By: Cristin Tarr Issue: Vision Section: Community
A New Vision for Social Innovation
Poverty is not a political issue; it is a reality. In the United States one in five children are living in poverty. Our public schools are underfunded and underperforming, parks and recreation areas are deteriorating. In addition, medical needs are on the increase as obesity rates have doubled over the last three decades. These are just a few of the statistics we don’t like to recognize as our own. Our communities are suffering and government can’t solve these problems alone. We must explore a new vision to accelerate positive social change where we live and work. We must ascertain—does community matter?
Is solving social issues in our community the government’s responsibility alone or a combined commitment of our citizens, nonprofits, and businesses? Traditionally, businesses write checks to nonprofit organizations to support their favorite charities, but surprisingly only five percent of the total giving dollars in the United States originate from the private sector. The Center for Philanthropy at Purdue University reported that 79 percent of charities are financially stressed, with not enough resources to support critical social programs. Collectively, we must redefine the boundaries of capitalism and make a fundamental shift in how we fund and support social programs.
Corporate social responsibility (CSR) is the notion of companies directly committed to the common good of society. This commitment to CSR supports both social needs as well as environmental responsibility. Companies of all sizes are dabbling at giving to charity or recycling programs, but CSR is more than that. It is a business commitment using resources to support the greater good, while still focusing on profits. It can be scaled to all sized companies. Patagonia built their organization on CSR practices—protecting resources and people has been the forefront of their core business model. The very popular “Common Thread” campaign asks customers to pledge to only buy what they need or to repair, reuse, and recycle their clothing. Important to note, authentic CSR practices positively impact company reputation. In fact, Reputation Institute’s 2011 Pulse Survey suggests that overall CSR practices are responsible for more than 40 percent of a company’s reputation.
Milton Freedman wrote in 1970 in The New York Times “Social Responsibility of a Business is to Increase Profits” declared that profits are and should be the only goal of a company, and that giving back to the community should be funded on a personal level and not part of company’s business practice—unless it alleviates a tax burden. In 2011, however, Michael Porter suggested a new concept called shared value which he defines as corporate policies and practices that enhance the competitiveness of the company while simultaneously advancing economic and social conditions in the communities in which it operates. John Kania, Managing Director at Boston-based FSG, and colleague of Porter’s, co-authored the recent article, “Do More than Give” argues that CSR is not a black and white issue. He says, “Responsibility is about individual values. Corporations won’t invest in societal issues on a sustained basis unless their management and employees see a strategic value in doing so. Companies should look to create shared value and align parts of their business to address social and environmental issues in their communities. The results are the value creation of long-term positive change for both society and company.”
Kania’s opinion begs the question—will the private sector embrace this new paradigm and develop long-term business strategies to drive profits and benefit society?
Social innovation is a new vision where a company profits from creating social change. Jason Saul, a leading advocate and founder of Mission Measurement and author of Social Innovation Inc., describes five strategies of how companies of all sizes can demand profits, while positively impacting the community. The value is realized through paths such as opening new markets, developing employees, building closer ties to customers, advocacy, and attraction and retention of talent. This shift in practice changes the way we think about business and its role in our communities. Social innovation is the “DO” of social responsibility and philanthropy, producing a blend of impact and profits, and going beyond traditional philanthropy.
Social innovation is strategic, aligned and views greater good initiatives as a means of increasing profits—it is not just a glossy brochure or a big check to a random nonprofit. For example, Starbucks launched the UCO’s (Urban Coffee Opportunities) in over 100 locations in underserved markets such as Los Angeles, New York, and Detroit. The chain’s success includes a Harlem store, which led to the redevelopment and now a vibrant neighborhood. The UCO initiative creates jobs with health benefits, builds a local gathering place, and empowers community players to take action in their neighborhood. At the same time, Starbuck’s is extending its footprint and gaining value in emerging market areas.
Integrating social innovation into a company culture takes thoughtful and committed steps. Every company, from a sole proprietor to a large multinational corporation can embrace and take action in social innovation and shared value through four key steps.
Step #1 - Set Vision and Commit
Step #1 requires transitioning from the traditional mindset that philanthropy is a cost of doing business, to one that embraces the idea that social innovation strategy takes leadership. It entails commitment of C-level executives to embrace community engagement as a method of creating shared value. It is imperative to have the commitment from the top and allocate critical resources, build a core strategy, get buy-in for stakeholders, and ultimately measure the positive impacts on both the company and the community.
Step #2 - Develop Strategy and Engage
To create shared value, a social innovation strategy requires a vigorous, yet attainable goal, and clearly defines to stakeholders the benefits to both the financial bottom line and society. There must be advocacy linking employees and other company stakeholders with community activities that they are interested in. Executive leadership teams are important, but the commitment of the workforce and collaborative partners is what will move mountains. Employee engagement can and must be a value of social innovation. There are clear indications that engaged employees are more productive. The Society for Human Resources Management compared companies that had strong sustainability programs with companies that have poor ones and found that engaged corporations morale was 55 percent better than those with little or no engagement, business processes were 43 percent more efficient, public image was 43 percent stronger, and employee loyalty was 38 percent better—creating an obvious business value.
Step #3 - Implement, Innovate and Inform
A strategy is only good when executed. Leveraging a company’s brand, innovation, core competencies, resources and partnerships responsibly, strengthens the workforce, communities, and economy. No longer is community engagement a cost of doing business, rather it is a well-planned initiative that mobilizes workplace knowledge and expertise to solve social issues. There are several essential practices to transform goodwill efforts into a business return.
Educate and Empower
A company’s workforce is their biggest asset. Educating on sustainable practices and giving tools to empower teams to solve both business and social challenges promotes innovation and good problem-solving skills. Through training and by recognizing individual success, companies are able to more aptly create buy-in and a long-term commitment to profitable social change.
One of the most powerful ways for young executives to experience leadership essentials is through community and volunteer opportunities. Volunteering can be a hands-on, multi-generational, and team-building chance to introduce a holistic approach to building capacity in our communities. Matching and organizing volunteer programs can be interpreted by employees as an extra burden, but when employees are empowered, given resources and organizational support, they can focus on outcomes which are much more rewarding and successful. Offering employee incentives, such as days off to volunteer or bonuses for meeting or exceeding social innovation goals, should be interpreted as tools as well as a company’s commitment to achieving shared value.
Collaborate and Communicate
Consulting and communicating with all stakeholders is part of the value of social innovation. And, telling authentic stories builds both attraction and value. Many Fortune 500 companies dedicate a portion of their website, and in some cases exclusive sites and social media, to communicate sustainability and social accomplishments. These methods enhance brand loyalty and attract the new workforce—young professionals or Millennials—born after 1985. The 79 million Millenials are particularly attracted to companies that embrace strong CSR practices. In fact, a recent study by Cone Communications found that 83 percent of Millennials trust a company more and 79 percent wants to work for a company that shows they are socially and environmentally responsible.
Step #4 - Measure, measure and measure
“If you can’t measure it, you can’t manage it,” is a familiar phrase among CFOs. As every good business decision is made through setting goals and monitoring performance, social innovation and shared value creation is no different. An essential step is to measure key indicators and structure programs to monitor continued improvement. Many believe measuring social change is difficult, but it starts with simply setting goals. John Kania, a social impact advocate says that business must, “Figure out what your community goals are then figure out the indicators for success and begin there. It is not any different then what is on the business side.” He advocates that it is critical to continually evaluate and report findings from indicators and to monitor milestones to ensure a sustained company commitment and direction.
A great example that summarizes the social innovation process is GE’s brilliant campaign called Ecomagination. This unique program is GE’s commitment to imagine and build innovative solutions to today’s environmental challenges, while driving economic growth. GE mobilized their stakeholders to take action around the world to solve societal problems and create shared value. Furthermore, GE stuck with their core competencies, company mission, and set a vision. Through collaboration they built a strategy using employees as an advisory board, communicated and delivered results that were measureable and meaningful, and ultimately benefited society and the company.
What is happening to our communities is troubling, but not irrevocable if we work together. Listen to the new Bruce Springsteen’s release “We Take Care Of Our Own,” where he sings, “I've been stumblin' on good hearts turned to stone; The road of good intentions has gone dry as bone; We take care of our own.”
Let’s begin a new vision, because community does matter.
Cristin Tarr is the Co-Founder and Managing Partner of Business Service Corps. Business Service Corps assists companies develop, organize, and implement ambitious and collaborative community outreach programs with measurable results while making a positive social change in our communities. Cristin’s passion to connect, collaborate and commitment to global citizenship is perfect for her roles in community relations, as a corporate trainer, speaker and facilitator. To learn more about Business Service Corps visit www.BusinessServiceCorps.com.