Archive for the ‘ Corporate Initiatives ’ Category

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 meet 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 also sustainable 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 McDonald’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.

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

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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 proceeded 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-paralysis confidence 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 an 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.

Marketing to – and Connecting With – Your Next Billion

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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.

Corporate Volunteerism: When You Care Enough to Give the Very Best

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- The Corporate Intrapreneur
- Strategic International Corporate Volunteerism
- Smarter Solutions for a Smarter Planet (IBM on Global Citizen’s Corp)
- Special Edition on International Volunteering

These are just a few of the sessions offered at the recent Business Civic Leadership Center Global Conference that focused on corporate leaders and employees improving the world and growing business through volunteering. In every industry, knowledge-based global companies are approaching corporate volunteerism as both a business and societal win/win.

Leading organizations are crafting their own particular approach.

GE is centering their global growth strategy around solutions to healthcare and energy with the expectation that many innovations will come from the Global South. (Relevant: How GE Is Disrupting Itself)

Dow Corning is seeking opportunity through deploying high potential leaders/innovators as cultural and commercial anthropologists in Africa, Asia and Latin America. IBM’s Vice President of Corporate Citizenship and Corporate Affairs Stan Litow credits a significant source of IBM’s continuous innovation capability to their understanding that “when you give what differentiates you in the marketplace, you produce not only significant benefit in the community but also for yourself.” These are just a few from a long list of innovators in this area.

Volunteerism & Corporate Value: IBM Responds
How does corporate volunteerism create value for companies, and how can companies organize to create maximum impact in the societies where they work and volunteer?

For leaders who are not yet convinced about the fundamental importance of corporations acting responsibly to both avoid doing harm and to improve society, Litow explains IBM’s view of company value creation from corporate responsibility in a recent interview. In answer to the question, “how do you put metrics in place to track company impact?” Litow has very specific advice. Here is a summary of the key results that IBM expects and measures:

1. Find and keep the best talent.
2. Deploying the best talent and tech in exigent environments maximizes learning.
3. Ranking high in CSR means ranking high in SRI Funds. (Socially responsible investment funds control over a trillion dollars worth of assets.)
4. Earned media has calculable economic value
5. IBM (and all corporations should) measures the effect of corporate responsibility on brand value.

Some leaders may view volunteerism as a way to save on cash contributions. It is unlikely that the leaders at this conference would advocate for a short-term financial advantage from corporate volunteerism. The advantages sought are leader development, learning, innovation, market creation and emerging market and consumer understanding.

In seeking the five values IBM measures and the people benefits above, it might be useful to ask a slightly different question: What are other admired companies doing that don’t seem to be using corporate volunteerism as aggressively?

P&G: An Innovation-Driven Model with Similarities
One example of a company taking a different approach is P&G, an organization with a reputation for innovation (Bestselling book, The Game-Changer, was written by P&G’s former chairman and CEO, A. G. Lafley).

One of its core strategies is FutureWorks, often referred to as P&G’s “entrepreneurial engine.” The Futureworks group is out in front on opportunities to grow and import innovation from entrepreneurs and social entrepreneurs globally, similar to GE’s self-disruptive approach.

Like IBM, the Futureworks team also builds partnerships. While IBM is approaching volunteerism and the associated leader development on a broad scale (over a thousand leaders deployed through their Global Citizen Corp last year) and their citizen executives are learning through building capacity outside of IBM mostly in non-profit organizations, Futureworks is supporting P&G”s goal to import half their new consumer products from the outside.

Under the mantra of converting “not invented here” to “proudly found elsewhere,” P&G’s 50 + partner experts scour the globe and offer to partner voluntarily. For P&G the “volunteer entrepreneur supporters” are more likely to partner with for-profit enterprises, and P&G’s successful engagements can often lead to investment opportunities as well.

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.

P&G, IBM, Dow Corning and GE recognize that the world is changing rapidly and their strategies need to focus assets on new geographies and markets where innovation requires partners. Adding new generations of customers requires following their lead and rejecting single bottom line thinking. In many cases the global south entrepreneurs and social entrepreneurs will create the products and services that will bring a new generation of customers to insightful companies who scale these entrepreneurial efforts.

Expanding Impacts of Volunteering
As any global development leader can tell you, the complexities of solving societal problems are substantial. Understanding and measuring whether a particular intervention has succeeded has become so complex — think of randomized control trials — that it is not surprising that many companies default to those programs put forward by employees working in their own communities (or in the case of companies working in developing countries, working in the communities that are impacted by their presence.) In emerging markets, leaders usually engage development experts to assist in design and implementation, but in most cases the focus is still on local community programs.

There is much to be learned from community-focused development, and having the employee leadership and personal volunteer investment guarantees a win/win when programs are successful. However, the ability for local community-focused individuals to be strategic and to consider alternatives with superior innovation models or impact profiles is limited. Employee-led programs are usually stuck in the history of where the company assets are instead of where they need to be for future “licenses to operate” to enable growth and pay dividends.

If the goal is to create societal impact and develop leaders who understand the complex tasks of innovation, market creation and policy making in emerging markets, a company cannot have its efforts derived exclusively from employee-driven development and volunteerism.

Guidelines for Increased Impact
To increase both company impact and societal impact from corporate volunteer programs, learn from the leaders and partner with the most innovative and sustainable solutions. Here are four key guidelines for getting the best results:

1. “Giving the very best” is fundamental in creating corporate value and sustainable societal value.
2. Rather than starting with the company’s capabilities, begin with this question: What organization is most capable of solving the challenge we are seeking to address in a sustainable manner and what do they most need?
3. Seek social enterprises that build capacity to solve problems and scale solutions across countries and continents using hybrid and/or for-profit models and compare these models to nonprofit alternatives.
4. Compare local solutions against regional and country-wide solutions that improve societal outcomes more broadly and seek partners to scale proven solutions.
Going forward, funds and talent should flow to the organizations making and reporting measurable progress actually solving key challenges. Some leaders call this “buying impact”.

By deploying the best, companies can bring added critical capabilities that enable impact to become partially or fully sustainable. In these cases, “buying impact” is replaced with “investing in impact engines.” (Relevant: Social Enterprise and Social Innovation: Not the Same Thing)

Successful social entrepreneurs create business models where the product or service provision draws resources from customers, donors, government, corporate and investor markets. This combined support and innovation actually can make the difference between a profitable and a non-profitable model.

These models are all evolving, and this fluidity is evident throughout the world. Viewing corporate volunteers as leaders who can attract other partners, bring business acumen to solutions, add critical distribution and scale capabilities, while enabling money to become a catalyst in building societal improvement capacity means the landscape of both business and society can be transformed.

Note: This post originally appeared on CSRWire.

A New Triple Bottom Line

As we dive into the New Year and face up to the challenges ahead, I am reminded of the fundamental reason so many of us are working in this area. We came to do more good, though we often find most of our time is spent doing less harm.

CSR organizations are increasingly tasked to cover both.

And we will have to come up with new approaches to scale doing less harm and doing more good at the same time.

The Cost of Incrementalism

What is taking so long? Looking at just one aspect of CSR, corporate philanthropy, we see lack of results from scale — from the ReachScale site:

“Over the past forty years, over 200,000 nonprofits were established. Only 144 achieved budgets of 50 million (USD) or more. Of that group fewer than 15 were scaled through corporate financial contributions. In other words, corporate funding has scaled one nonprofit every three years.”

Adding to the old answers to “What is taking so long?” are some new challenges:

First is the fragmentation of social responsibility activities in most companies. Executives talk about the need to track involvement in major issues (pensions, training, employee healthcare, etc.) as well as environmental impact (carbon, water, energy, packaging, etc.). But treated as individual issues, the solutions often receive inadequate attention for any comprehensive solutions.

This fragmentation problem is most extreme for companies who ignored externalities until recently and then just tacked on an external function to try to handle them. Doing what’s right needs to be mainstreamed, and it all begins by comprehending what it means to “do less harm.”

Unfortunately many companies fall victim to the equivalent of the 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.

Scaling “Do Less Harm”

Two years ago, Wal-mart began to scale its comprehensive supply chain initiatives. Many questioned the resource allocation and the criticality. Two years later, these new comprehensive mainstream models are being talked about as table stakes.

The genie is out of the bottle on these issues. These days the scorecards are being kept by a variety of independent monitoring organizations.

While some companies are still in denial, the smart corporate players are partnering with the scorekeepers to assist them in mainstreaming their “do less harm” commitments. The recent comprehensive fleet mileage targets agreement between the US Government and the global auto companies (highlighted in a recent editorial by Tom Friedman) represents an example of this trend that will continue across many ecosystems.

Scaling and mainstreaming “do less harm” is garnering much of the effort in the best companies. And as leaders see the positive benefits of this approach, the most innovative already realize that the same idea set should be applied to “do more good.” They are also the first to see that the big problems can only be solved through a mix of both approaches along with a significant dose of innovation.

Scaling “Do More Good”

Here are three reasons why scaling “do more good” will have even more impact on creating virtuous cycles that support both better environmental stewardship and better economic growth. First, an example:

Many challenges exist around young people, learning, access for people at risk and education for the disadvantaged. One critical reason that youth are at risk and people lack access is disabilities. There are a broad range and most require donor driven approaches with limited sustainability.

One exception is hearing loss—an opportunity that can directly overcome the disability of 300 million people and over 180 million infants, children and young adults. As is often the case, these opportunities exist because of underserved markets and this is one of the largest underserved markets with 60 percent of 600 million people at risk, untouched, globally.

Access to the market has been created by a small team of innovators working over the past decade to invent the solar hearing aid. Solar Ear is already manufacturing in Botswana and Sao Paolo. Eventually there will be 10 manufacturing sites serving 60-70 countries, with low tariffs, and reaching millions of people that are not served by traditional companies. They are completing a deal for the distribution rights for Solar Ear in Brazil that will fund their third manufacturing line in China — and all the hearing aids and chargers are manufactured by deaf young adults.

Solar Ear and Howard Weinstein just won the Social Entrepreneur Award at the World Technology Summit, among many other recognitions.

From “License to Operate” to “License to Grow”

Social impact scaling that can demonstrate progress in meeting people’s fundamental needs while making a modest profit is a new innovation. With an ethics-based marketing model instead of interruption-based one, new opportunities emerge. As corporate strategy guru Michael Porter pointed out in “Strategy and Society,” a Harvard Business Review article he coauthored with Mark Kramer:

“No business can solve all of society’s problems or bear the cost of doing so. Instead, each company must select issues that intersect with its particular business. Other social agendas are best left to those companies in other industries, NGOs, or government institutions that are better positioned to address them. The essential test that should guide CSR is not whether a cause is worthy but whether it presents an opportunity to create shared value – that is, a meaningful benefit for society that is also valuable to the business.”

Other examples include Healthpoint Services (see this article on exceptional scale) and Lifespring Hospitals, operating in rural India, are two examples of a license to operate that has evolved into a license to grow. Arogya Parivar (AP), an innovative outreach by Novartis India is another example. (AP received a prestigious award for “Best long-term rural marketing initiative” from the Rural Marketing Association of India.)

Increasingly companies will recognize that it is not enough to do less harm. A license to grow demands more vision and more impact. It also requires building ecosystems and innovation models that can turn problems into profits.

Reputation based on Results

Donations and volunteer hours are no longer newsworthy unless presented in the context of strategic commitments to solve real problems.

Forward thinking companies like Nike and Timberland admit openly that they know their businesses are not currently environmentally friendly. Going forward they need to drive innovation to drastically change their businesses. In the future we cannot produce products like T-shirts in the environmentally damaging way we do it today.

Going forward, companies will not be able to protect and preserve their reputations through “pretty pictures” CSR. Instead they will need to identify an appropriately big problem and then demonstrate measurable results towards a solution.

Return on Investment

What is new with ROI in the sustainable impact world is how it is achieved. In the past the corporation’s core business produced the returns with a small percentage of the profits allocated to cost centers including CSR and philanthropy. Increasingly global companies see how the most pressing problems that seemed to be intractable resource sinks can be, with appropriate innovation and collaboration, profit producing. For example, General Electric’s global business strategy now centers on two critical challenges: healthcare and energy.

Achieving profit through social innovation and collaboration requires new partners that are assembled from all over the globe. These partnerships are generating profitable and sustainable innovations by offering products at price points that a large segment of the pyramid can afford. Ideally these solutions are marketable because they also result in behavior change. The creation of delivery systems for clean water to rural villages is an example of a rapid behavior-change solution.

The reputational value of sustainable solutions can attract multiple sources of capital. As you watch the social investment announcements in 2012, you will increasingly see strange bedfellows clasping hands and acting together to drive integrated social and monetary returns.

This new triple bottom line leverages strategic and brand resources within the corporation with highly innovative social enterprises. By combining social impact, enhanced reputation and a return on investment in this way, the whole becomes significantly greater than its parts.

Photo credit: Organic Soul

Note: A version of this post first appeared on CSRWire.

Five Questions to Measure Commitment to CSR

In conversations with marketing, communications and CSR leaders at the 36 conferences in which ReachScale participated in 2010, an unusually high number of executives said they are doing a strategic review of their CSR commitments and strategies. One might assume that the goal is to be more impactful, to do less harm and do more good. Instead of assuming, a question needs to be asked: Is the purpose of our CSR review to increase impact? The answer is not simple, given the current economic climate.

World leaders are faced with the same challenge as CSR leaders. Every three years the UN Global Compact Leaders Summit assembles the global ecosystem that was built through a commitment to the 10 principles of the Global Compact. (Review the list here.) Much good has come from the Compact and yet at the same time, promises have fallen short. The global economic meltdown has created a kind of schizophrenia in those organizations that committed to goals that appeared reachable in 2007 but seem less so today.

Empowering an ecosystem of leaders to re-envision appropriate responses is a tough challenge. In these circumstances it is no surprise that the proceedings of most conferences on CSR are dominated by testimonials of good works completed, of new projects and collaborations being started. But these are being discussed without the goals and measures that Porter and Kramer suggested are essential.

Based on our advocacy efforts and the testimonials heard from many conference podiums, we have distilled some simple but core questions for companies who are viewing their commitment to “shared values and principles, which will give a human face to the global market” (the quote that appears on the cover of the Gobal Compact Annual Review.)

1. Can we identify and focus on a cause or problem whose solution creates shared value?

As you answer this question please consider the following quote from Porter and Kramer:

“No business can solve all of society’s problems or bear the cost of doing so. Instead, each company must select issues that intersect with its particular business. Other social agendas are best left to those companies in other industries, NGOs, or government institutions that are better positioned to address them. The essential test that should guide CSR is not whether a cause is worthy but whether it presents an opportunity to create shared value – that is, a meaningful benefit for society that is also valuable to the business.”

2. Are we taking on a problem that our stakeholders would immediately recognize as significant?

For example: No one will argue that global banks are reputationally challenged in this post financial crash world. If you are the leader of a global bank and your response to current circumstances is to do exactly what community reinvestment laws require (and only in those countries that currently regulate you,) then you are working at zero base. On the other hand, you could make a commitment to address the global migration to cities problem, actively build community reinvestment principles and seek innovative partners to address the global slum problem in every country that delivers profit to you. That is an effort that would be clearly recognized as a commitment to a highly significant problem.

3. Is the problem we have chosen core enough to our business that we can ask our experts to apply their knowledge to the problem across multiple functions?

Using global banks as an example once again: Virtually every functional group within the organization has talent that can be applied with the appropriate innovation partners to solving this problem in every major city in the developing world in which that bank operates.

4. Is the problem we have chosen important enough that each member of the executive committee could justify spending 2 days a month (10% of work time) leading the organization and the ecosystem in seeking a solution?

The Global Compact is all about commitment. One could argue that for some companies, implementing the 10 principles will take at least that much time from executives at the beginning. As leaders drive the principles deep into the organization’s collective psyche, the muscle strength needed to take on larger opportunities will develop.

5. Is our wisdom, work and investment focused on attracting participants across the value chain?

The behavior of all players must change to achieve real results. Looking to engage multiple innovation sources encourages not just one corporation’s investment but also the commitment of many other companies as well.

Increasingly the ability to create value depends on market mechanisms that attract multiple value chain and investment participants. The social innovation to attract the participants will often come from outside the companies championing the changes. Finding and cultivating these innovations often depends on a problem solving commitment that goes beyond simply serving one company’s goals. The commitment must flow from an understanding that the problem goes beyond what any single company can do; the real work is assembling an ecosystem to solve a problem which requires a committed company’s best and brightest wisdom and work.

At Sustainable Brands 2010, Jason Saul of Mission Measurement stated that the CSR practice of reporting on the checks written and the volunteer hours logged will not be an adequate measure going forward. Ben Packard of Starbucks stated very openly that Starbucks knows they have not made enough progress in addressing the most significant impact they create as a business — the cup. Jason Saul and Ben Packard are two examples of leaders asking the right questions about real CSR impact.

Note: A version of this article first appeared on CSR Wire in February.

Social Innovation Funding: Where are the Global Companies?

On August 12 The Economist published an article about social innovation. Focusing on the
the Social Innovation Fund (SIF) support for social innovation, the piece led me to imagine how this significant event might encourage companies to take a closer look at including social innovation in their innovation and investment models. It also parallels a lot of the writing I have been posting here over the last few months.

Here are four examples of where our thinking comes together and, in some cases, diverges:

1. The Economist:

Policymakers on both sides of the Atlantic are keen on a new approach to alleviating society’s troubles. On July 22nd Barack Obama’s administration listed the first 11 investments by its new Social Innovation Fund (SIF). About $50m of public money, more than matched by $74m from philanthropic foundations, will be given to some of America’s most successful non-profit organisations, in order to expand their work in health care, in creating jobs and in supporting young people.

In several earlier posts here (such as Problem Size, Innovation and Scale) I have approached the issue of tackling big, intractable problems. The complexity inherent in addressing these problems garners more attention from governments and from thought leaders such as the Economist, and it also encourages new forms of innovation, collaboration and the expansion of ecosystems where participants are willing to contribute “wisdom, work and dollars.”

2. The Economist:

The idea behind social entrepreneurship is that fresh, businesslike ideas will bring about a productivity miracle in the “social sector” (public services plus charity) similar to the one that began in business in the 1990s. Already, a growing number of social entrepreneurs have made a mark. The best known is probably Muhammad Yunus, the Bangladeshi founder of Grameen, a microfinance bank, and winner of a Nobel peace prize. Another prominent example is Wendy Kopp, the founder of Teach for America, which puts thousands of recent graduates from leading universities to work as teachers in some of the country’s worst schools.

Teach for America is an example I often use to illustrate the lost opportunity when companies do not step up to an opportunity to make measurable progress in solving a significant problem. See the post, Largest Strategic Branding Error Ever?

3. The Economist:

However, so far the enthusiasm for social entrepreneurship has run ahead of its effects. The problem has not been a lack of good ideas (even if plenty of people who call themselves social entrepreneurs are in truth conventional charity workers). Innovative projects have ameliorated seemingly hopeless social troubles, for instance by reducing rates of reoffending by former prisoners or by helping children from the rougher parts of American cities to graduate from college.

The problem is instead one of speed and scale. Successful innovations have spread only slowly, if at all. In business, entrepreneurial firms that do well grow fast; but social entrepreneurship does not yet have a Microsoft or a Google. Policymakers hope that with encouragement from the state social entrepreneurs’ best ideas can be spread faster and wider.

One of the greatest opportunities going forward is persuading global companies that solving global problems is the best possible form of marketing. These efforts will be aimed at for profit ventures as well as those solutions that offer a strong reputational affiliation. Reassigning 2% of the global marketing budgets of large companies could quadruple philanthropic funding from companies as well as motivating them to add their wisdom and their work.

Adding wisdom and work can transform some problems from money losers to money makers, bringing attention from both impact investors and corporate investors. For example, Healthpoint is an innovative organization working on the delivery of water and basic healthcare to rural India. The approach Healthpoint is taking is profitable, sustainable and transformative. As these new models prove themselves, the most innovative companies will join in early and eventually result in the internal social-investment groups I have mentioned in earlier posts.

From Problem Size, Innovation and Scale:

“In the future: Much in the way M&A groups are used today to scour the horizon for profitable acquisitions, successful future global companies will use internal social-investment groups to find and scale the most innovative approaches to solve the biggest global challenges. The current trend of sponsoring business plan competitions – which provide only a pittance of what these innovative ideas need to actually scale – will be replaced by whole teams inside and outside companies that can build on the value creation from solving global problems.

If you are a corporate leader and this sounds totally new to you, then you may want to do some catch-up.”

For more on this topic, see Road Work: Be Aware, or Fall Behind.

4. The Economist:

Politicians’ interest in social innovation has been sharpened by the rapid deterioration of governments’ finances. Even sustaining today’s public services out of taxes alone looks impossible. Fresh ideas that promise as much, or more, for less are welcome. “The silver lining in any economic crisis is that it can force government to take necessary steps that, in more comfortable times, would fall victim to inertia,” explains New York’s mayor, Michael Bloomberg in a foreword to a new book, “The Power of Social Innovation”…Its author, Stephen Goldsmith, is a Harvard professor, but his insights come from experience. As Republican mayor of Indianapolis, he won a reputation as a leader of a new breed of reform-minded American city bosses….

Mr Goldsmith says that society is on the threshold of the fourth stage of how it addresses its thorniest problems. In stage one, at the start of the 20th century, caring for people was largely left to families and charities. In the second stage, marked by the welfare state in Britain and the Great Society in America, the government took on the job of ending poverty. Private efforts were largely crowded out. In stage three the state tried to foster partnerships with the private sector through competitive outsourcing, but although this sometimes made a big difference (as in Indianapolis), too often the partnerships were too prescriptive and highly focused on cost-cutting. In the fourth stage government will tap the ability of the private sector, for-profit and non-profit, to deliver “disruptive, transformative innovation”.

Since most corporate leaders have not been involved, they will see these four stages as foreign territory. In reality the fourth stage is the source of the innovations that they have invested billions to create but have made only modest progress in realizing. I believe their vision and their visualization are too narrow. The learnings, ideas, tests and collaboration partners that they need are running ahead of them and hoping that they get their act together and start following, so that they can be real leaders soon.

For more on this topic, see Innovation and Scale.

Making CSR “Strategic Reviews” Strategic


Value sharing: The power of linking with more than one

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In conversations with communications and CSR leaders at the UN Global Compact and Sustainable Brands conferences, an unusually high number of executives said they are doing a strategic review of their CSR commitments and strategies. As an advocate for significant changes in these strategies (and for changes in the overall communications and marketing investments that companies are making,) I see the scaling of innovative social enterprises as a means to increase focus, impact and measurable solutions to world problems.

Given the number of companies doing these strategic reviews however, it is also important to identify the best reasons for such a review and to pose this simple question: Is our review being done for the right reasons? In the current economic climate, a review driven by economic conservatism will not be strategic almost by definition.

Below are three key questions that focus the thinking on strategic issues. Incorporating the answers to these questions will provide the basis for a truly strategic review.

1. Can we identify and focus on a cause or problem whose solution creates shared value?

As you answer this question please consider the following quote:

“No business can solve all of society’s problems or bear the cost of doing so. Instead, each company must select issues that intersect with its particular business. Other social agendas are best left to those companies in other industries, NGOs, or government institutions that are better positioned to address them. The essential test that should guide CSR is not whether a cause is worthy but whether it presents an opportunity to create shared value–that is, a meaningful benefit for society that is also valuable to the business.”

Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility, Harvard Business Review, by Michael E. Porter and Mark R. Kramer.

2. What are the primary ways that we measure our CSR activities? Do these measures track the most significant impacts our business creates and the outcomes that our activities are designed to accomplish?

As you answer this question please consider this fact: At Sustainable Brands 2010, Jason Saul of Mission Measurement stated that the CSR practice of reporting on the checks written and the volunteer hours logged will not be an adequate measure going forward. The stakes are increasing every day. Ben Packard of Starbucks stated very openly that Starbucks knows they have not made enough progress in addressing the most significant impact they create as a business—the cup.

3. Is our wisdom, work and investment focused on attracting participants across the value chain—the behavior of all players must change to achieve real results—and from multiple innovation sources to encourage not just our own corporate progress but also the progress of as many other companies as we can reach?

Increasingly the ability to create value depends on market mechanisms that attract multiple value chain and investment participants. The innovation to attract the participants will often come from outside the companies championing the changes. ReachScale’s focus on scaling social enterprises and Nike’s GreenXchange are two examples, and there will be more. Finding and cultivating these innovations often depends on a problem solving commitment that goes beyond simply serving just one company’s goals. The commitment must flow from an understanding that the problem goes beyond what any single company can do; the real work is assembling an ecosystem to solve a problem which requires a committed company’s best and brightest wisdom and work.

Follow up to the UN Global Compact Leaders Summit: Three Questions that Gauge Commitment

Every three years the UN Global Compact Leaders Summit assembles the global ecosystem that was built through a commitment to the 10 principles of the Global Compact. (You can review the list here.) Much good has come from the Compact and yet at the same time, promises have fallen short. The global economic meltdown has created a kind of schizophrenia in the organizations that had committed to goals that seemed reachable in 2007 but seem less so today.

Empowering an ecosystem of leaders to re-envision the appropriate responses is a tough challenge in its own right. Well respected leaders including Secretary General Ban Ki-moon, Georg Kell, Lord Michael Hastings and Jeffrey Sachs among others (the featured attendee list here) were doing yeoman’s work to course correct while all the measuring instruments are being recalibrated.

Under the current circumstances it is no surprise that the proceedings were dominated by testimonials of good works completed and new projects and collaborations being started. (For more on the results, read the Global Compact Annual Review.) I expect many people listening to the testimonials were asking themselves some recalibration and authenticity questions such as:

“Is that challenge or project worthy of the global organization that has taken it on?”

“Is there a problem that is so core to that organization’s business that they could dramatically increase the resources they have committed?”

“Would taking on a larger issue do a better job of engaging their human capital and leadership?”

Making decisions about our own response as individuals and company leaders becomes increasingly difficult during times like these. In small group discussions that took place during the conference, these questions were discussed. (One group I participated in came up with a three step process which I’ll cover in my next post.) Those conversations, along with the multiple testimonials heard from the dais, led me to three simple but core questions. I share them here as a possible path for companies who are viewing their commitment to “shared values and principles, which will give a human face to the global market” (a quote that appears on the cover of the Gobal Compact Annual Review). For those leaders who are willing to identify a global problem that has seemed intractable and to focus their energies on demonstrating progress towards its solution*, these questions will help.

1. Are we taking on a problem that our stakeholders would immediately recognize as a significant problem?
No one will argue that global banks are reputationally challenged in this post financial crash world. If you are the leader of a global bank and your response to current circumstances is to do exactly what community reinvestment laws require (and only in those countries that currently regulate you,) then you are working at zero base. On the other hand, you could make a commitment to address the global migration to cities problem, actively build community reinvestment principles and seek innovative partners to address the global slum problem in every country that delivers profit to you. That is an effort that would be clearly recognized as a commitment to a problem that has been viewed as intractable but could shift significantly with the right focus.

2. Is the problem we have chosen core enough to our business that we can ask our most competent associates to invest in its resolution? Is its strategic business relevance demonstrated by our experts applying their knowledge to the problem across multiple functions?
Using global banks as an example once again, virtually every functional group within the organization has talent that can be applied with the appropriate innovation partners to solving this problem—in every major city in the developing world in which that bank or their partners operate.

3. Is the problem we have chosen important enough that each member of the executive committee could justify spending 2 days a month (10% of work time) leading the organization and the ecosystem in seeking a solution?
The Global Compact is all about commitment. One could argue that for some companies, implementing the 10 principles will take at least that much time from the executives at the beginning. As leaders drive the principles deep into the organization’s collective psyche, the muscle strength needed to take on larger opportunities will develop.

Next post: More from the UN Global Compact Leaders Summit.

* For a seminal discussion of these issues, read the Harvard Business Review article, Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility, by Michael E. Porter, Mark R. Kramer.

Sustainable Brands and Authenticity

We are surrounded every day by the fallout from authenticity disconnects and dichotomies. The examples are glaring and particularly poignant right now, with “green branding” investments being made while the most elemental safety precautions were ignored.

At the Sustainable Brands Conference last week in Monterey, I spent three days hearing and seeing the positive side—real initiatives that are making a difference, shifts in fundamental thinking at the C-level in major enterprises, innovators inside and outside companies working together. It restores some hope in our global future.

Three themes emerged from that conference for me that can enable all of us to act and innovate more authentically:

License to operate
No matter how you view the ubiquitous presence of Starbucks in your neighborhood, Starbucks is coupling significant investments in reducing their footprint with jobs that offer healthcare as fundamental. Those are issues that are of importance to all of us. In talking about the Starbucks cup recycling efforts, Ben Packard acknowledged that while they have to deal with all aspects of their footprint, the real touch point of everything is the cup. If Starbucks can’t address that issue then they do not deserve to be in your community.

Responsible Profit
Jason Saul of Mission Measurement said it best: Donations and volunteer hours are no longer newsworthy unless presented in the context of strategic commitments to solve real problems. This theme was repeated in a number of sessions as forward thinking companies like Nike and Timberland admitted openly that they know their businesses are not currently environmentally friendly. Going forward they need to drive innovation to change their businesses drastically. In the future we cannot produce every day products like T-shirts the way we do today. The companies that do not exemplify this shifting reality do not deserve to be in the sustainable brands community.

Commitment and Authenticity
Most of the conference attendees are sincere proponents of improving the world and securing their license to operate. The most common question asked was a variation of this one: “How can we communicate our sincere efforts to be responsible?”

This is the wrong question. And if it is the question you are asking then it is likely that your sincere efforts cannot be communicated authentically. Sincerity does not guarantee authenticity. The plethora of recent green washing debacles include sincere companies as well as cynical ones. Corporations from either end of that spectrum were criticized—and rightfully so—for their lack of authenticity.

Seeking authenticity means carefully considering the capabilities you possess and the costs you impose. It also requires an answer to the following: “What significant challenge in the world can our leaders and stakeholders commit to solve that makes our commitment clear? How do we responsibly apply capabilities and budgets so that our customers, employees and the general public can measure our willingness to think big and to innovative solutions for serious social problems?”

If your organization is handing out money, leaving the selection and solutions to others and placing no reporting or measurement requirements other than check size, your authenticity is going to be minimized. If you are logging volunteer hours in ways that don’t leverage core competencies to solve serious problems, you are disrespecting your potential to shift the impact and really make a difference.

Collaboration is critical in navigating this new territory. One of the focal points should be on social enterprises already innovating to solve problems that improve the world and are core to your business at the same time. Partnering with the most innovative social enterprises can move you forward in becoming a leader that is making demonstrable progress towards solving real problems. Other approaches such as open innovation, mass collaboration and tri-sector partnerships can add further leverage to your talent and capabilities. Regardless of your approach, the license to operate will be much more rigorous in the future.