Archive for the ‘ Conferences ’ Category

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

© Copyright 2013 CorbisCorporation

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.

© Copyright 2010 CorbisCorporation

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.

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 and 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 $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 enormous. 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

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.

The Need to Scale: Social Enterprises and Community Health

Community health workers: Now that is a profession that must be compensated.

That is my paraphrase of Jeffrey Sachs’ response to the question I posed at the mHealth Summit about this issue. Investments in technology to support community health workers (CHWs) must be balanced with the need for volunteer CHWs — which are still the majority in Africa — to be paid in order to have any hope of building a skilled professional corps of these life savers.

Working in the Millennium Villages since 2006, Jeffrey and Sonia Sachs are leading proponents of a program to deploy, train and equip one million CHWs across rural Africa. This effort and its partners are described in Sachs’ article, Breakthrough in Saving Lives in Rural Africa. The scale of the effort is both visionary and challenging to the donor governments who are asked to support it.

These compensation issues are more narrowly focused in the United States. For example, many nurses are not recognized as care providers who can be reimbursed under the Affordable Care Act. We too have underserved populations where innovation and new partnerships are critical to reaching those in need.

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Beyond the App: Verizon Models New Ways of Partnering

The innovation needed is not a new app — there will be plenty of those — but instead a new way of partnering that merges corporate resources with technology and organizations that are bypassing the international development and social enterprisemany impediments in our care system to directly reach those in need.

Because of ReachScale’s focus on corporate support of social innovation (The New Triple Bottom Line,) we found Verizon Foundation’s new efforts laudable: an innovative step that ensures that technology is actually used for good. In their words, “For the first time at Verizon we are integrating our technology solutions and philanthropy to accelerate change in healthcare and improve patient outcomes.”

While four different partners have been chosen to reach children, women and seniors in the $13 million program (roughly one-third cash and two-thirds in kind through technology and services,) most attention at the Summit was on the mobile health clinic parked in the Verizon Foundation display.

Working in six of the 50 underserved communities where Children’s Health Fund operates, Verizon will enhance impact by equipping the three to five person teams in each clinic-on-wheels with smart phones, applications, and support.

The young health worker who conducted the tour said that having Verizon ensure that all their electronic gear could access the network as the clinic arrives at each remote location was one of several significant impact drivers in reaching children at risk due to poverty, homelessness and lack of healthcare access.

Verizon_app

Social Entrepreneur, Meet the Health Worker

While the underserved populations in the United States are in the tens of millions, we have adequate verizon social enterpriseeconomic power to reach them if we choose to. In Africa and Asia, the number of people exceeds one billion and basic components are missing, including a paid profession of local health workers.

While donor government support is probably the only way to accomplish comprehensive CHW coverage, participation in conferences like the mHealth Summit by groups such as ReachScale brings a social enterprise point of view to these issues.

Social entrepreneurs are infamously unwilling to wait on governments, and nearly one-fifth of them focus on healthcare, water and sanitation. The remaining 80 percent innovate with business, technology and finance models. Many options for economic empowerment are available — as exemplified by leaders like Professor Yunus and by a million or more social entrepreneurs around the globe who are actively exploring new approaches and better solutions.

These social entrepreneurs are supported by a well-developed ecosystem.

And while these players may not be household names, they are well known to university and corporate leaders seeking to train and recruit the millennial generation. Grameen, Ashoka, Skoll and Schwab Foundations are among the leaders as are universities including Babson, Columbia, Oxford, Stanford, Harvard and Santa Clara with their Global Social Benefit Incubator and TECH Awards. (Note: ReachScale tracks over 30 such organizations seeking to surface the most innovative social entrepreneurs, not to mention several hundred competitions with similar goals.)

The questions that must be answered include:

- Are these social entrepreneurs important to expanding primary health systems across Africa and Asia?

- What role should they play in addressing needs around food production and nutrition, education, water and sanitation, technology innovation and entrepreneurship?

- How can philanthropists, non-profits, corporations and local and national governments decide where to invest for most impact?

- And finally, how can we share innovations that create income in communities and enable sustainable payments to CHWs, teachers and other critical social capital developers?

Building Capacity From The Bottom Up

Most social entrepreneurs start with a very personal obsession to improve lives by solving a challenge or inequality. They prefer to spend as little time as possible fundraising, and often they bring innovationinnovations to the table that decades of nonprofit work have not uncovered.

Social enterprises typically get off the ground with a small loan, such as the $36 that funded Professor Yunus and his innovation of microfinance. As Yunus points out in every speech he gives, “When I saw a problem, I started a business to solve it.”

Microfinance is the best-known category of business models in social enterprise, and it includes organizations ranging from Citigroup to Kiva.org. According to the Microfinance Information Exchange, the global microcredit portfolio in 2010 was estimated at US$65 billion versus US$12 billion in 2004.

Microfinance has demonstrated that the leadership of several global innovators– combined with support from multiple NGO and private sector players with sustainable and therefore scalable business models — can aggregate to billions of dollars. As BusinessWeek described the Nobel Peace Prize win of 2005:

Grameen Bank, a leading advocate for the world’s poor that has lent more than $5.1 billion to 5.3 million people. The bank is built on Yunus’ conviction that poor people can be both reliable borrowers and avid entrepreneurs.

© Copyright 2011 CorbisCorporation

Social Enterprise, Local Development & Healthcare Access

Here are five ways that social enterprises can support access to health/healthcare and compensation of CHWs:

1. The provision of a health foundation built on safe water, sanitation and health education. Examples: Blue Planet Network and Community Health Clubs

2. Enabling job creation that increases income in rural villages, especially for women. Examples: International Lifeline Fund (Cook Stoves) and Katosi Women Development Trust

3. Align with locally-led models built on revolving loan funds creating sustainable community development and income. Examples: Nyaka Aids Orphans Grandmother Groups and Hiinga.

4. Utilize and develop the entrepreneurial skills of community members to create profitable local businesses. Examples: Solar Sisters and Living Goods

5. Establish portfolios of social businesses enabling communities to choose optimal investments that also maximize education and income to support healthcare access and other social capital.

The last option is an outcome of the first four and others yet to be innovated/created. The drive to organize these portfolios can come from the goal to empower local entrepreneurs to create income or from support for the concept of scaling sectors, as recommended by the Omidyar Network in Priming the Pump.

Scaling_social_enterprise

Leveraging Social Enterprises for Bottom Up Scaling of Essential Services

As Jeff Sachs makes clear, to talk “Africa scale” we need to talk in billions. From Sach’s article, Funding a Global Health Fund:

The annual cost of specific disease control in the next three years is perhaps $6 billion, and another $6 billion per year for health-system expansion. The total, $12 billion per year for an expanded Global Fund, might seem unrealistically large compared to the $3 billion per year spent now. But total annual funding of $12 billion is really very modest, representing around 0.033 percent (three cents per $100) of the donor countries’ GNP. This is a tiny sum, which could be easily mobilized if donor countries were serious.

So how can larger players leverage social enterprises to help in scaling? Here are five suggestions:

1. Build partnerships to scale innovative models that reduce healthcare burdens and risks such scaling social enterpriseas combining water, sanitation and health education or scaling cook stoves with local manufacturing, education and finance.

2. Tie social businesses to the UN’s Millenium Development Goal [MDG] investments that promise results that the social business can secure. For example, provision of clean water promises freedom for women and the option for girls to attend school. Meanwhile revolving funds enable women to farm or start self-employment businesses, which in turn fund school fees. Nyaka’s grandmother groups support school fees for 30,000 children in southwestern Uganda.

3. Adopt social innovations that enable CHW’s to become more productive. ChildCount+ is used by Millennium Villages to guide the CHW through malaria treatments, nutrition advice, and danger signs. Switchboard working in Liberia, Ghana and Tanzania uses mobile phones to build nationwide networks of health workers. Referring patients to a clinic is critical but so is the provision of clean water that CHWs don’t have to gather such as Grameen Danone.

4. Adopt social innovations from outside each country and use them to become more sustainable. Healthpoint Services in Punjab, India, combines water and health clinics to create a more sustainable model. Punjab state has built around a 100 sites in a year to scale Healthpoint’s sustainable model.

5. Seek social enterprises that are already scaling and become lead strategic scaling partners, attracting other partners with your commitment. The options are extensive, and choosing the ones that leverage investments that need to be made anyway can drive sustainable scale.

Social business has transformed Bangladesh into a country that should achieve six of the eight MDGs. The goal is not to be wildly profitable but to sustain solutions and then scale eventually shifting resources to the next set of challenges.

The opportunity to leverage entrepreneurs whose work determines their and their families’ survival is essential in reaching the billion plus people in extreme poverty today. Social enterprise leverages this essential “human resource” building from the base to meet programs coming from governments and donors.

Note: This post originally appeared on CSRWire.

Summing Up World Water Week: Making Way For Disruptive Social Innovation

World_Water_Week_2012

The theme for World Water Week 2012, Water and Food Security, was a great step forward in cross sector cooperation. And as hurricane Isaac descended on New Orleans seven years after Katrina’s devastation, the importance of collaboration was highlighted in the new “Dutch treated” levee system that was ready for any onslaught.

Creeping Challenges & Incremental Responses

While hurricanes are concentrated disasters, the food and water/access and conservation issues are more of the creeping variety. Even when droughts lead to shortages and starvation, symptoms get treated while the long-term trends are ignored — such as climate change — that will exacerbate symptoms slowly and inevitably.

Cross sector solutions are underutilized — and that creates other challenges.

An example in food security is two adjacent problems. Creeping obesity in the U.S. can be juxtaposed with the fact that 20 to 30 percent of food grown, produced and transported is not actually consumed. Incremental solutions will not address synergies between those distinct but related problems.

Congratulations are in order to World Water Week organizers for first time invitations to the Food and Agriculture Organization (FAO) and the Consultative Group on International Agricultural Research (CGIAR). But it does beg the question of how 20 years of World Water Week conferences were unable to break through those silos before now.

In fact, the deadening combination of silos and incrementalism is a serious challenge throughout global development, corporate responsibility and the overall global resource crunch and World Water Week’s Food Security collaboration sets a good example that will lead to the United Nations International Year of Water Cooperation in 2013.

Disrupting Silos & Incrementalism

While it may be too early to predict which disruptive innovations will surface from this water and food security collaboration, two questions might help clarify how to proceed with the 2013 Year of Water Cooperation and beyond:

Are there any large untapped sources of disruptive innovation?
In order to leverage these sources, how can existing leaders seek out and open up to collaboration and disruption?
While there are many potential sources, let me highlight just one.

One of the most underutilized sources is social enterprise. A few social enterprise leaders were present in Stockholm including Water for People and Water.org. Many more should be—because they bring ideas and innovations that are being tested in the real world with know-how and money that comes from outside the government and corporate economic engines.

Social Entrepreneurs: Innovation & Solutions

No matter what country or industry you are focused on, there is much to learn from social entrepreneurs and their early adopter scaling partners. As the water, food and energy sectors seek disruptive innovations, here are five examples of social enterprises that can enhance partnerships.

1. Cross Sector Visionaries: Healthpoint Services

Billions have been spent on water and billions on health care. For the first time in 2009, an organization built a for-profit model for rural villages, which creatively combined both of these donor-dominant approaches. When the government of Punjab, India, was shown four cash flow positive water and health care clinics in early 2011, they committed to build the structures to house over 100 life-giving water points.

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2. Vertical Value Creators: GADCO

In 2009, a London investment banker and a Ghanian agriculture innovator combined forces to build a for-profit, small holder Ag social enterprise. Two years later GADCO is the largest domestic rice Social entrepreneurprovider in Ghana.

By expanding the scope of the project to build an organization that can provide branded consumer products, GADCO captures additional margins and passes that back to the small holder farmers. This innovation captured the attention of development finance organizations like USAID as well as GADCO’s first significant investor, Seattle-based Summit Partners, a traditional venture capital firm.

3. Engagement & Finance Innovations: Water for People and Water.org

The mantra “Everyone Forever” and innovative solutions like Flow have drawn the Skoll Foundation and other supporters to Water for People. Water.org is the leading innovator in merging microfinance and water and sanitation innovation. Pepsi-cola’s work scaling Water.org was one reason cited at World Water Week for their receipt of the Stockholm industry Water Award.

4. Leader Driven Cross Continent Collaboration: Blue Planet Network

Starting with water and sanitation projects from developing regions of India or Africa, Blue Planet members improve the projects through voluntary advisory and vetting services resulting in a quality rating and likely success. The Network matches these quality projects with donors who want to fund testing for new solutions and scaling of proven solutions.

5. Building Social Enterprise into Global Government Innovation: Akvo and Aqua for All Foundation

The Netherlands is a prime example of social enterprise adoption by an entire country’s water and sanitation leadership. From the innovative partnership between Netherland’s water innovator Akvo (developing the open version of Flow from Water for People) to the government funded Aqua for All Foundation that predominantly funds programs with social enterprise scaling models, we have a great example of thoughtful integration to enhance cooperation.

And let us not forget to thank the Netherlands for the “Dutch-treated” levees in New Orleans.

The collaborations listed above, including Healthpoint and the Punjab state, GADCO and Summit Partners, Water.org and Pepsi, are just a few examples of partnerships that grew out of the search for more scalable, sustainable models. And to open up more of these opportunities, leaders will need to do three things:

1. Seek innovation and scale as part of every partnership design — an exclusively donor driven model is not scalable,

2. Learn by doing: Adopt the key innovation and scale levers that social enterprises offer, and

3. Concentrate resources and leadership around the disruptive, scalable innovations.

The 2013 Year of Water Cooperation presents opportunities galore to follow these leadership examples. Every partnership can start immediately by declaring today the first day of your Year of Cooperation. Because disruptive innovations come when coalitions engage to scale the best ideas.

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World Water Day: Watering “No business can succeed in a failed society”

On Friday, UN special rapporteur Catarina de Albuquerque warned that government delegates to the World Water Forum appeared to be watering down their human rights commitments to water and sanitation. These rights, formally recognized by the UN in 2010, must form the basis of any proposals to expand access to essential services, said De Albuquerque.

Water is a $400 billion global industry, the third largest behind electricity and oil.

Last week (in anticipation of World Water Day) The World Water Forum, a tri-annual event, assembled 18,000 water, environmental and sanitation leaders from 173 countries with over a hundred country water ministers attending the event in Marseilles, France.

Some Progress On Drinking Water Access

In the last two decades, over 2 billion people gained access to improved drinking water sources. United Nations Secretary-General Ban Ki-moon said recently:

“Today we recognize a great achievement for the people of the world. This is one of the first MDG targets to be met. The successful efforts to provide greater access to drinking water are a testament to all who see the MDGs not as a dream, but as a vital tool for improving the lives of millions of the poorest people.”

Water will be on the Rio+20 agenda for the first time.

Our ability in the global north to turn on the tap and flush has resulted in water not rising to the same attention level as energy and climate change. This is changing as the interconnected global economy is demonstrating connections that have gone unnoticed, or at least unattended to, for decades. Circle of Blue’s strong work on Choke Point: China, Confronting Water Scarcity and Energy Demand in the World’s Largest Country, is one example out of many.

The Challenge: Getting the Right People To The Table

Part of the challenge that the World Water Forum and Circle of Blue are beginning to address is whether we can get the right people at the table. Eight billion person hours of conversation in Marseilles demonstrated the complexity of these interconnected challenges. What remains to be seen is the ability to keep these efforts going and attract participants who bring both demand reduction and supply production and conservation to the table.

The real learning may be around integrating conversations and obtaining commitments to bring new talent to the table especially around innovation and scaling solutions. At the synthesis session on water basin management I got the feeling that while the leaders were ecstatic to be collaborating with their peers, the absence of the non-participants was more visible.

ReachScale represented one of these ecosystems: social enterprise. The broad water industry is unaware of social enterprise and its innovation engine. Other missing participants included the non-water industry corporates, innovation design and related sectors like healthcare and agriculture— agriculture and food production consumes around 80 percent of water worldwide. There was a food security track that attracted Nestle, but most speakers were academics and NGO leaders.

In Marseilles, the opportunity to engage was aggressively pursued, and several session leaders mentioned lists of innovation ideas in the mid-five figures. I believe that many of these conversations will continue over the next three years (The next WWF is in Korea in 2015). However, optimism where it appeared was tempered by challenges in persuading current stakeholders to compromise and/or sacrifice to achieve sustainability.

The need for corporations to join the collaboration is essential and a number of efforts have attracted participation from the leading water users, beverage and food producers.

Companies Can Be Water Stewards

This is a huge opportunity for companies to demonstrate their commitment to successful societies through water stewardship. The reasons are clear, as are the advantages. So, here’s a starter set of suggestions:

1. Advocacy: In the global north, taps and toilets are automatic. It should be easy for us to align with water and sanitation as a human right. Instead we often leave it off the agenda.

2. Advocacy Action: Identify a natural water and sanitation advocate and encourage them to seek both talent and resources that the company could marshal for water and sanitation advocacy. Pick the most effective advocacy organization with which to partner.

3. Demand: Set corporate goals to reduce your water footprint and seek innovations to extend sanitation in globally relevant countries.

4. Demand Action: Marshal the talent and partnerships to meet the goals and join with the organizations that are most productive in assisting you.

5. Innovation: Identify the water intersections with your businesses and challenges that could use your innovation capabilities. If you work in healthcare or energy there are a myriad of possibilities. Consumer products and education suggest plenty of targeted opportunities.

6. Innovation Action: Identify the organizations innovating in these sectors and challenges, and pick one to support and grow, or a portfolio if the associated business opportunities are strong. A perfect example, courtesy Fast Company: Power From The Sun, Floating On Top Of Sewage.

7. Community and Watershed Stewardship: Space does not permit fully treating these and there are excellent examples of companies “doing the right thing” in communities. Nestle and Coca-Cola come to mind from Water Forum 6.

8. Stewardship Action: Watershed cooperation is newer and holds some of the greatest promise in achieving real sustainability. And now is the perfect time to engage, since the Alliance for Water Stewardship just released their first draft standard, open to stakeholder comment until June 15, 2012.’

9. From Incremental Gains to Social Innovation: As gains in footprint and community development continue and watershed collaborations develop, each company should compare the next set of incremental improvements with the opportunity to innovate more broadly to create healthy societies. This opportunity is not embodied in the water and sanitation stewardship progress to date, perhaps because identifying the alternative models and opportunities appears too daunting.

Social Innovation for Water Rights

Yet, the WWF had multiple tracks trying to examine and find alternative models and answer to social innovation. The most alarming statistic: 2.6 billion people lack access to improved (or any) sanitation.

Kamal Kar, founder and advocate for Community Led Total Sanitation (CLTS), made a strong case for creating access for the final billion people to both water and sanitation at the same time, as a way of ensuring healthier lives. CLTS and similar organizations represent one of the most important social innovation capabilities to replicate and scale today. Some brilliant marketers in the next decade will realize that stakeholder engagement around “Open Defecation Free” is more authentic and will engage stakeholders longer than many causes that make for pretty pictures.

The reason for CLTS’ scalability is simple. With modest interventions, communities solve the challenge themselves with local leaders moving on to other challenges. CLTS’ work results in leadership development every day on the community level. Companies that speak highly of their leader development capabilities could do worse than support a multiplicative effort whose core engine is leadership development.

Cross Sector Social Collaboration

Over half of the ministers – representing more than a 100 countries – at Water Forum 6 were from Africa.

The final Africa-centric session was lead by African leaders including Maria Mutagamba of Uganda. Mutagamba is an excellent example of the new, more transparent generation of leaders emerging all across Africa, often women, who driving striking progress in their communities.

However, celebration was not the main reason for their trips. These leaders were first to admit the work remaining to be done. ReachScale represented one such cross sector effort: Blue Planet Network (BPN), a social enterprise, and member International Lifeline Fund (ILF) are seeking partners for a water, sanitation and healthcare cross-sector effort to link village and health clinic access to water and sanitation.

Joining the team to create the health connection is Management Sciences for Health (MSH) whose health system experts already work in Uganda and many other countries to support local health systems.

MSH, BPN and ILF will link health and water committees more closely to seek direct impacts on both villagers and community health workers. The need was highlighted when MSH identified over 400 clinics in the 25 districts they serve that lack access to clean water. Coordinating between clinics and villages the needs of both can be better met and cost per water point can be lowered by as much as 30 to 40 percent.

These partnerships represent just two examples of many social entrepreneur and innovation opportunities that can be leveraged to improve societies in which companies desire a strong license to operate and grow. What is the private sector waiting for?

Note: This post originally appeared on CSRWire on March 22, 2012.

UN Opening Week: Facing the Non-Communicable Disease Epidemic

“Where you live shouldn’t determine whether you live.” With that simple statement Nancy G. Brinker, CEO of Susan G. Komen for the Cure, focused attention on the non-communicable disease burden the big four (cardiovascular and chronic respiratory disease along with cancer and diabetes, commonly referred to as NCDs) place on countries and citizens as the UN convened for the second time around global health issues.

UN Opening Week, among other things, presents an opportunity for a myriad of initiatives and global challenges to take the stage. And while frustrating politics from the General Assembly can be discouraging, there are also moments of hope. Despite the difficult challenges facing the world due to the NCD epidemic, the week’s events could also be viewed through the lens of confidence flowing from the progress that has been made with HIV, tuberculosis and malaria over the last decade. Further positivity flows from infrastructure and platforms supporting that progress.

An example of such a platform is the U.S. Global Health Initiative. Their mission is clear: “The U.S. will promote country ownership and align our investments with country-owned plans, including improved coordination across U.S. agencies and with other donors, with the aim of making programs sustainable.”

The Global Health Council along with Management Sciences for Health (MSH), one of USAID’s significant partners, convened a session called “Tackling NCDs: How Can Existing Platforms be Leveraged?” to showcase leaders from USAID, NGOs (Path and psi), corporations (Medtronic and Novo Nordisk), universities and others to discuss possible pathways to multi-disease platform capabilities.

How would the jockeying for position affect each organization’s advocacy? For the most part it did not. Leaders from each cause seemed to get this was an opportunity to lift all boats and avoided putting their own concerns ahead of the overall effort.

This cooperation also may have been driven by the recognition that in the current global crisis, no amount of leadership will result in a new global fund for NCDs. Flowing from this reality, a second theme emerged: countries, NGOs, companies and innovators of all stripes will need coordinated and aggressive innovation, behavior change, policy commitments and funding to minimize loss of life and costs. Without all of the above, the world will face significant trade-offs, especially in low-income countries.

Many of the challenges were openly discussed. The list below is only a partial one. If you have others, feel free to add them in the comment section below.

Spend now or pay later

“The World Health Organization identified strategies to prevent and treat cancer, heart disease and lung disease that would cost $11.4 billion a year to implement in low- and middle- income countries, the UN agency said in a separate report today. Without action, those nations could suffer $7 trillion in losses, the World Economic Forum and Harvard study said.”
Businessweek

These are the diseases that break the bank. Left unchecked, these diseases have the capacity to devour the benefits of economic gain. According to Dr. Margaret Chan, WHO Director General, treatment of diabetes in some countries already consumes as much as 15% of the national health care budget.

Government intervention or lifestyle freedom?

According to Her Royal Highness Dina Mired, “In poor countries a lifestyle choice will instead become a life sentence.”

Why must this responsibility fall on heads of state? According to Dr. Chan, the problem is too big and too broadly based to be addressed by any single government ministry.

The rise of these diseases is being driven by powerful, borderless forces that affect everyone—in particular rapid urbanization and a globalization of unhealthy lifestyles. These trends require top-level attention to command protective policies across all sectors of government.

For example, full implementation of the WHO Framework Convention on Tobacco Control could bring the single biggest blow to heart disease, cancer, diabetes and respiratory disease.

“I call on heads of state and heads of government to stand rock-hard against the despicable efforts of the tobacco industry to subvert this treaty,” said Chan. “Increases in tobacco taxes and prices are the most effective measure. They not only protect health. They bring in considerable revenue. The same is true for taxes on alcohol.”

Corporations as partners, innovators or pariahs?

Whether Dr. Chan’s comment above could – and should – also be applied to the food and beverage industries was central to the debate which lead the UN to unanimously adopt a 13-page document on Prevention and Control of Non-communicable Diseases. More of the behavior change innovation in this fight must come from corporate leadership and through offering healthier products to all populations. Changes in both behavior and products will require companies to be more open in sourcing ideas, products, marketing innovations and business models. Continued partner recognition will depend to a great extent on corporate success in these reinvention efforts.

A commitment to know the truth

As Dr. Chan, HRH Dina Mired, Dr. Jonathan Quick and many others pointed out, meeting these challenges requires coordinated and aggressive collaboration, innovation and policy to envision positive outcomes and bring them to pass.

As important as this set of meetings are in launching and enabling that effort, their greater importance may lie in an increased obsession to understand how bad things really are today and communicating that reality to and with the government, NGO, corporate and social enterprise leaders who must respond.

A lesson for what is needed can be learned from a contagious disease containment success story. William Foege, author of House on Fire and leading expert in the eradication of smallpox, spoke at the International Conference on Global Health recently. Foege embodies the self-effacing and yet tenacious approach needed to deal with complex global problems. Referring to his long battle to eliminate smallpox, his advice is wise counsel for any and all health initiatives: “You have to be able to consistently envision the end result while aggressively seeking the actual data, no matter how bad it is.”

From his book, House on Fire:

“One had to be an optimist with a feel for numbers to be ecstatic at the same time that Bihar had over 5,000 known smallpox outbreaks and had just reported over 11,600 new cases of smallpox in a single week.”

While small pox spreads like fire, country after country has been lulled into inaction by the “slow-motion disaster” represented by the big four’s building cumulative impact. Unhealthy lifestyles that fuel these diseases are spreading with stunning speed and sweep.

During several meetings last week, the case was made that new efforts in primary care and research are needed for early detection and lifestyle education. Sir Peter Gluckman, Chief Science Advisor for New Zealand and Programme Director for Growth, Development and Metabolism at the Singapore Institute of Clinical Sciences brought research to the table emphasizing the importance of early interventions—particularly for pregnant women and their newborns. The Singapore Institute’s advances in understanding the propensities of different Asian populations around NCDs is also an important example of knowing the risks.

Communicating the non-communicable

Ten years ago the UN convened its focus on HIV. It was a critical juncture for garnering support and moving forward in a cohesive way and resulted in a global fund and a 10-fold increase in funding to tackle HIV, tuberculosis and malaria. Of those three diseases, only AIDS was a killer in the developed world at the time.

NCDs are different. The big four are indiscriminant killers globally. And while drugs play a critical part in every circumstance, their role with the big four can be deceptive. Drugs that reduce blood pressure, lower cholesterol and improve glucose metabolism only bring a progressive problem under control: they do not return a person to full health. Unfortunately the big four are lifestyle choices before they are diseases. New approaches must be taken regarding prevention, policy, harmful behaviour, corporate malfeasance and government failure.

Action requires more than advocacy. Some next steps are straightforward. Dr. Chan spoke powerfully about increasing taxes and the price of tobacco and alcohol, and methods for reducing salt intake. Low-cost regimens for cardiovascular disease, cancer screening, drug therapy and vaccination against hepatitis B were also brought forward.

As each organization seeks funding and directs its investments into innovation, platform development, education, behaviour change and policy prescriptions, better mechanisms are needed to find the best ideas and scale them. As an advocate for social innovation, I would argue the other players – NGOs, corporations and governments – need to be much more aggressive in seeking ideas from outside their silos and in moving resources so that research, idea testing and data collection are accomplished as part of integrated programs.

In the “How Can Existing Platforms be Leveraged?” session mentioned earlier, there were examples of this type of integrated capacity building. One is MSH and the Gates Foundation’s efforts in Tanzania to enhance how informal village drug sellers support community health workers and provide safe prescriptions for some diseases. Healthpoint Services in Punjab, India is building clean water and village clinics that provide telemedicine, diagnostics and generics at base of the pyramid prices. They plan to start offering chronic disease packages next year, which can be subscribed to and the costs shared between individuals, insurers and governments. Most importantly, both these sustainable efforts will improve early detection and lower the overall cost.

Many more examples are needed. The success of these approaches will depend greatly on funds flowing to the most innovative participants no matter their size and then scaling the successes to achieve more innovative and sustainable models and systems.

Note: This article first appeared on CSRWire.

Social Enterprise: When Exceptional Scale Becomes the Rule

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How well does big business innovate to meet real needs, as opposed to creating demand through advertising for minor variations of existing products? What is more typical: The radical innovation that led to the iPhone or a new cereal formulation? And which type of activity are most businesses good at?

For Peter Drucker, “Efficiency is doing things right; effectiveness is doing the right things.”

And that’s where the problem begins: We need a new generation of “virtuous cycles,” ones that start with Drucker’s definition of effectiveness and reinforces positive choices and the associated benefits to customers and society.

Real Innovation Opportunities: Where to look

Why are we not seeing more breakthroughs? As someone who actively attends “innovation summits,” I often end up questioning why so much investment is being funneled into figuring out where the opportunities exist? It seems much of the effort is confined silos that lead to a focus on niche markets and incremental innovation, rather than efforts such as those led by Steve Jobs. Yes, those do entail more risk but they also have the potential to redefine markets or enable entirely new ones.

Steve Jobs was unique but what would happen if more leaders were to balance profit-making goals with a commitment to doing the right thing?

For example, E-Health Point Services is one of a few hundred thousand for-profit social enterprises worldwide. These are organizations that tackle a major social issue using market-based strategies, but keeping their social goal(s) firmly in sight. (Look at Ashoka and the Skoll Foundation for a great framework of business social organizations.)

E-Health Point was incubated at Ashoka with a mission to bring quality healthcare to underserved and mostly rural communities in developing countries—a huge but neglected market of several billion people. It is barely three years old and already providing 500,000 people access to healthcare and safe drinking water (which prevents water-born diseases) at affordable prices. What’s important to note here is that while a niche approach would accept that low-income customers are off the table, E-Health Point specifically targeted these customers as their market.

The E-Health Point Story

During the last decade the charismatic business guru C.K. Prahalad led a movement to address poverty and other related social problems using business approaches, arguing these are highly neglected opportunities. Many major corporations were intrigued. Leaders at International Finance Corporation (IFC: the inclusive investment arm of the World Bank) began exploring underserved markets. They deployed a field team to look at how the poor actually spent their money and the team found that when you add up all the goods and services that these several billion people buy, it equals a ton of money.

Large companies still haven’t made major inroads into these low-income markets, but social entrepreneurs have—embracing novel approaches, longer time frames for a return on investment and thinner margins. Their goal is to enable the world’s poor to access more essential goods and services and to get value for their money.

Al Hammond, who led the IFC study team, was one of these social entrepreneurs.

Using his understanding of low-income markets and other ideas about how to address rural healthcare needs, he approached Ashoka. But the catalyst for E-Health Point came when he met Amit Jain, an expert in rural water systems, at the Global Social Benefit Incubator (GSBI) at Santa Clara University. Hammond and Jain joined up with Chris Dickey, a third cofounder and public health expert, to create E-Health Point Services.

Billions of dollars have been spent on safe water for the poor. Billions of dollars have been spent on providing primary healthcare for the poor. The effects have been very positive for those reached, but most of those efforts have relied on donations and few are sustainable. In 2009, E-Health Point opened the first integrated water and healthcare clinics, based on a business model that can make a profit from serving massive markets ignored by traditional businesses.

Eighteen months of experimentation and innovation resulted in proving that the model works, and that the clinics can run cash flow positive, even at the extremely low prices which E-Health Point customers can afford ($.30 to see a doctor; $1.5 for a family’s monthly supply of safe drinking water). The effort required equally innovative ways to finance the venture, to identify new services (maternal and child health, for example) and to lower costs. But the venture has thrived and has begun to scale – E-Health Point is now bringing its services to 20 new communities every month.

License to Innovate

Social enterprise leaders have been speaking about scale for more than a decade. Many of the innovations that will enable business to become a positive source of customer solutions and jobs will come from social entrepreneurs. Another secret to success for all markets will be behavioral change among customers. Nowhere is this more critical than in healthcare.

In many ways E-Health Point is a global consumer behavioral change laboratory. Now with its model units operating sustainably and its ability to test a broad range of social marketing and behavior change innovations, E-Health Point is getting attention with three important awards in just six months:

- Sankalp (India’s equivalent to the Skoll Foundation grant),
- A Saving Lives at Birth Grand Challenge grant (for use in piloting maternal services), and
- Tech Awards Laureate

Virtuous Cycles from Doing the Right Things

From the beginning, E-Health Point was built to scale and attract a broad range of social and standard investors. One of the cornerstones of their activities in Punjab, India has been to work with local governments, involving them in planning where to build the company’s new facilities. That led to the understanding that smaller villages – too small to support a clinic – still needed safe drinking water, so the cluster model was born: a clinic in a larger village able to provide health services to the entire cluster, standalone waterpoints in the smaller communities. More revenue and better service to more people.

Today, just six months after starting to scale, there are over 70 operational waterpoints. And in many cases, the government is helping with construction, building units to E-Health Point’s specifications and lowering the installed cost of each unit by a third. E-Health Point’s water prices are approximately half those of its competitors, so more families can afford the service. Adoption is rapid—typically about half of a village becomes customers within three months. The societal impact of clean water is tremendous. And health services can then be marketed to satisfied water clients, not strangers.

No Business Can Prosper in a Failing Society

Too much of the business world has talented people focused on doing things right in niche markets. Increasingly companies will need to tear down silos and integrate social innovation and social business leaders into their plans. The range of opportunities is truly endless. My current list of E-Health Point-like opportunities includes new energy enterprises, jobs for specialists (autism, for example), disabilities (hearing and vision improvement) and sector-specific micro-finance, but the list goes on.

Bottom line: If your company is providing basic services like water and healthcare, your license to operate in that country is secure.

World Water Week: Negotiating the Non-Negotiable

During 2011, Circle of Blue has collaborated with the China Environment Forum at the Woodrow Wilson International Center for Scholars to report on energy demand and water supply in China. Their extensive coverage and reporting included over a dozen presentations of the results in China. The context for this coverage—called Choke Point: China—is positioned as follows:

“Over the last decade alone, 70 million new jobs emerged from an economy that this year, according to the World Bank and other authorities, generated the world’s largest markets for cars, steel, cement, glass, housing, energy, power plants, wind turbines, solar panels, highways, high-speed rail systems, airports and other basic supplies and civic equipment to support a modern economy.

Yet, like a tectonic fault line, underlying China’s new standing in the world is an increasingly fierce competition between energy and water that threatens to upend China’s progress.”

Last week in Stockholm, the 23rd World Water Week convened and could have featured the tag line, Choke Point: World. Over 2600 water professionals (and semi-pros) gathered to focus on Water in an Urbanising World. (For an overview themes and participation at the conference, read Céline Hervé-Bazin’s post.)

Many thought leaders including Paul Reiter, CEO of the International Water Association (IWA), lauded China as a potential source for ideas and innovations. Motivated by those 70 million jobs and terrible conditions in rural areas, China is the most rapidly urbanizing country in world history. The challenges facing China’s urban leaders and planners are extensive. (While not mentioned at a conference with an urban focus, another indication of the connectedness of everything through water is the amount China will spend on rural water, sanitation and healthcare: $125 Billion.)

Assessing which problem is more challenging may be less productive than thinking about how both challenges could share technology, innovation and social enterprise approaches to make progress. China so far has not acknowledged the need for outside social enterprise or technology models, and is betting on competition between the provinces for innovation.

A New Style of Urbanization

At the first day plenary session, both Dr. Joan Clos, Executive Director of UN Habitat, and Sheela Patel, head of Shack/Slum Dwellers international, made a strong case that this is one of the most complex development challenges facing the world. According to Clos, “Every year the number of people who live in cities and town grows by 67 million – 91% of this figure is being added to urban populations in developing countries.” Unlike the urbanization that accompanied 19th century industrialization, this new urbanization often lacks the job and revenue base to invest in public services. Sheela Patel challenged leaders to seek cooperative solutions agreed to and supported by beneficiaries: “Participation does not mean bringing in the poor to rubber stamp a predetermined solution.”

Essentially every rapidly urbanizing city must be viewed as a resource poor environment. These circumstances require a combination of innovation, ingenuity and people that is simply not required in most high- and middle-income countries. Innovation in the coming century must come from these exigent environments. In the case of water, cities and countries recognize the need for a combination of tariffs and taxes, but the challenge in poor countries flows from compressed finances. According to Greg Browder of the World Bank, water can garner 2-4% of individual income—$1000 per person per year in rich countries, $200 in middle-income settings and $40 per person in poor countries.

Challenges: Non-negotiable

The session on Integrated Urban Water Management Challenges was a microcosm of the overall conference. Here are a few of the @ReachScale tweets from that session:

Urban Water Mgt: 2-4% of income to water means: High income $1k/yr/person; mid=$200; low=$40; so mid 5x>low; high 5x>mid: Big Constraint

IWA Paul Reiter: Challenges in urban means urban must use 50% less as globally; 800k new urbanites added weekly!

IWA Paul Reiter: Challenges means new urban water systems in Asia & Africa must cost a fraction of current.

Urban must use 50% < water, as globally 800k new urbanites added weekly. If Ag water use 10% less; Amount for urban 2x.

Paul Reiter Point: Realities of Water Challenge are non-negotiable; Glenn Oroz Counterpoint: Realities require much Negotiation.

Global Water Intelligence through the Water Risk Index is one source for looking at the areas where challenges will be greatest: http://www.water-risk-index.com/index.html

Collaboration, Innovation and Investment to Succeed

In the case of water, we are all part of the potential solutions. Seeing the water fraternity hard at work to enhance collaboration provides the basic foundation for seeking solutions. Here are scenarios/suggestions for the kind of transformative changes IWA, SIWI, the World Bank and others insist are essential.

1. Agriculture is the center. New practices are needed to double agriculture production, protect natural systems and enhance global food security. As stated by the CGIAR Challenge Program on Water and Food:

“There is an urgent need to rethink current strategies for intensifying agriculture, given that food production already accounts for 70 to 90 percent of withdrawals from available water resources in some areas. The report, An Ecosystem Services Approach to Water and Food Security, finds that in many breadbaskets, including the plains of northern China, India’s Punjab and the Western United States, water limits are close to being ‘reached or breached.’”

2. The World as a Scaling and Learning Laboratory. In meeting after meeting, I saw studies and decks that talked about pilots, prototypes and tests. While there were a few exceptions – the Asian Development Bank’s remarkable progress with the Metropolitan Waterworks and Sewerage System in Manila for one – too many projects were “learn now, scale later.” Mechanisms need to be developed to compare and promote the most scalable opportunities. This could include funding scaling learning labs and then funneling funding into the winners. Brookings along with the Shell Foundation and others funded by the Japan International Cooperation Agency are developing thinking in this arena. Healthpoint Services with P&G have already embarked on scaling in India. Next year they will add scaling investors and journey to other countries.

Homi Kharas of Brookings pointed out in a call today that aid projects have actually been shrinking in scope in order to improve measurement. This runs smack against the non-negotiable realities of urban everything, including water. I spoke with country and DFI leaders at World Water Week that are concerned about the lack of scale. Turning this thinking and action around is critical.

3. Seeking social innovation and making it profitable. The only way to attract enough capital to fully address this problem is to identify the segments that are willing to pay and then deliver low-cost solutions that fund extensions further down the pyramid. In the early stages, focusing resources on getting profitable (or close to) is more important than studying impact.

Social enterprise models including for-profit, hybrid, leveraged and cross sector innovation models will be critical to attracting new capital sources. Social innovators often breach silos that an industry can’t see beyond. They also aggregate investments from multiple donor, DFI and profit-based sources to get to scale faster. In some cases these models will be superior; in others they can augment, so that less study is needed and more action can happen sooner. Both Water for People’s FLOW model and the Blue Planet Network are examples of these types of innovations.

Looking out to 2030, there is a shortage of innovators from inside water, as well as outside water. Not enough innovation is being crowd sourced, and not enough adjacent and non-adjacent innovators are engaged in the water challenges. Over the next decade, Millennials will create more social enterprises than those created to date. We need to make sure a significant share of those social innovators are working on scaling water and agriculture sustainably.

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

Summer Reading: The Holy Grail and the Greatest Bargain

One advantage of actively attending conferences is the opportunity to hear brilliant people argue their ideas, and often those ideas run counter to the conventional thinking. These leaders – in their thinking and doing – help us see how we can work together to do both.

In the spirit of the proverbial summer reading list, here are two books I recommend for bringing some of that nonconventional thinking to a beach or pool near you.

House on Fire: The Fight to Eradicate Smallpox, by William Foege.

“I don’t know much but when there is a house on fire in our village; we don’t poor water on all the houses.”

This simple statement was made by a village leader in India at a pivotal point in adoption of an innovative containment program for smallpox. Rather than trying to vaccinate everyone, this program used targeting of just six percent of the population to eradicate smallpox.

Author Mark Rosenberg wrote about William Foege, “The eradication of a disease has long been the holy grail of global health and Bill Foege found it: more than any other person, he was responsible for the eradication of smallpox from the face of the earth. This is a story told by a remarkably humble man, about the extraordinary coalition that he helped to build, and the most impressive global health accomplishment the world has ever seen.”

Listening to William Foege speak at the International Conference on Global Health recently, I was struck by his self-effacing tenacity. In response to the classic “what did you learn?” query, he responded with this wise advice: “You have to be able to consistently envision the end result while aggressively seeking the actual data, no matter how bad it is.”

From House on Fire: “One had to be an optimist with a feel for numbers to be ecstatic at the same time that Bihar had over 5,000 known smallpox outbreaks and had just reported over 11,600 new cases of smallpox in a single week.”

William Foege underlined this steady optimism by saying he held back from celebrating the triumph over smallpox in any individual country because he thought that would demonstrate surprise at the result which, at the beginning, he had so clearly envisioned.

Poverty Capital: Microfinance and the Making of Development, by Ananya Roy.

In the past year I have participated in a number of conferences focused on social enterprise, poverty alleviation and microfinance. The Skoll World Forum at Oxford and the MicrofinanceUSA Conference in NYC both featured distinguished moderators and microfinance leaders discussing the crisis in the microfinance sector. (This usually shows up as a critique of Comportamos or other successfully profitable MFIs.)

While Professor Yunus is a leading advocate for not profiting from serving the poor, a few realities are sometimes overlooked in this argument. Here’s my list of reasons why a more open view of this sector, including the option for profitability, is necessary at this point in time:

1. The microfinance sector would never have attracted $30 billion dollars without the option of profitability.

2. Microfinance grew out of pent up demand for access to loans that was immense. Servicing that demand has required infrastructure, trained personnel and distribution, all costs that are not trivial.

3. A bell curve of strategies – falling between the two poles of social impact and loan pricing/profitability – have been developed that include a variety of trade-offs. This has resulted in more variety and better choices for borrowers.

4. It is noteworthy that microfinance grew as long as it did before abuses (which would inevitability be encountered) became visible. While the lack of regulation aided the absence of visibility, it is still remarkable events of misuse in India are happening over 25 years of microfinance’s time span.

One of the best summarizing comments made at MicrofinanceUSA came from Ananya Roy, author of Poverty Capital and a professor at UC Berkeley. After extensive study of the specific trade-offs within microfinance, and the equally important trade-offs between microfinance and the other global development options, Ms. Roy pulled a balanced context together with this one line: “Microfinance is the greatest bargain in global development.”

As I mentioned in a question after Ms. Roy’s comment, any other development sector, healthcare, water, slum upgrading, would kill (pardon the expression) to have a thousand people gathered with recognized brand names like Comportamos, ACCION and Kiva, discussing the trade-offs from $30 billion dollars of global development—most of which was paid back! Likewise William Foege and leaders from the World Health Organization and a broad range of other organizations organized and innovated to avoid the deaths and maiming of millions upon millions. Both outcomes show the value of vision and innovation in attracting the human and financial resources and then making measurable progress in solving global challenges.

A version of this post first appeared on CSRwire.