Posts Tagged ‘ Sustainable Brands

Scale and The Triple Bottom Line

Happy New Year…I’m expecting 2011 to take off with energy this week.

As we dive into the new year, I quote from the background page on ReachScale:

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

Corporate philanthropy has historically favored the same large nonprofit organizations even though each dollar donated results in less than a dollar of impact. While business leaders are very aware of the upside potential for scaling an entrepreneurial business venture, the concept of applying the same principles of scaling to viable social enterprises has not been explored.

We did a lot of exploring in 2010—36 conferences and over 4000 conversations with social enterprise and corporate leaders. Our client Healthpoint announced their first corporate scaling partner, Procter & Gamble, and several other highly innovative social enterprises are in serious discussions. [For more about Healthpoint, see the coverage in Fast Company and my earlier post.]

One reason that these conversations are taking shape is the recognition that there is a new additive triple bottom line of benefits to global corporations that realize that their business and innovation talents are squandered when they are not driving scale in every investment and social responsibility activity.

ReachScale works with companies to achieve their sustainability and social responsibility goals by partnering and scaling innovative, problem-solving social enterprises. Selecting an area of social concern that affects a company’s core business and then innovating to make measurable progress in solving that problem is a win/win/win opportunity.

Here are three examples of what that triple bottom line could look like.

License to Grow
Social impact scaling that can demonstrate progress in meeting people’s fundamental needs while making a modest profit is a new innovation. It results in ethical marketing instead of interruption marketing. As corporate strategy guru Michael Porter pointed out in his article coauthored with Mark Kramer, “Strategy and Society” in the Harvard Business Review:

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.

Healthpoint and Lifespring Hospitals are two examples of licenses to grow, one in rural villages and the other in maternal health. Arogya Parivar, an innovative outreach by Novartis India to rural regions of India is another example. AP received a prestigious award for “Best long-term rural marketing initiative” from the Rural Marketing Association of India (RMAI).

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

Reputation based on Results
Jason Saul of Mission Measurement said it best at Sustainable Brands: Donations and volunteer hours are no longer newsworthy unless presented in the context of strategic commitments to solve real problems.

This theme was repeated in a number of sessions at Sustainable Brands as forward thinking companies like Nike and Timberland admitted openly that they know their businesses are not currently environmentally friendly. Going forward they need to drive innovation to change their businesses drastically. In the future we cannot produce every day products like T-shirts the way we do today. The companies that do not exemplify this shifting reality will not be able to use “pretty pictures” CSR to shift their reputations.

Choosing an appropriately big problem and making measurable results in its solution can and will shift reputations based on results.


Return on Investment

This triple is not new. What is new however is how it is being achieved. In the past the core business produced the return and a small percentage was allocated to CSR and philanthropy—the cost centers. Increasingly global companies are seeing that the most pressing problems that seemed to be intractable resource sinks can be, with appropriate innovation and collaboration, profit making (or at least break-even after scaling and capacity building investments.) General Electric’s global business strategy centers on two critical challenges: health care and energy.

In the case of the for-profit through innovation and collaboration opportunity, the new goal becomes demonstrating the people impact, license to grow and reputation value. These can be mixed and deployed to attract multiple sources of capital. As you watch the investment announcements in 2011, you will increasingly see strange bedfellows clasping hands and acting together to drive integrated social and monetary returns.

Capacity building opportunities can be attractive as well. They enable the founders to develop social brand equity with great returns. Imagine if your organization had been the strategic scaling founder of Teach for America, a question we have addressed in an earlier post. Scaling to create profitable or breakeven portfolios of solutions or to attract a broad range of supporters who gladly join because of high impact through social innovations enables value creation without incremental funding.

This new triple bottom line enables the leveraging of corporate strategic and brand resources with highly innovative social enterprises. This achieves impact, enhanced reputation and a return on investment that can then go after new challenges.

Sustainable Brands and Authenticity

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

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

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

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

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

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

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

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

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

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