models in global healthcare featuring Nobel Prize innovator Mohammed Yunus and Kaiser Permanente CEO George Halvorson.

No one has done more to call on leaders to expand their vision of “Progress Out of Poverty” than Yunus. “Whenever I found a problem, I started a business to solve it,” he has said repeatedly. The $30 billion microfinance markets grew from that “I started a business to solve it” premise and the understanding that poor women are some of the world’s best entrepreneurs.

Grameen Bank started by lending $27 to 42 of these new entrepreneurs.

Now it goes into the villages of Bangladesh each week to imbue courage and skill and collect ripple effectpayments from 800 million borrowers and bank owners who hold $1.5 billion in entrepreneurial assets. Grameen Bank is well known, but social enterprise leaders everywhere are solving complex problems with broad populations by combining community leadership, technology, social marketing, silo busting, policy levers, movement building and partnerships often in ways that standard for-profit organizations have never considered.

Goonj in India is a great example of unlocking the entrepreneurial human spirit. As founder Anshu Gupta explained to a rapt audience of us at Babson, “Cloth for Work” unlocks the human spirit with dignity in three ways:

It recognizes the talent and time of each individual and community by asking them to select and design solutions that they will create through hard work.
Villagers are paid for their work in cloth and clothing, maintaining their dignity in the process.

Goonj is a global voice for clothing including the taboo subject of sanitary pads, calling attention to the problem while encouraging replication of the Goonj model.

Microfinance has opened up entrepreneurship for a couple of billion who otherwise would be in the depths of poverty. Instead, their courage, skill and hard work have made them entrepreneurs. Goonj and multiple other models need to be scaled globally to add their unique impacts to the global economy. ReachScale works with partners like Babson to design an important next step: invite multiple stakeholders to design and build scaling engines that streamline growth commitments and reduce risks so portfolios of “most innovative” social enterprises can be scaled.

However, as conversations continue to indicate, many unique challenges and opportunities for engaging the entrepreneurial human spirit in the U.S. remain. Social innovators and entrepreneurs from New Orleans to Detroit and from Asheville to Cleveland, are hard at work to leverage these trends and overcome obstacles.

Several of these were addressed in Changing Business as Usual: 3 Questions for Non-profit and For-profit Innovation Leaders. I will address more in future columns.

Changing Business As Usual: 3 Questions for Non-profit & For-profit Innovation Leaders

© Copyright 2013 CorbisCorporation

I returned home to Boston after a 10 day conference “intensive” – the Council on Foundations in Chicago, the World Healthcare Congress in Washington, D.C. and the Skoll World Forum on Social Entrepreneurship in Oxford – looking forward to a Patriot’s Day holiday to recover and enjoy a beloved Boston tradition, the Marathon.

Of course, that fateful day did not unfold as expected. During the week of grief and being asked to shelter in place that followed, I thought a lot about quiet heroes who run toward a blast, not away.

The suddenness and unexpectedness of that scene in Boston and the coming together of skill and courage to address life-threatening outcomes raised questions about the slow moving challenges where we need skill and courage to come together, many of which were showcased in Chicago, D.C. and Oxford.

From Money to Data: A Rude Awakening

Sessions with leaders from global and corporate foundations explored new avenues of innovation and money collaboration to yield better outcomes. Lucy Bernholz, a Stanford professor speaking at the Global Philanthropy session, pointed out that while philanthropy has been managed by the rules of money in the past, in the next century it would be driven by the rules of data.

As I listened to Lucy Bernholz, I found myself thinking about a provocative piece from another leader in the foundation ecosystem, Clara Miller, which questions the basic assumption of what to measure with the data. In The World has Changed and So Must We, Miller describes the “rude awakening” of the post crash economy:

Decades of effort to bring the poor into the mainstream where “a healthy and growing labor market” would enable a steady income (and for some, even prosperity) have been shattered as “more Americans experience poverty today than at any time in the 53 years the Census Bureau has published such figures.”

Questioning the assumptions that got us here and describing the scene from her vantage point, Miller suggests that “business as usual” must change:

If our field is to address a more fundamental set of issues, our tactics must change, broadening our approach to go beyond a traditional set of activities. Admittedly, this emerging approach lacks some of the theoretical certainty of the dominant view, which sees access and ownership strategies as reliable steps into mainstream opportunity.

Yet given the reality that access strategies have been helpful but not adequate, we must be intentionally experimental. Only by rigorously questioning and transcending our own cherished assumptions will we progress.

Philanthropy, Impact Investing & Social Enterprise: Three Questions

In the spirit of the provocative visions and admonitions of Clara Miller and Lucy Bernholz, the following questions surfaced from the many viewpoints heard at these conferences regarding philanthropy, impact investing, and social enterprise.

(Note: The royal “we” in each question below encompasses philanthropy, business, non-profit, investment, government, multi-lateral organizations, and most importantly, the communities and leaders where change is desired.)

1. How can we come together–with skill and courage–to get beyond the for-profit vs. non-profit dichotomy that often prevents even envisioning sustainable solutions?

At the Council Global session, social enterprise was featured as a “big idea” alongside “shifting money rules to data rules.” Social entrepreneurs are applying business models to solve social challenges, and they represent some of the most intentionally experimental leaders in the world. The rich range of hybrid, leveraged, and social business models offer multiple paths to move from non-profit to sustainable.

What is lacking: cross sector commitment to engage, evaluate, invest and scale the most innovative collaborationand sustainable models. The need for this shift and this commitment is reinforced each time a Clara Miller says, “We plan to invest 100 percent of our endowment, as well as other forms of capital, for mission.” These are some of the models that can make mission sustainable.

The separation of non-profit church and for-profit state creates significant hurdles to sustainable solutions, however. For example, NGO Source, just announced in Chicago, enables U.S. Foundations to provide unrestricted grants to organizations in other countries that have been qualified as valid U.S. non-profit equivalents. The dedicated team from TechSoup Global and the Council on Foundations spent five years working on this breakthrough.

Yet, NGO Source simply extends U.S.-centric money rules to the global landscape.

The near term cost is the lost competition of non-profit programs with more sustainable models. IRS rules of money favor less sustainable and scalable models. The much larger cost is the massive loss of innovation that could come from engaging community, philanthropy, non-profit, social enterprise, business and government leaders across global north and south opportunities to invent and scale sustainable solutions.

2. How can we collaborate to scale “best solutions” now while advocating and changing the rules so that data (and sustainable models) are more influential in allocating resources to global, country and community engines of economic development?

The knowledge silos and non-profit money rules limit our innovation visions. Simple questions like the difference between social innovation and social entrepreneurship are not well understood. Even organizations who understand the distinctions and know proven innovators who could scale, continue to over-invest in adding new pilots and enterprises and underinvest in scaling these proven winners—begging the question: Where Will All the “Household Names” in Social Enterprise Come From?

The value of getting to scale was clearly discussed at the World Healthcare Congress. I had the privilege of moderating a panel on the rise of social business models in global health care, which featured Nobel Prize innovator Mohammed Yunus and Kaiser Permanente CEO George Halvorson.

No one has done more to call on leaders to expand their vision of “Progress Out of Poverty” than Yunus. “Whenever I found a problem, I started a business to solve it,” he has said repeatedly. The poverty$30 billion micro-finance markets grew from that “I started a business to solve it” premise and the understanding that poor women are some of the world’s best entrepreneurs.

Grameen Bank, started by lending $27 to 42 of these entrepreneurs. Now it goes into the villages of Bangladesh each week to imbue courage and skill and collect payments from 800 million borrowers and bank owners who hold $1.5 billion in entrepreneurial assets. When Yunus encourages the sons and daughters of these entrepreneurs to invent their own jobs, he uses the example of their heritage as expressed in the simple statement:

Of course you can do it. Your mother owns a bank.

And George Halvorson leads one of the most innovative healthcare delivery companies in the U.S. and created a similar “Aha moment” when he announced that Kaiser Permanente is a social business. Kaiser’s unique model of prepaid healthcare ensures coincident incentives to keep its clients healthy with clients paying a premium for their healthcare, not for individual procedures.

When clients stay healthy, Kaiser has more money to invest in improved services. For three years, Halvorson has written a weekly letter to his entire staff celebrating each achievement in keeping clients healthy.

3: How can we engage and collaborate with innovators and entrepreneurs in every sphere of influence to leverage the entrepreneurial human spirit?

We see from Mohammed Yunus’ example that successful leaders and models are those capable of tapping the entrepreneurial human spirit. When people who must “innovate to live” (immigrants, for example) engage with leaders who are motivated to share these innovations, the potential is social entrepreneurshipenormous. Social entrepreneurs demonstrate that these stretch goals are achievable and could result in scale and profit.

These leaders are solving complex problems for broad populations by combining community leadership, technology, social marketing, silo busting, policy levers, movement building and partnerships often in ways that standard for-profit organizations have never considered.

An important next step: to invite multiple stakeholders to design and build scaling engines that streamline scale commitments and reduce risks so portfolios of “most innovative” social enterprises can be scaled.

As Thomas Freidman recommended, we need a radical middle ground for revenue and for sustainable business that leverages the best of both non-profit and for-profit thinking. Social enterprise shows us multiple pathways to move towards sustainability. The intentional experimentation advocated by Clara Miller will empower new leaders, policies, partnerships and models tailored to our underutilized human and economic assets.

We simply must adopt the best examples and never underestimate what talented entrepreneurs can do, no matter where we find them.

© Copyright 2010 CorbisCorporation

Note: This post originally appeared on CSRWire.

Marketing to – and Connecting With – Your Next Billion

© Copyright 2012 CorbisCorporation

TV advertisers are watching as millennials and their family members—especially their parents—who have adopted similar socially conscious views increasingly populate prime demographics. One outcome of these increasingly “sustainability-supporting demographics” is that advertisers and corporate leaders are now actively exploring how they can persuade their global customer base that they “get it” too.

In the Rush for Social Media

Most agencies that guide the marketing world have been working hard these last few years to “get” how they can use social media. As a result, it is not surprising that many have missed the other major social movement that has erupted in the same time: social enterprise and social innovation. While social media can influence customers, if you need to add a billion new customers (P&G’s goal) social enterprise, not social media, is developing the models to reach those numbers.

In the end, the “other social” oversight may be for the best since the knowledge and resources required to leverage the growing social enterprise movement actually exist at the intersection of companies and social enterprises. Corporate leaders must identify the problems they could step forward to address and seek out the most innovative organizations already solving those challenges.

To do that, they must first answer this question: Who is the most innovative social business already solving “our challenge” and how can we drive their solution to scale?

Then build partnerships with the innovators. Use new partnership models (like the one proposed in World Economic Forum: Where will the “Household Names” in Social Enterprise come from?) that shift resources from adding new social enterprises to the funnel and invest instead in scaling proven models that have the capacity to leverage corporate talent, technology and commitment.

Engaging Directly With Social Entrepreneurs

It is good news that the World Economic Forum is bringing Schwab Foundation social entrepreneurs to Davos. And the Skoll World Forum on Social Entrepreneurship – the largest annual gathering of social billboardenterprise leaders – is happening again this year in Oxford, England from April 10-12.

I have written about the opportunity for companies to engage directly with social entrepreneurs. (A New Triple Bottom Line provides a good introduction.) Since social enterprises focus on opening markets across the base of the pyramid (BoP,) their models often represent the innovations needed to understand how commercial entities can grow their BoP markets. Companies who assume that their ‘Global North’ engagement models are going to work in these new markets are going to be a day late and a dollar or rupee short.

The Task Ahead for Marketing Chiefs

Visionary global CMOs are engaging now to understand and connect with billions of their future customers. Here are four reasons why every CMO should be doing the same.

1. Meet the designers of the engagement models of the future.

Whether you believe that the world ahead must include less consumption or not, your most effective marketing spend will need to be one that is less customer interruptive. Marketing expenditures are being redirected from TV ads to content and cause marketing, and other activities that depend on authentic customer engagement.

If you want to connect with your future customers globally, you will need to understand the engagement models that are evolving in their villages.

2. Share your progress in solving a globally recognized challenge with your stakeholders by embracing a sustainable innovation business model.

In order to persuade “sustainability and social good” customers of your authenticity, you need partners with intimate knowledge of what your current customers and even more importantly, what new marketing toolsthe next billion customers care about. You can’t read about this in books posts or tweets. A good example is how Dow Corning sent its executives into the Global South as brand anthropologists. IBM’s Global Citizen’s Corp is another model with potential.

BUT you need to flip the requirements so instead of working with non-profits, your executives rub shoulders with the leading creators of the hybrid and low price/modest profit models that can scale to the next billion—your execs need to be their scaling partners.

3. Social entrepreneurs build sustainable models that become brand assets.

Claire Lyons, formerly of the PepsiCo Foundation and one of the designers of Pepsi Refresh, wisely advised CMOs to “stop propping up PR with dilutive dollars.” Money spent for marketing and PR campaigns that require an equivalent or greater investment to create the next set of impressions is a perpetually dilutive effort. To build a social brand asset, the model must build capacity to continue solving problems as the spend decreases or ends.

4. Your window into entrepreneurs who must “innovate to live” can be opened through social entrepreneurs.
You can meet and work with leaders who are solving complex problems for broad populations by combining community leadership, technology, social marketing, silo busting, policy levers, movement building and partnerships in ways your organization has never considered.

Global corporations whose new customer goals are in the neighborhood of a billion must find models that operate in the neighborhoods where the next few billion customers live.

Note: This post originally appeared on CSRWire.

World Economic Forum: Where will the “Household Names” in Social Enterprise come from?

Shared_value

Scaling Social Impact, the new Insight Center from HBR and The Bridgespan Group, is full of articles with useful ideas.

The concept is a vital one and Bridgespan knows well the limited role corporations have played in scaling social impact because they did the definitive study.

As a term, “social impact” may be too inclusive, encompassing a range of very different undertakings such as non-profits, company initiatives, program related investments, crowdfunding, social bonds, and social enterprises.

When something is this all-inclusive, the tendency is to advocate for the obvious good outcomes and required support without understanding the distinct innovations and capabilities that would be needed to make the business and impact models truly scalable. It is easy to say that if you want scale, focus on profit.

But if it were that easy we’d have many more “household name” social enterprises—we don’t.

As world leaders gather in Davos for the World Economic Forum, many are questioning the effectiveness of the modalities being used by nation states and corporate entities to create economic opportunity for their own citizens and employees. Focusing on solutions to challenges where benefits are shared (by governments, communities, companies and future generations) seems a potential win-win, but who will prime the pump to support sector development?

The priming ideas come from millions of social entrepreneurs who are stepping forward. Working on shared space their own or with philanthropic and sweat equity, these efforts are testing solutions designed to bypass broken policies and systems (or anti-systems in many cases.) Why aren’t the big players flocking in to scale these enterprises that are solving problems and could be doing so profitably when they reach scale?

A Pervasive Mis-Allocation of Resources

One answer is a pervasive miss-allocation of resources combined with lack of clarity among those who “own” the capabilities to scale about how to create sustainable social impact. In trying to “do more good” universities, foundations, companies and others focus on adding more seedlings while ignoring the successful crops that have sprouted (often in out of the way fields) but need watering and nutrients (plus harvesting equipment, silos and transport).

The majority focus on seed stage is clear from the proliferation of competitions, fellowships, mentoring programs, incubators and accelerators. While easier to do and sure to attract attention, the mature social enterprises who obtained their credentials several years ago, already know it does not lead to scale nor sustainability. The lack of successfully scaled examples demonstrates that the sum total of these “do more good” efforts falls far short of the wisdom, talent and investment needed to solve real social challenges.

To shift the resource allocation we need new partnerships to identify those that have navigated multiple crop cycles.

© Copyright 2012 CorbisCorporation

From Sponsors to Active Innovators

As with other innovation this selection is just the beginning. From here, testing which models and management teams can absorb talent and capital with continuous learning and adapting to new cultures and systems becomes critical. Experimentation now consumes the reallocated investment, competitionbeginning with select innovators funded to test and learn alongside “go to market” partners who already have testing infrastructure in place.

With this vision, companies shift from passive sponsors of competitions to active innovators. Conversations are no longer about the role of the corporation as donor and customer. The real market creation levers for most corporate partners come from any of five possible roles:

Innovator/Tester
Integrator
Capacity Builder
Marketer
Distribution Innovator
Focusing on these critical roles aligns the social enterprise with the corporation and enables bi-directional leaning and capability building from the best talent and assets of both organizations.

Here are three examples that illustrate the “cross silo” merging of most of these five possible positions:

1. Social Enterprise Exposes Massive Market Opportunities
Naya Jeevan’s [which means new life] mission is to provide social protection to low-income families in Pakistan in an efficient and inclusive manner through a unique micro health insurance model that reaches poor populations residing in urban areas of developing countries.

Model development has been supported with knowledge, talent and funding from global insurance leaders led by Allianz-EFU. Experiments with scalable partnerships resulted in several viable go-to-Social enterprise Naya Jeevanmarket strategies attracting other corporations, schools and individuals to leverage existing, inpatient and ER-trauma healthcare delivery systems.

Naya Jeevan now offers its insurance program in Pakistan at subsidized rates under a novel national group health insurance model underwritten by Allianz-EFU, IGI Insurance, and AsiaCare.

Naya Jeevan’s success has lead to plans to take the model to India with active collaborations with corporate, academic, and non-profit institutions underway currently. Cofounder Asher Hasan is also a leader of the WEF Global Agenda Council for Social Innovation, so look him up at Davos and talk scale.

Naya_Jeevan

2. Innovation and Integration-Driven Model
P&G’s FutureWorks group, often referred to as an “entrepreneurial engine,” seeks opportunities to grow and import innovation from entrepreneurs and social entrepreneurs globally, similar to GE’s somewhat self-disruptive approach.

Futureworks supports P&G’s goal to import half their new consumer products from the outside, enabling new solutions to leverage P&G’s integrated capabilities or apply its own expertise to building integrated capacities as needed.

Innovation success in developing countries will depend on accessing and importing the most active global innovation sources led by social entrepreneurs. One P&G investment example is Healthpoint Services, a for-profit social enterprise scaling from Punjab, India. Started by Al Hammond, a global base of the pyramid expert, and Amit Jain, a clean water pioneer, Healthpoint is the first scalable integration of telemedicine, clean water, diagnostics and generic pharmaceuticals. This integrated solution enables real foundational healthcare and water delivery in a sustainable manner (i.e., profitably) via a village facility where doctor visits and tests average less than a dollar.

3. Internally Created Platform Opens Distribution Innovation
The past two years at the Skoll World Forum on Social Entrepreneurship, Dorje Mundle of Novartis has presented the progress of Arogya Parivar (“healthy family” in Hindi), a social initiative developed by Novartis to reach the 740 million people living at the bottom of the pyramid in rural India.

Now operating in 11 states across India, it is the first industrial social enterprise to tailor affordable products, local training and capacity-building to diseases endemic among the rural poor, which are frequently ignored by the country’s mainstream healthcare providers.

The program broke even in 30 months and sales have increased 25-fold in the last five years. As the innovator and business designer, Novartis has played all roles while actively innovating with other social and healthcare organizations. Last year’s presentation included their strategy for distributing Embrace infant warmers through the nearly 400 health advisors Novartis employs.

In 2013, we look forward to the progress of the model opening in Kenya and Vietnam.

These three cases exemplify what HBR wrote in an article titled How GE Is Disrupting Itself in December 2009:

“If GE’s businesses are to survive and prosper in the next decade, they must become as adept at reverse innovation as they are at glocalization. Success in developing countries is a prerequisite for continued vitality in developed ones.”

Innovation and social solution success, both in the U.S. and globally, will depend on accessing, scaling and even importing the most active global innovation sources. Working with social entrepreneurs beyond contests and fellowships can leverage corporate scaling capabilities to enable measurable solutions that improve communities and economies creating markets today and in the future. Isn’t that the goal?

Note: This post originally appeared on CSRWire.