Archive for the ‘ Corporate partnerships ’ Category

Five Questions to Measure Commitment to CSR

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A New Kind of Partnership: Healthpoint and P&G

Healthpoint Services is bringing clean water and health care to rural villages in India

The ReachScale impact model test began last January with a simple set of ideas:

– The most innovative social enterprises can provide solutions to global challenges.
– When scaled by global corporations, social enterprises can create powerful licenses to operate.
– By working together, social enterprises and global corporations can galvanize difficult-to-acquire consumer attention and loyalty.

We set about looking for the best disruptive innovators. That process was aided by social entrepreneur screening pioneers such as Ashoka with its 2800 global fellows. Meanwhile ReachScale used international conferences as its own scaling engine. These gatherings make it possible to exchange ideas and visions of the future with both social and corporate leaders.

It was after many thousand conversations that a new possibility became visible: Combining social innovation and scaling innovation has profit making potential in many sectors. As in microfinance, this approach can be for profit or break even after an investment in capacity building.

Today is the culmination of that process and an important day for one of our clients. Healthpoint Services is announcing their first corporate learning and scaling partner—Procter & Gamble. The news is being announced at the mHealth Summit in Washington DC, a gathering focused on advancing the benefits of mobile technology for health and wellbeing for all world communities.

P&G’s reputation for innovation is legendary (The bestselling book, The Game-Changer, was written by P&G’s chairman and CEO, A. G. Lafley). So it is no surprise that Healthpoint would welcome P&G as a partner and investor.

But the big news is that P&G’s investment is driven by a desire to learn from Healthpoint.

Healthpoint was started by Al Hammond (a global base of the pyramid expert), Amit Jain (a clean water pioneer) and Chris Dickey (a doctor of public health with a Wharton MBA), and it is the first scalable integration of telemedicine, clean water, diagnostics and a robust generic pharmacy. 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 a dollar.

Each village Healthpoint clinic costs around $40k to build and equip. Healthpoint builds, owns and maintains the infrastructure and then reaches out to partner with the government on specific services. State and local governments are recognizing and supporting these significant investments in their region. Punjab, India is the site of the first Healthpoints, and 2,000 are envisioned in the five northern Indian states.

P&G’s Futureworks group is out front on this opportunity. They are by no means alone however. Transforming a corporation’s license to operate into a growth engine is top level thinking at the most innovative companies. (See “How GE Is Disrupting Itself” by Jeff Immelt in the October 2009 issue of the Harvard Business Review.)

The world is changing rapidly. A new generation is rejecting single bottom line thinking. Their counterparts in the global south will become customers only when insightful companies create offerings that bring them appropriate products and services.

Our prediction is that a few years from now, the best companies will fund social innovation investment groups in a fashion similar to the way business mergers and acquisitions are done today. P&G’s Futureworks is getting there through Healthpoint’s innovation windows. Those not opening these windows now may find the growth lights hard to turn on later.

Social Innovation Funding: Where are the Global Companies?

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

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

1. The Economist:

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

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

2. The Economist:

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

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

3. The Economist:

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

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

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

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

From Problem Size, Innovation and Scale:

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

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

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

4. The Economist:

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

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

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

For more on this topic, see Innovation and Scale.

Problem Size, Innovation and Scale

Polynesian seafaring “wayfinders” used devices like this to navigate the vast Pacific, a tool that takes into consideration the location of islands, sea currents, wave patterns and astronomical data. Solving complex problems, like sea navigation, doesn’t happen with singular, linear approaches. (On display at the Museum of Fine Arts, Boston Massachusetts)

When the challenge of poverty is viewed from the standpoint of the individual, government and NGO efforts to solve poverty on a grand scale look remarkably narrow-minded or, more accurately, narrow-visioned – they focus on what is easy for the funder to deliver rather than what is an integrated solution for the recipient. A common example is rural health-care delivery efforts that don’t deal with clean water: what benefit is there of getting well if the next drink you take makes you sick again?

Those silo approaches are doomed to fail, so strategic social entrepreneurs are creating braided solutions. As my previous post discussed, they are leveraging (1) the pervasiveness of the entrepreneur, (2) new delivery innovations, (3) new ways to collaborate, and (4) the power of scale and innovation to create virtuous cycles.

A key enabler for these new “big problem” social entrepreneurs is the presence of an already on the ground “mission entrepreneurial entity” or MEEs, a local social enterprise. (Click here for more on MEEs, a term introduced by the Affordable Housing Institute.) MEEs cut across the silos and mitigate against non-responsiveness by government and surrogate NGOs by organizing and advocating at the same time. Most importantly, they insure that approaches are tested and structured to deal with the local challenges. (Think of the population in India who refused to relocate from their neighborhood on a toxic waste dump to the safety of a high rise.)

The changes have to occur in the local environment, and MEEs are farther along on the learning curve in working with governments and NGOs to create solutions. As collaborators from outside the MEE’s world, governments and donors/ social investors need to bring insights into how to test the four approaches identified above. The best results are achieved when the learning environment integrates knowledge from on-the-ground operations as well as external experts.

When problem resolution is viewed from this perspective, certain things look very different. For social investors, bigger problems are more worth tackling, because they have:

1-Availability of existing investing systems and business channels that can be repurposed to address these large scale problems. It will be fruitful to use the world’s investment infrastructure to augment impact investing.

2-MEEs that possess significant relationships, skills and access to entrepreneurs. Just like levering the investment platform for social investment, we can use existing entities to launch new combined initiatives. For example, the microfinance infrastructure built in the last few decades can expand to address slum upgrading, cleaner cooking/energy and other related problems.

Problem size can also be leveraged in other ways to drive innovation and to attract talent and resources. Here are two examples:

1-Happening now: The millennial generation is creating an explosion in small collaborative organizations. These groups are populated with “digital natives” who refuse to look at problems as intractable. L3Cs, B Corporations and other new business forms are expressions of the Millennials’ desire to formally integrate social impact alongside profit as a business goal.

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

These changes and others are transforming every aspect of global problem resolution. More to come in future posts.

The Scaling Trifecta: Margin, Mandate and Mission

Three arrows in the quiver (Detail from Brazilian Candomblé metal sculpture, also known as Ferramentos)

In an excellent post by Brian Trelstad, Chief Investment Officer of Acumen, a case is made that the three primary drivers of scale—margin, mandate and mission—are respectively important to business, government and social enterprises.

After discussing nonprofit mission organizations (like the Girl Scouts,) business organizations whose growth is primarily margin driven, and government scaling that resulted from mandates, Trelstad both asks and answers:

At this point, you’re probably asking yourself: OK, makes sense, but how does this relate to social enterprise?

Where this gets interesting from a social enterprise perspective is that it offers us a lens to understand the oft-discussed but also misunderstood “path to scale”. The path to scale is not straightforward; social enterprises don’t follow just one path or another. In fact, every business in Acumen Fund’s portfolio blends some element of business, social enterprise, and policy experiment at different points in their life cycle. They need to focus on margin, communicate a compelling mission, and advocate for a mandate at various stages of their development.

I think there is more to this trifecta than Trelstad is suggesting here. A quick review of the success stories of the new century (Google, Apple, J&J, P&G, GE, etc.) suggests that business leaders have built on missions (make the world’s information available, eco-imagination) and mandates (grow through innovation with half of all new offerings coming from outside the corporation) which have become the foundation for increased margins.

That said, many of our current woes are a function of total lack of balance between profiteering and mission. Many companies were surprised by the overwhelming response of individual citizens and organizations in the third sector who exposed their lame attempts to color themselves green (greenwashing is now a thriving sector.) Did they forget about their colleagues at Enron, WorldComm and the banks whose rampant risk taking resulted in their demise and the economies cliff jump? A majority of the population (and the millennial generation in particular for whom these events were formative) has expressed clearly that they want more than just CSR reporting from the brands that are wooing them.

In my view, Acumen’s attention to the sophisticated social enterprise will soon become a common requirement for increasing numbers of investors and corporate leaders. As investors see more examples of successful double and triple bottom line companies, their expectations will continue to rise.

Balancing mission and margin while seeking mandates (and/or donations) makes the social entrepreneur adept at managing these complex and competing factors. More and more companies in the for-profit world are going to need to emulate that balancing act as well.

At the same time, more social enterprises will need to collaborate and in some cases combine forces with other organizations, both for profit and not for profit, to achieve critical mass. Seeking corporate partners that can demonstrate collaborative skills will enhance value creation on both sides.

Going forward, corporate organizations will benefit from with these social hybrids. Those partnership include a mutual exchange of ideas and techniques. As social organizations demonstrate the ability to create value for companies and to enable double and triple bottom line thinking to extend across all partners in these hybrid value chains, the attractiveness of these partnerships will increase further.

Sustaining Trust

Last week I participated on the Green Marketing panel at the MIT Sustainability Summit. Michael Hopkins, editor of the MIT Sloan Management Review, offered up the elemental question(s):

Should companies do green marketing?
If yes, how?

I’ll save my answers to the first question for another post. But in answering the second question, I proposed that the specifics of the how were not nearly as important as intentions and intended outcomes.

In the nonprofit world, the intersection of professional management and impact analytics comes together in a unique manner to achieve real progress. (This process is described clearly in an excellent book by Leslie Crutchfield and Heather McLeod Grant, Forces for Good.) And the move towards concentrating resources and innovation that is now being emphasized by philanthrocapital entities has resulted in sophisticated donors requiring each organization seeking resources to demonstrate how effectively it is—and will be able to solve—whole problems or significant portions of those problems.

Stewardship stories* are no longer enough. Stories now must translate into measurements, analytics and innovations that clearly show substantial progress, both in scaling the effort and in identifying how whole problems are being addressed and resolved. Now more than ever, intentions have to be translated into real innovations and outcomes before trust and resources will flow to any serious organization.

Jim Black, a fellow panelist at yesterday’s conference, is a board member of Air Quality Sciences and GreenGuard certification. Over 21 years ago his wife Marilyn Black, founder of the Greenguard Environmental Institute, began testing products to determine their impact on indoor air quality. One of the first companies to ask for help was the leading maker of vinyl wallpaper, one of the worst indoor air and land fill offenders at that point in time. The product was so unsustainable that two decades ago the company’s management figured out that unless they made significant progress towards a sustainable product line, they would eventually be out of business. After four years and a multi-million dollar investment, vinyl wallpaper became an acceptable product with a manageable life cycle.

End of story?

No, especially considering the next question that was asked. Given the cynicism of consumers (and with good reason given the vagaries of recent corporate greenwashing,) will GreenGuard certification be seen as meaningful? What can a company like the manufacturer in the vinyl wallpaper example described above do to solve the problem of trust?

It is no longer enough to just tell your story and then point to certification for cover. Why? Because every consumer knows that turning one offending product into an earth-friendly one does not make measurable progress toward solving the cumulative product life cycle problem we all face.

The manufacturer who wants to win consumer trust must step forward and catalyze learning, innovation, resources and commitment to encourage as many companies as possible to do the same. Doing the right thing may save your company, but it does not buy you substantive consumer trust. Persuading others to follow your lead confirms your intention and your commitment to translate those intentions into results. And it is results that win trust.

*Stewardship stories, content and materials are the testimonials that nonprofits use to demonstrate the value and scope of their impact model.