The Gratitude Network is excited to present its 2014 Gratitude Award winners: GoodWorld Solutions (Oakland, CA), The Springboard Collaborative (Philadephia, PA), DrinkWell (Mumbai, India) and Jail Education Solutions (Chicago, IL).
Jail Education Solutions – improves inmate outcomes by incentivizing educational and vocational progress through tablet-based curriculum in correctional facilities. Jail Education was the winner of our “Audience Choice” (by popular vote) at SOCAP14.
Goodworld Solutions – is our winner in category of Community Development, provides the first platform (“LaborLink”) to leverage the disruptive power of mobile to give voice to the global workforce and deliver real-time data to companies like Cisco and Patagonia to align sourcing practices with worker needs.
SpringBoard Collaborative – our 2014 winner in category of Education, addresses the reading achievement gap with programs and tools for coaching teachers, training family members, and incentivizing learning such that our scholars have the requisite skills to access life opportunities.
DrinkWell – Transforms the arsenic and fluoride water crisis affecting over 200 million people across rural India and Bangladesh into an entrepreneurial opportunity by blending proprietary filtration technology with a franchise business model. They are our winner in the category of Health.
Gratitude Award winners were chosen from the Nine Finalist companies who each presented on stage at The SOCAP14 event on September 5, 2014 – details can be found on this page. Their presentations to the SOCAP14 audience on September 5th can be found at this link. Our nine Finalists were narrowed down by a panel of experts from semi-finalists (who were covered in this article which appeared in YourMarkOnTheWorld, a blog by Forbes writer, Devin Thorpe).
This was the 2nd year The Gratitude Awards were held and our first year in partnership with SOCAP. More information about all our portfolio companies can be found on this page.
The Rise of Global Social Entrepreneurship
1971-4 were big years for global social reform…but it took us 40+ years to fully realize how big. It was in the early 1970’s, that two new enterprises were formed, one in the U.S. And one on Bangladesh, that would go on to positively affect the lives of tens of millions of individuals around the world. Opportunity International (founded in 1971 by Al Whittaker, Bristol-Meyers President) and Grameen Bank (first loan in 1974 by Bangledesh university director, Mohamed Yunis) formed “micro-credit” organizations, offering loans, credit/savings, insurance and training for impoverished families. These two organizations were early to innovate in the “social” or “impact” sector. Their focus as organizations.
In 1981, Ashoka was founded by Bill Drayton who recognized that entrepreneurs through a social venture capital approach could impact many aspects of society, addressing the needs of the poor, marginalized and under-represented. Ashoka today operates in over 70 countries and supports the work of almost 3,000 entrepreneurs, chosen and mentored as “Ashoka Fellows”. Drayton calls these workers “social entrepreneurs”. For the past 30 years, Ashoka, and others that have followed their path, have sparked a movement toward the citizen-driven social innovation.
Other organizations, such as Echoing Green, The Acumen Fund, Omidyar Network, Skoll Foundation, and many more have followed Ashoka’s lead in supporting social entrepreneurs around the world.
What’s Fueling Social Innovation?
What’s fueling the move toward Social Innovation in our world today?
Chasms and “Bankers”: first, we can all agree that there is a growing chasm between The Have’s and The Have-Nots – the disparity between wealthy and lower income classes is growing each year. This chasm has forced Those Who Have a Lot to re-think the meaning of work, life, and philanthropy. Many of the richest Have’s earned their money from technology and innovation – Bill Gates through innovation in the software space; Warren Buffet in financial innovation; Pierre Omidyar and Jeff Skoll in e-commerce innovation; Marc Zukerberg in social media innovation; and Marc Benioff in enterprise business model innovation. Their form of philanthropy is ENTREPRENEURIAL. “Let’s apply entrepreneurship to the world’s greatest problems and see if we can’t make a dent.”. The Chasm is creating consciousness and this consciousness is manifested in new social innovations.
Technological Shifts : are making the world a smaller place. New advances in communications, networking, social networks, and other technologies have created an unprecedented array of new opportunities and have disrupted just about every business, government and learning institution on the planet. The falling cost of Internet access and mobile communications has opened up the Developing World to instant knowledge and information, often disrupting the old ways of thinking.
Citizen Sector: one big outcome from technological shifts has the rise of the citizen sector – people around the world are able to compare themselves with others, and see the differences. Boundaries are broken down, and real needs become well know and exposed to the world. The Have-Nots suddenly are exposed to what the Have’s have.
Governments Failing to Keep Up: unfortunately in the conscious and technological shift we are facing, large organizations, like the government and corporate entities are falling behind – they will be forced to innovate or perish. It is becoming clear that large-format government is not going to be able to innovate quickly enough to solve our growing social problems on which they are expected to act. Something has to augment government and large corporate understanding and efforts in order to keep up with the pace of change.
Corporations Waking Up : Perhaps due to increased popular and governmental pressure (think: environmental issues and greenhouse emissions), or perhaps due to leaders of our global corporations “awakening” to the realities of pure profit motives, most global corporations have focused some attention to social issues in the past decade. Many have formed internal task forces, departments of “Corporate Social Responsibility (CSR).
A few leaders have made social give-back a part of the corporate culture – notable examples are Toms’s Shoes, Ben & Jerry’s, and Salesforce. A few corporations have grown due to the focus on social issues, such as Triodos Bank,
Global Urgency: Against the above background, it is becoming clear that our Earth’s resources: oceans, forests, food & water supplies are in jeopardy. An urgency in such matters as democratic change, environmental hazard/waste, global warming threats, and more – has come to the forefront of our consciousness as a people.
The New Era of Innovation
In the last decade, a dramatic confluence of economic, technological, political and spiritual shifts appears to be shifting global consciousness on social issues such as poverty, education, human rights, environment, and basic human needs. In my opinion, we are now entering a new global Era for Social Awareness and Innovation never before experienced. These innovations turn new leadership styles, business models, processes, technologies and products/services into forces of good to address the world’s most challenging needs.
The market term for this new form of innovation is Social Innovation.
Seven Forms of Social Innovation
The late Peter Drucker, in his book Entrepreneurship and Creativity, discusses 7 forms of innovation. These 7 explain the background for nearly every innovation that has occurred in modern times. Today, we are seeing social innovation occur in all seven of these areas.
1. Unexpected occurrences (serendipity, chance & surprise) – Drucker believes some inventions and innovations have come from surprise, and of course this is true. A famous example of this is Art Fry, at 3M, who came up with the idea of Post-It Notes from the unexpected failure of a new glue that the company had experimented with. Today, social innovations also come from serendipity – or “being in the right place at the right time”. An example I like to use is Donorschoose.org. Founder Charles Best invented his service when, out of frustration for lack of resources, he created a simple internet site to post the local needs of teachers at his school. By chance, others outside the school system found it intriguing and DonorsChoose became a phenomenon after Best was featured on the Oprah Show nationally.
2. Incongruities (e.g. growing market, falling profits) – One of the most common birthing spots of innovation is Incongruity – when markets or situations are simply out of alignment, and something new is called for to take advantage of the situation. I’ve witnessed many times, as a venture capitalist and angel investor, the affects of . An case study and example, which I use in my class at UC Berkeley is Reply Inc.Founder, Payam Zamani, realized in 2006 that hisprimary target markets (real estate and automobiles) were suffering in the economy, and his company needed to re-organize it’s business model to make products and services easier to use. Incongruities are a major driver of Social Innovation, of course, because the incongruities in many developing nations expose underlying political, economic and societal issues. A favorite example of mine is Napo Pharmaceuticals (South SF), founded by consultant, Lisa Conte. On a trip to Africa, Lisa saw children suffering from diarrhea and dying. With further research, she found out some 2+ million children die each year from diarrhea-related maladies. Yet most major drug companies found this “niche” too small and unprofitable to address. She formed Napo to address this incongruity in the market. The company went public in , and today assists children all over the world.
3. Process Needs (e.g. linotype & advertising = desktop pub) – As a new worker at Apple Computer in the 80’s I witnessed a great example of process innovation – the rise of “desktop publishing”. The Macintosh computer, released in 1984, represented a new way to interface with computer hardware – the roll of a mouse, the fonts on the screen – all approximated the realism of a printed page in a magazine. But the Mac went on to revolutionize the concept of self-publishing and advertising by allowing individuals to approximate the same things that expensive Linotype could do in upscale advertising, for a mere fraction of the cost using a computer and laser printer. Today, we take this innovation for granted. In the social innovation space, my favorite example of process innovation is happening today in learning and education. Sal Khan (founder of Khan Academy) and others in the “blended learning” category have shown that education can be changed by bringing the homework into the classroom, and bringing the lecture to the home (videos that students can watch anytime, anywhere). This reverses the thinking that teaching takes place in the classroom only. There is currently a revolution taking place in Education where the “old” process of teaching is being replace by the “new”, personalized process.
4. Industry and Market changes (e.g. Shifts, catastrophes, competition) – a classic example that fits this area is Salesforce.com. In 1998, Marc Benioff attempted to convince his bosses at Oracle Corp that a new business model for providing software would address the needs of customers who were tired of paying huge prices for internals software installation and maintenance. He was unsuccessful, so he started his own company to address the needs of mid- and large-sized clients. His business model, today referred as “SaaS” (software as a service) is now used by most software companies on the planet. In the social innovation sector, market and industry changes in Developing nations have prompted extraordinary new innovations. For example,
5. Demographic Changes (e.g.changes and shifts in the world’s demographics) – the world is in constant change, and many innovations take advantage of shifts in the world’s population. An enormous demographic change in the US for our present generation is the aging baby-boomer segment of the market, who will soon be senior citizens, creating a vast array of needs in elder-care, housing, health and medical needs. New innovative ways of addressing this demographic shift are underway. My favorite example for “demographic change” that drives innovation in the social innovation space is SamaSource, founded by Leila Jonah. Samasource has created an innovative piece of software that disseminates work electronically to impoverished areas of the world, where qualified, but otherwise unemployed workers can earn a wage completing the work virtually. This takes “outsourcing” to a new level. The company prides itself on bringing work to impoverished areas of the world where people can be quickly trained and made ready for meaningful jobs.
6.Changes in Perception (e.g. Health, fitness, education) – in time, human beings perceptions of life and the world we live in change. Racial, sex, sexual norms have changed in various societies. Here in the US the perception for “Fast Food” has dramatically shifted in the past 20 years, going from a “convenience” to a national health driver. This has led to new innovations in “healthy” foods, as evidenced by new restaurants, innovative food distribution (think: Whole Foods) and new forms of weight control. In the social sector, innovations are also driven by changes in perception. The empowerment of women in the developing world is a good example. In many cultures where women have been “second-class” citizens in the past, new social innovations are allowing them to become the bread-winners for their family, the leaders in their communities and even political heroes of social change. Opportunity International, for example, supports over 2 million loans per year to family “entrepreneurs” – 85% of the recipients are the women in the family.
7.New Knowledge (e.g. computer chips, batteries) – Moore’s law, applied to chips, communications means that new technologies are coming on the market every 2 years that are doubling in capacity and power. Adoption curves for new technologies seem to become steeper and steeper with each successive wave. It took 20 years for telephones to become popular; it took 2 months for Instagram to catch on fire. An early pioneer in social entrepreneurship, Kiva.org, is a great example of how new technology can be used to bridge social gaps, match Have’s with Have-Not’s. Today, Kiva is on track to transact $1 billion in loans between the developing countries and wealthy US/European families. This new innovation has disrupted the common form of lending by banks, and has spawned a new generation of social innovations linking those in need with those who have via the internet and mobile
We are awash today in innovations in the social sector. So much so, that attention has shifted from large monolithically non-profit organizations (think: American Cancer Society) to a new era of “social entrepreneurship” (think: which encourages “lean” thinking and enterprising approaches, both in for-profit and non-profit formats.
Have your own example of social innovation and where it fits with Drucker’s 7 forces? I’m interested to hear it!
is now fueling the world’s quests to end epidemics, resolve inequities and poverty, increase education and care for our natural resources. Three forces — government environment, bottoms up desire for skills/learning, and conscious capital — have come together to create this sea of change. The Millennials will cause changes like we’ve never seen in the world. In general, there is a growing consciousness that we CAN change our world for the better and entrepreneurial thinking is the key to this change.
For the past two years, we’ve had an amazing set of innovators/entrepreneurs share their experiences @ The Intersection Event on how their work impacts the world. Some of the most memorable moments…
–> Kushal Chakrabarti, Chairman of Vittana, gave a passion-filled pitch at 2013 The Gratitude Awards for ways in which his company has enabled young people in Africa to complete their educations with help from those of us who care
These …and many many more memorable moments at The Intersection, have reminded us that innovation that impacts social change is not coming from the large NGOs – it’s coming from the ingenuity of the entrepreneurs.
If measured by televisions sets in our homes in the US, Entrpreneurship has reached the pinacle of popularity…shows like Shark Tank, a TV show developed by Mark Burnett (executive producer of Survivor, The Bible, The Voice, and Celebrity Apprentice) and featuring 5 angel investors who love (or shred apart) various entrepreneurs who “pitch” their wares. Thanks to this program, millions of people around the world now know how to calculate the valuation of a start-up, how to evaluate a team, what sales are needed to impress investors, and how to negotiate a term sheet (…and for this I went to Harvard Business School???).
Around the world, Big Governments is encouraging Entrepreneurship. This trend started 10 years ago and has reached a crescendo in recent years. My former professor at HBS and colleague, John Kao, authored Innovation Nation in 2007 to “pour some cold ice” on the US government about how the US is losing its edge as an innovation leader. New institutions, laws, cultural norms will enable other countries to surpass the US in innovation, posits Kao, if we don’t embrace entrepreneurship and ingenuity in new ways in the US. Regardless, with the recent
entrepreneurship in internet search, mobile software and human interface design, the SPIRIT of ENTREPRENEURSHIP still seems embedded in our culture I don’t see it going anywhere in the coming years. Initiatives, under Obama, like the Steve-Case-headed Start-up America are looking for ways to turn around our competitive situation
While Mr. Burnett is raking in the ratings, there is clearly a grass roots, bottoms up desire for Entrepreneurship among tomorrow’s leaders – who are today in undergrad and graduate schools around the world. I see this with each year that I teach at UC Berkeley and U. Cambridge – more and more students are asking me how they can “do well” AND “do good”.
General Entrepreneurship is taught at every major University around the globe; three dozen of the top business schools now offer a “Center” for Entrepreneurship” or program – without one they are no longer competitive players in the college market – many students are looking to build their entrepreneurial skills as part of their core learning experience in college.
Social entrepreneurship is now the hot new area: courses at UC Berkeley’s Haas School of Management illustrate the case. In the past few years, numerous course on innovation, entrepreneurship and now social entrepreneurship have proliferated – and most students take at least one of these electives in pursuing their degrees. These offering have spilled over into the 3-year (“weekend/evening MBA program”) which takes in students who for the most part also havefull-time management-level jobs in the Bay Area. According to February 2013 blog on HBRbetween 2003 and 2009 the average course in US MBA schools has skyrocked over 110% per year.
A recent Fortune article on higher ed illustrates the points: The latest trends in undergrads are programs that develop students as social entrepreneurs. Already Berkeley (Haas), Yale, Stanford (GSB), Harvard MBA, and Duke (Darden School) have entire programs around teaching social entrepreneurship. Abroad, INSEAD has led the way and Oxford (Saïd School) has sponsored The Skoll Foundation’s annual trend-setting conference called Skoll World Forum for Social Entrepreneurship.
Not Just the MBAs
Turns out the social entrepreneurship movement is gaining momentum in many undergraduate schools as well – from Dartmouth to Azusa Pacific. For example, at Brown University, undergrad students are leading the entrepreneurial charge. This bottom up approach has led to the continued success of the Entrepreneurship Program, or EP, a 15-year-old student run entrepreneurship initiative, which is now thriving as both an engagement program for blossoming entrepreneurs, and an accelerator program for more experienced founders. In addition, EP has recently formed a partnership with E’ship, the student-run entrepreneurship club at the Rhode Island School of Design. Through partnering RISD designers with Brown coders, engineerings, and creative thinkers, the Brown-RISD entrepreneurship initiative could assert Providence’s College Hill as one of the nation’s top entrepreneurial breeding grounds, all thanks to a grass-roots approach to entrepreneurship. Brown was also ranked recently by US News & World Report as a leader in the area of Social Entrepreneurship, with its unique programs at the Howard Swearer Center including the Social Innovation initiative and a Seed Fund for social ventures.
The Intersection of Need and Talent and Money
The third component, MONEY, completes the puzzle. Over the past 10 years there has been a steady rise in funding sources available to social entrepreneurs. There are angel groups (for example, Investors Circle), foundations (Skoll Foundation, The Bill and Melinda Gates Foundation,and the Kauffman Foundation), social-impact banks (such as Triodos Bank in Europe), and a variety of emerging venture firms (see a great listhere, from Olivia Khalili of Cause Capital blog).
At UC Berkeley, my students and I have completed a “Note on Social Impacting Investment” that can be used with MBA students to provide an overview of the options available. The Note, written in 2012, provides an overview of the wide range of emerging options for philanthropic and impact investing, along with overviews of 8 of the top funding organizations. To download and read the Note, click here: A Note on Social and Impact Investing
Put them all together they spell “C-H-A-N-G-E”
Put these three trends together — top-down government policy, rising desire of the Millenials for social entrepreneurship, and Conscious Capital — and one gets a very encouraging picture of impact that global social entrepreneurship is likely to have in the next 20 years. Scores of young minds desire to understand how they can become social entrepreneurs, governments (in the US and abroad) are likely to legislate in favor of the entrepreneurs and capital is becoming more available.
This week, I begin a relationship with University of International Business & Economics (UIBE), a fast-growing university in Beijing, China that is training MBA-level students, primarily in Asia (Russian, China and Far East). In our class, we’ll have students from Mainland China, Malaysia, Indonesia, Thailand, India, Russia, Uzbek (and Germany thrown in for good luck!).
Our first class together will explore the nature of creativity on an individual level – what makes a person creative? – as well theories on entrepreneurship and relationship to creativity. I’ve seen this first hand, working with dozens of Silicon Valley start-ups ,but it’s always interesting to tear it apart and try to explain it to students/practioners who are 9525 kilometers away from the Silicon Valley.
I’m anxious to hear the students’ initial thoughts, from their perches in Asia Major and Minor, as to what their views on Creativity and Innovation are. Coming into our class, what do they think Creativity is? How is it different from Innovation?
I’ve asked them to respond here to this question…let’s see what they have to say.
Back at Apple in the 1980′s, we knew how to throw a party – annual developer conferences, beer bashes and new media shindigs…all served to bring together the community around the Macintosh. Then something funny happened. Macworld led to Internet World; Internet World led to Always On; Always On led to Web 2.0, and well…here we are today with lots of speakers and lots of events. All are good, but I long for something innovative, time-saving and useful.
I began attending TED Conferences in the 1990′s and enjoyed it. What has set TED apart from many other events and made it innovative: the quality of the audience was nearly as good as the quality of the speakers. TED has built up a community of innovators that enjoy seeing each other every year and use the lectures and talks to invigorate the “hallway” and break-time talk. As TED turns into a bigger production each year, the “organic” conversations become harder and harder, IMHO.
New Models, New Ways of Meeting Up
During the past decade, within the tech world, we’ve witnessed a huge range of innovative new business models, new products, new software, new services. The innovations have given rise to platforms, such as Apple, Linkedin, Facebook, Twitter, Skype, Webex, Groupon, and Google. How do members of these innovative companies find out about one another, meet, and create relationships?
As the tech world has become more innovative, the way in which people gather to exchange ideas has also become more innovative. Today there are a wide range of virtual and physical ways to meet up with others – the trick is settling on the ones that have the biggest impact for you.
Virtual Models for small groups
There is no doubt that WebEx/Cisco and teleportation technology have become more sophisticated in the past 10 years. This equipment, still expensive to build out, allows companies to communicate across the world as if they were in the same room. But is is limited to a small number of people around the table and still inaccessible to the masses. More accessible, of course is Skype, which is really built on a 1:1 model and is great for 2-4 people communicating but relatively unreliable in quality still and not great for a full “room” full of people. Advances in large screen monitors (soon to be WALL sized) will likely change the ability of distant groups of people to communicate.
The place where all this is mostly to change is Facebook. With over 800M people, Facebook now represents the single biggest “meet up” locale in the world. Live chat features, ability to send video, and applications that connect like-minded friends. For example, the FB applet called “Branch Out” ties together people with similar business interests.
A 2010 start-up called Plancast has also hit the Silicon Valley scene recently. Plancast.com allows you to look for events online, but also to let others know which events you plan to go to. So those on the circuit – Dave McClure, Ron Conway, George Zachary (Charles River Ventures), etc, etc. are all posting their anticipated trips and attendances. What a tool for an entrepreneur who is trying to “meet up” with (or stalk?) a particular angel or venture investor!
MeetUp is an approach the blends the virtual and the physical – anyone can start or sponsor a meeting or gathering, post it and attract like-minded local people to the gathering.
For all practical purposes, still the only way to interact with hundreds of people to meet up is to shuffle off to an event and join the party. The good old-fashioned event (conference, seminar, gathering) still exists and has wandered into some new intriguing spaces. Events and gatherings, after all, can often be the catalyst to new relationships, new ideas and new connections in the mind. And, some of these events are taking on interesting twists.
Facebook, Apple, Google, GigaOm, and TechCrunch all hold interesting events for programmers (sometimes called “hackathons”) – Techcrunch has its Disrupt Hackathon, Facebook calls its event the “Garage” . Tim O’Reilly’s Foo Conferences have also been called UnConferences. There is no agenda set prior to the meet-up, but once people arrive they determine what topics and seminars are most important to those assembled.
On the non-technical side, a host of conferences around start-ups, innovation and technology have blossomed in the past few years…many of them featuring scores of speakers and panels on a variety of today’s topics; examples include Web 2.0, Always On, and TechCrunch Disrupt and Demo. Each region of the country typically has speaker-series hosted by a regional player – in the Bay Area, the best known is The Churchill Club (features top speakers from technology, innovation on single evening topic).
A good listing of global conferences on technology can be found here.
Social and Impact Get their Turn
One of my new favorite events is SoCap (Social Capital Markets) event, held each year in SF. I’m a newbie to this, but the conference itself has been around for many years, bringing together leaders in social/impact space, entrepreneurs and The event head-quarters are located in The Hub, in downtown SF, which today is a hot-bed of social/impact start-ups. Social entrepreneurship is a hot topic these days on college campuses, at events, and in mid-life crises.
Another event for social/impact space is the Take Action! Impact Investment event – held annually in SF, and bringing together investors interested in the impact/social investment space.
A relatively complete list of events in the Social/Impact space can be found on Socialbrite’s blog.
A missing gap in all this is Application of innovation to helping others. While events like TechCrunch Disrupt and might explore technology, innovation and trends, they do not talk about how these new tools, services and platforms can be used to help the bottom of the pyramid or those who most need it. In fact, trickle-down theory tells us that it will be many many years before today’s innovations reach those most in need .
Where Innovation Meets Social/Impact
A new model for exploring how today’s innovations can make an impact on the less fortunate in the world will be explored at The Intersection, a unique one-day extravaganza supported by Pixar, WorldVision and the Gratitude Network .
The Intersection is bringing together some of the country’s leaders in innovative thinking from a variety of sections and looking at the INTERSECTION of ideas as a means of finding solutions to large social issues. Susan Sarandon (actress) & Greg Brandeau (Disney) with perspectives from Hollywood; Steve Case sharing insights from government and entrepreneurship; Linda Hill, John Hagel III and Frans Johnasson (all respected authors) on their perspective on leadership and innovation; Ed Catmull (Pixar) and Tim Brown (IDEO) with their perspectives on creativity; and Chris Pitt (World Vision) and Guru Singh with examples from around the world of social innovation.
I’ll be moderating this event on January 14, 2012. The event will be intimate with only 350 in attendance. We have been fortunate enough to be invited to hold the event at Pixar’s world headquarters and studios. So, it’s not only a great collection of activities and speakers on the topic of innovation and social change but it will be held in a unique venue (complete with surprised throughout the event). Click here for Information about applying to the Intersection.
Thanks for joining us in our discussion about social entrepreneurship and impact investing. The goal is to be helpful to social entrepreneurs who will be seeking funding for their companies and investors who are exploring impact and social investing.
We would like to find out what topics you, the reader, would like to see covered in a blog on this topic?
Randy Haykin ~ May 16,2011
What’s the link between innovative start-ups and sustainability?
I recently worked with a group of executives from all over Europe in a 5-day session on Corporate Social Responsibility and Sustainability, held at Berkeley. Executives participating were from over 25 organizations in Europe, from small start-ups to large corporations such as oil companies. Presentations from each of the executives disclosed that there are a wide variety of ways that sustainability and CSR are being addressed by companies today – some are just getting started, while others have entire departments already thinking about how to build brand awareness, employee programs and new products in this area.
CSR and Competitive Advantage
There are several areas in which I can see that competitive advantage might be achieved through a company’s embracing of sustainability. First, brand perception within certain markets might be enhanced with a focus on sustainability. Starbucks, for example, long a leader in the specialty coffee market was one of the first large scale coffee manufacturer and retailers to embrace the concept of sustainable farming and “fair trade” coffee. Peet’s, a rival competitor to Starbucks was forced to shift its focus to this area as well in the early 2000′s when the community of Berkeley, CA, threatened to ban the sale of specialty coffees not certified for fair trade.
A company might also gain competitive advantage with sustainability through its people practices. Since many people want to work for companies that demonstrate social responsibility, a company’s ability to attract and retain top talent might by positively affected by focusing on sustainability and CSR.
A great example of this trend is a bank called Triodos Bank (www.triodos.com). The bank attracts applications from all over Europe and hires the best and brightest in banking. Triodos boasts to “Sustainability is in our DNA“. The company was founded in 1980 and now has employees in five European countries (England, Germany, Netherlands, Belgium and Spain). Triodos trains its employees in the cultural values of sustainability, transparency, excellence, and entrepreneurship.
Triodos also has developed a strong following for its brand among business banking clients (it claims to have 230,000 such clients as of late 2009), by ensuring that cash from these clients are invested only in projects related to social entrepreneurs , sustainability and community development. Few other banks in Europe can make this claim. And, while the bank’s assets are small ($4-5 billion Euros in 2010), it has strong growth and a compelling plan for continued growth in the future. The bank is only 4 countries now, so could easily grow 10-fold by expanding to other European.
Some companies experimenting with CSR make the claim that it enables their employees to be more productive. Google, for example, is famous for allowing its engineers to apply 20% of their work-time to passion projects – and many of these projects have a social focus. Employees who are allowed to happily pursue areas of interest will be more balanced, happy and productive employees. There is not way to measure this hypothesis, but for those employees who care about global sustainability issues, this would allow for alignment between work and passion.
Linking Innovation and CSR
Within companies building brand, programs and products around CSR and sustainability, there appears to be a lot of innovative thinking. These companies are recognizing the needs of consumers and trends in today’s global sentiments and adjusting flexibly to those needs.
Triodos, for example, is very innovative in its new product development. It listens to its customers, tests and develops new programs based on the needs of its constituents…and it seems to stay nimble and flexible in the process. So, the company innovates in the way that it incorporates client feedback, innovative in the way that managers collaborate and innovate in new products it offers. This innovation, in the areas of CSR allows it to remain profitable and competitive.
Salesforce has been a leader in social responsibility, creating Salesforce.com Foundation in its growth years just after going public. The concept revolves around “giving back 1% product, 1% time and 1% in equity”. As of this post, the company has put over $24 million into community and global impact projects, ranging from non-profit philanthropy to for-profit social businesses. The idea was the brainchild of Founder, Marc Bennioff who has personally been involved in civil service and social entreprepreneurship for years. Often companies that take on social responsibility in early years are simply reflecting the “roots” of their founders. No better example of this can be found than eBay. The company invested significantly in CSR with the acquisition of WorldOfGood in 2010. The Founder/Chairman of eBay, Pierre Omidyar, has used his personal wealth to fund Omidyar Network, which has given billions to social responsibility and sustainability programs and
Since 2006, Google China has sponsored the Social Innovation Cup, which is a national “competition aimed at empowering China’s youth to address pressing social issues through grassroots, innovative solutions.” Google.org, Google’s social venture and philanthropy organization was funded with $1 billion and has engaged employees in hundreds of engineering projects aimed at social innovation since 2004.
How early is too early?
Many start-ups practice social responsibility as a core component of their competitive strategy. For example, Twitter and Facebook have all had early efforts involving their employees involved in community-based responsibility programs. Biz Stone, CEO at Twitter, has been vocal about ways in which young companies can give back, without waiting until they become the next “Google”. Three years after its founding, Twitter partnered with non-profit Room to Read, as an example of social responsibility in a program called The Fledgling Initiative.
The trend is likely to continue in this direction. In the future, expect to see an emerging class of Social and/or Impact investors who will be looking to invest in companies that view social responsibility as a building block for their success.
Can you think of other examples of entrepreneurship and CSR? we’d like to hear about them.