The CSRwire community recently participated in a Twitter chat in response to this query: “What will disrupt your year?” Leading experts gathered to discuss CSR and sustainability trends in 2014.
Over an hour’s time, a range of assumptions and common frames emerged. In spite of the challenge to explore the concept of disruption, please judge for yourself whether most of the responses were disruptive or best described as incremental.
Industry Ripe for Disruption
In their breakthrough publication, Competing for the Future, Hamel and Prahalad made the trenchant observation that when leaders of an industry come to share a common set of rules and frames about how things must operate, that industry is ripe for disruption.
In light of that insight, perhaps the more critical question to be asked is this: Does the world of corporate sustainability/social responsibility share common rules and frames that make it ripe for disruption? If the answer is yes, who will the disruptors of CSR be, and what will the disruptions look like?
Frames and assumptions reflect a particular viewpoint so let me say upfront that I am a champion of social innovation and view social enterprise as a key source for both solutions and sustainable disruptions. After four years of seeking both globally and cross sector candidates for the most innovative social enterprises with sustainable and scalable solutions, I am partial to frames and disruptions that move resources to these opportunities. That said, here are two frameworks that appear ripe for disruption.
Framework One: Risk Taking in Sustainability
As stated in my 2012 article, The New Triple Bottom Line:
Many companies fall victim to the equivalent of mission creep that plagues the non-profit world. Creeping incrementalism in both environmental and philanthropic activities falls short in three ways:
– Essential focus and risk taking never happens, and under-resourced efforts yield inadequate progress.
– Instead of focusing on innovation and testing sustainable approaches, attention drifts to smaller and easier approaches and/or unsustainable activities (often with high visibility).
– As a result, real challenges—like measuring water risk without addressing water stewardship—are avoided altogether. Too many resources are spent communicating small wins and covering up a lack of progress. The focus on perception vs. reality becomes a resource sink and can actually do more harm.
Risk Avoidance Frame
What does the risk avoidance frame look like?
Let’s ask the CEOs of a thousand companies as reported in the Accenture CEO Sustainability Survey and shared at the tri-annual UN Global Compact Leaders Summit:
CEOs see business caught in a cycle of “pilot paralysis” – individual, small-scale projects, programs and business units with an incremental impact on sustainability metrics – and while they see a role for business in promoting sustainable development, their responsibilities to the more traditional fundamentals of business success, and to the expectations of markets and stakeholders, are preventing greater scale, speed and impact.
Pilot paralysis risk avoidance is not limited to corporations. These characteristics are replicated across multiple organizations in the non-profit and foundation worlds as well. Many experts have discussed the impact of this lack of social risk taking. As I noted in Changing Business As Usual: Three Questions for Nonprofit & For-profit Innovation Leaders:
Lucy Bernholz, a Stanford professor speaking at the Global Philanthropy session, of the Council on Foundations Annual Conference last year, pointed out that while philanthropy has been managed by the rules of money in the past, in the next century it would be driven by the rules of data.
Clara Miller, CEO of FB Heron Foundation, questions the basic assumption of what to measure with the data. In The World Has Changed and So Must We, Miller describes the “rude awakening” of the post crash economy:
Decades of effort to bring the poor into the mainstream where a “healthy and growing labor market” would enable a steady income (and for some, even prosperity) have been shattered as “more Americans experience poverty today than at any time in the 53 years the Census Bureau has published such figures.”
In addition, Chris West, head of the Shell Foundation, told Skoll attendees last year that corporate foundation capital should be the most risk capable capital in the world. In practice however it is some of the most conservative.
Who Will the Disruptors Be?
What will the disruptors look like? The disruptors on the sustainable social business front are already at work. Typically they have won awards for their innovations a few years ago and are continuing to refine and improve their effectiveness. They have also been designing for scale and are now doing just that in one or two locations or countries.
Corporate Partners to Disruption
Innovation and scaling is attracting corporate “disruptor” partners, a few leaders who realize the immense opportunity to leverage a select pool of proven social enterprises to drive disruptive innovations. These innovations are able to align with their brand and engage their current and future customers.
It’s early and these disruptors are organizing to leverage these opportunities. The strongest tone from the top does not mention CSR – see Unilever’s Sustainable Living Plan. But leadership has created numerous experiments and test-at-scale spends in multiple countries (see Reel Gardening and Unilever in South Africa).
These commitments to sustainability have C-level executives meeting with founders of innovative social enterprises around the world and line of business leaders are breaking down silos and testing new models in Global South countries where most of the future growth is located (see Allianz-EFU and Naya Jeevan).
Scaling Up Disruptive Sustainable Models
Leaders are discovering the innovations in business modeling, technology application, asset utilization and resource efficiency at the base of the pyramid will not flow from their executives but are being developed by innovative leaders (and their future partners) who are already solving these challenges.
Disruptor investments in supply chain, marketing, CSR. philanthropy, etc., are concentrating on the most innovative disruptions, and innovation and scale leaders are shifting away from small grants and dilutive activities. By investing in the scaling of disruptive sustainable models, they can help create social brand assets that pay dividends to all stakeholders for decades to come.
Framework Two: Corporate Brands and Leadership Addressing the “Olympic” Challenges
The Olympic games demonstrate the power of focus in driving success in sports competitions. Early identification of talent, seeking the best technology, looking for innovative ways to train and finding the leaders to remove the roadblocks are all part of success. Success then attracts governments and global corporations to bring all manner of talent and resources to the table as well. BMW’s leading innovation on bobsled design for the United States is a just one example.
In the world of global social problem solving, scale is like an Olympic event. Unfortunately the way most companies approach global problem solving and scaling looks more like the bush league.
What will the disruptors look like?
Disruptors will ask different questions. To shift resources to scale will require recognition by leaders and resource holders that the current resource investment processes are not working. How often I am reminded of Einstein’s famous definition of insanity: Doing the same thing and expecting different results.
Five Ways to Know if Scaling Is Being Taken Seriously
So is scaling being taken seriously? Here are five ways to positively answer that question:
– Are resources focused on the most innovative and scalable solution to this challenge in the world?
– Is this solution already scaling where it was founded and is it moving towards sustainability in that environment?
– Will this solution add value to peoples’ lives and the supporting systems in ways that create jobs and income leading to virtuous cycles?
– Are the leaders guiding this solution already attracting partners, donors, investors and governments that want the solution to spread across a continent or the globe?
– Do leaders and partners have plans for several times growth increases over multiple years whose success would make them “household names.”
Creating the First Household Name in Social Enterprise
These are the questions that the disruptors are asking. They intend to disrupt by scaling in a way that can create the first household names in social enterprise solutions.
Disruptors will no longer focus on seed stage. Competitions, fellowships, mentoring programs, are only interesting if they further the scaling plans for participating social enterprises.
Disruptors know that pilots do not lead to scaling or sustainability. “Do more good” efforts that only help the people around a localized facility fall far short of the innovation and impact needed to solve real social challenges. Philanthropy efforts that spread funds across hundreds of small grants are non-scalers and non-starters.
These new disruptors are consolidating their efforts, risking real failure to reap real scale and investing in models and management teams that can absorb significant capital – and more importantly, their best talent and capabilities – as they go global.