There’s a market at the bottom of the economic pyramid valued at $5 trillion dollars.  But the real allure of this market, at least for me, is the opportunity to help its 4 billion people access healthcare, educational and basic living services.  How can businesses access this market and how can they do it without exploiting the market’s individuals?

This question led me to Unmesh Brahme who focuses on how companies can become involved in base of the pyramid (BoP) business as a way to alleviate poverty. But what really sold me on Unmesh as an interviewee for Cause Capitalism is his combined experience in international corporate social responsibility and cause marketing (he set up Ogilvy & Mather’s and HSBC’s sustainability programs in India) and emerging economies through work with Oxfam and the World Bank.

Unmesh gave a fantastic interview, sharing a cause marketing campaign he led that took place on farms rather than supermarket shelves, offering up entry points to the BoP market for businesses and speaking about his shifting perspective on sustainability, CSR and management education. It’s absolutely worth a listen.  Right-click and download for the MP3 or click the player below.

Download audio file (Cause-Capitalism_Unmesh-Brahme.mp3)

I’ve highlighted specific points below, which I hope will draw you into the larger conversation.

• Unmesh led an interesting campaign with Castrol in India. By asking Castrol, What’s your brand problem? he realized that they lacked brand saliency with farmers during draught times (Castrol sold motor oil for farm machinery). Instead of investing in TV, print or radio advertising, Castrol used its marketing budget to help farmers conserve rainwater.  The outcome was increased brand awareness and preference among rural communities and increased water supplies.
• Until recently, Unmesh thought that the true mark of a sustainability company would be its elimination of a CSR department.  Conversely, he now he sees the need for an executive level CSR/sustainability function (on par with a CFO) to advocate and influence social responsibility, particularly when it may conflict with short-term profit.  In one word, this role might be described as a ‘challenger.’
• CSR should be removed from corporate communication or community affairs to be more operational, to influence internal decisions rather than external perception.
• Companies looking to engage BoP markets need to understand the purchasing power of these markets and align their services with local income levels.
• Critically, if companies see BoP populations as only a market to sell to, they’ll likely exploit it.  They should first look closely at local social and environmental needs and then develop relevant products (affordable housing vs. televisions, for example).
• Unmesh suggests answering these questions as you consider creating a BoP business or product:
  • Can consumers pay for your product/service over a sustainable period of time?
  • Is a community-based ownership model a viable solution?
  • How has the community approached the relevant issue (electricity and water supply, housing, healthcare, etc.) over time?
  • What’s the community’s level of social/environmental acumen?
  • How can local NGOs and the government support and contribute?

If you like this interview you can thank Unmesh on Twitter like this.

About Unmesh Brahme
Unmesh is the founder of U:Reciprocal Sustainability Group and the co-founder of Climate Civics Institute, an initiative he developed as a Yale World Fellow.  He set up HSBC’s microfinance and climate portfolio in India as senior vice president of corporate sustainability.  Before that, Unmesh ran Ogilvy & Mather’s CSR program, where he worked with USAID, Unilever and Castrol.  You can follow Unmesh on Twitter at @UnmeshB and read his blog.

BoP figures taken from World Resource Institute.

Can Microsoft count social good among its top products?

It’s a hard question to answer (for starters, defining and measuring social good is tough) but a fair question to ask in the context of Microsoft’s employee culture of social involvement.

Last year, employee giving and company matched funds totaled nearly $90 million. Volunteer time is matched at $17 per hour; employees can earn up to $12,000 in matched funds from Microsoft every year.  There’s also a growing tradition of social enterprise among Microsoft employees and alumni. Former employees have founded and offered leadership support to more than 150 nonprofit organizations and social ventures, while a crop of current employees balance work with running their own nonprofits, among them Givology, Jolkona and CRY America.

How much of a hand does Microsoft have in influencing this culture of social participation?  My assumption was, a lot. But when I spoke with Akhtar Badshah, Microsoft’s Senior Director of Community Affairs, he painted a more nuanced picture.

Microsoft nurtures a culture and creates incentives that encourage employee giving and volunteering, but the process is organic, says Akhtar.  ”We provide the framework [Microsoft runs a large database of activities and opportunities that all employees can access] and employees decide how they want to engage.”  The $17 per hour match motivates employees to come back and report their work, which Akhtar and his team can then track.

Each October, when Microsoft runs its employee giving campaign, staff and organizations canvas for support on campus. Competitions, speakers and auctions help to engage employees in new organizations and spur donations, but it’s primarily employee-run. Microsoft provides access, incentives and encouragement, and employees leverage this as they want.

When I admitted that the organic nature of this program countered my perception of Microsoft as a supremely structured company, Akhtar said that the type of structure depends on a company’s overarching culture. It works for Microsoft because “we have role models here. We create an atmosphere where people feel they can do this type of thing and make a difference.”

Akhtar shared the following strategies that companies (perhaps with fewer resources) can apply:

1. Match your work to your DNA. For Microsoft, it’s using technology to bring about social change.
2. Start small and focus on one thing. “There’s nothing like success to help drive you.”
3. Look for ways to affect genuine change in the community, but do it with your core competencies.

You can read more from Akhtar on Microsoft’s Unlimited Potential blog and follow him on Twitter at @akhtarbad.

Microsoft has something up its sleeve.

A roiling, innovative and effective CSR strategy, which, even among CSR wonks, has gone largely unnoticed.

Over the past weeks I’ve had the opportunity to speak with several executives in Redmond, Washington, and Buenos Aires, Argentina, helping to shape Microsoft’s corporate citizenship strategy.  Admittedly, I went into these conversations expecting an exchange drenched in PR-ese and trumped up sound bites. Instead, I got an inside look at how Microsoft uses technology and partnerships (with global NGOs, governments, vendors and employees) to drive social change that left me impressed and eager to share some of Microsoft’s techniques.

When I spoke with Dan Bross, Senior Director of Corporate Citizenship, I had two immediate questions:

1) Why hasn’t Microsoft been more vocal about its citizenship programs (from skills training for unemployed Americans to mobile banking in Africa to public cellphone booths in Haiti)? And,

2) What can other companies learn from Dan’s experience building Microsoft’s corporate citizenship program?

Microsoft formalized its corporate citizenship initiative in 2003. Over the past seven years Dan says, “We have chosen to use resources to develop and improve programs, rather than talking about them.”  Fair enough. It’s a sound strategy to build the community clinic before cutting the ribbon. Based on my conversations and recent media, it seems it’s ribbon-cutting time as Microsoft looks to raise awareness for its programs and serve as a guide for other companies.

So what can you and I learn from Dan’s experience forming Microsoft’s corporate citizenship strategy?

• Understand your company’s values, mission, products and services.
  “Very clearly and early on, we determined that we could make the biggest difference in addressing societal challenges in the areas of skills training, workforce development and education,” says Dan.
• Tap appropriate internal stakeholders to co-create the program.
  Since Microsoft’s efforts would focus on skills training, workforce development and education, Dan reached out to colleagues in community affairs and the education and partner groups (which oversee skills training and work with Microsoft’s 700,000 global business partners, respectively) to provide feedback and insight from their work.
• Look at opportunities and challenges to determine what to prioritize then develop a timeline.
  Dan and his colleagues developed an annual, two-year and four-year execution plan.
• Focus on the outcomes.
  Take workforce development. Dan says it’s easy to count the number of people trained or number of downloads of Microsoft’s curriculum under its Elevate America program, “But what those metrics don’t tell us is the outcome associated with the training that someone may take. Did he or she get a job? Was it a better job? How long did he or she keep the job? Did it pay better than the previous job? We need to understand these outcomes so we can improve the program.”  Measurement is tough. Even Microsoft, a company that has a combustible level of combined IQ and resources is partnering with the academic community to look for more effective ways to measure outcomes.
• Develop citizenship/CSR heads in each office (if applicable).
  Microsoft has citizenship leads in each of its 110 subsidiaries. Based on Microsoft’s global priorities, these leads develop programs that meet the needs of their local communities. Jorge Vega Iracelay, who directs Microsoft’s citizenship initiatives in Argentina, prioritized job creation through skills training and access to computers. Jorge and his team are working with the national governments, more than 100 NGOs and over 300 suppliers to meet their goal of creating 45,000 employment opportunities and bridging the digital divide by bringing computer access to 38 million Argentineans by 2015. Dan says this approach allows for flexibility; headquarters provides the strategic guidelines, but there’s room for each subsidiary to approach local issues uniquely.

Across functions and regions, Dan was able to thread together a comprehensive corporate citizenship program that guides initiatives in 110 countries and touches 85,000 employees. When you look at the breadth of programs that Microsoft has, of which I’ve just named a few, you realize how impressive this task was. Still, Dan admits it wasn’t without its missteps.

“We did not fully appreciate the interest our employees had in this work [when we formed the program] in 2003.  And quite honestly, we did not fully communicate [our citizenship initiatives] as aggressively or as thoroughly as we should have.  Over the past seven years we have devoted increasingly more resources to share how our citizenship work joins with our business goals and objectives.  Now, we regularly hear from employees who aren’t shy about sharing how they think we can be doing a better job with our citizenship efforts.”

Within the world of social enterprise, there’s a subsect of organizations that help incubate and scale social ventures.  These entities, from veterans Ashoka and Echoing Green to young buck Unreasonable Institute, play varying roles of investor, connector, teacher and trend-chronicler of a rising-star sector.

To look beyond the magazine gloss and speculation and get a macro perspective on social enterprise in the United States, I spoke with Lara Galinsky, Echoing Green‘s senior vice president.  Lara joined the organization seven years ago after directing program development for Do Something.

Lara spoke about a visible shift in the backgrounds, ages and experiences of social entrepreneurs and a pop in hybrid business models. These figures are taken from a recent survey of 300 Echoing Green semi-finalists from the past four years.

• Social entrepreneurs are getting younger. In 2009 70% of Echoing Green’s semifinalist pool was under 35 years of age.
• Increasingly, more social entrepreneurs are coming from business, and less from the nonprofit sector. From 2008 to 2010, there was a 13% increase in semifinalists who had worked in the for-profit sector or had been self-employed (49% of the pool). During this same period, semifinalists coming from the nonprofit sector decreased by 15%.
  ..
  Lara points to several possible reasons. Business is moving beyond CSR to double and triple bottom-line ventures, B Corps and purpose-driven businesses like TOMS Shoes. The millennial generation’s expectation that businesses contribute to social change is accelerating this shift.

• More entrepreneurs are structuring their ventures as hybrids. In 2010, 37% of Echoing Green’s semifinalists structured their venture as a hybrid organization, while 8% used a pure for-profit model. In the past three years, semifinalists launching nonprofit organizations has dropped by nearly 20%.….
  ..
  Many of the hybrid models operate as nonprofit organizations with earned-income activities that help fund their work. More Echoing Green ventures are also attracting venture capital, rather than just philanthropic funding.

• The uptick in social enterprise is global. In recent years, Echoing Green has received a greater number of proposals from American and international entrepreneurs with global ventures. In general, this seems to reflect a shift in looking for broader, systemic solutions rather than localized community solutions. Although Echoing Green still supports community-based ventures, it’s seeing more national, multinational and global programs, says Lara.
  ..
  Last year, Echoing Green received 1,100 applications for 16 fellowship spots. So I asked Lara how she developed her Spidey sense to identify the entrepreneurs with the greatest potential. Echoing Green selects its fellows from the intersection of three circles, which represent evaluation criteria:

1. Entrepreneurial skills and demonstrated leadership. Is the individual a serial entrepreneur? Has she started something before, even if it’s been on a small-scale?
2. Is the idea new and intelligent? Lara looks for a “fierce relationship between the person and his or her idea. It’s more than passion. The idea’s shaped from the many pieces of his or her life experience.” Often, they aren’t looking around to start something, but they have an idea that they have to implement to feel fully in their life.
3. Is the organization new and can it attract capital? Does the person have the capacity to build a new institution?

Unconsciously, Lara balanced our discussion of trends and business models with philosophy at the end of our conversation. “Whatever you focus on will grow. This environment is all about positivity because it’s about solutions.”  To me, this reflects social enterprise’s innate balance between heart and mind.

About Echoing Green
Through a two-year fellowship program, Echoing Green identifies individuals with ideas for social change and gives them seed money and support to launch new organizations in education, youth development, health care, housing, human and civil rights, environmental conservation, the arts and economic development. Since 1987, the nonprofit has invested $27 million to help more than 450 social entrepreneurs in 40 countries.  Teach for American and City Year are two organizations launched through Echoing Green’s fellowship program.

You can follow Echoing Green on Twitter at @EchoingGreen.

In this 7-minute clip, Better World Books President and CEO David Murphy talks about the company’s fiduciary commitment to its nonprofit literacy partners and how it received funding, initially with an SBA loan and later through Good Capital, a social investment firm. Right-click and download for the MP3.

Download audio file (Cause-Capitalism_David-Murphy.mp3)

Distributing books Tanzania, 2006. (L to R) Michael Retzer, then-U.S. Ambassador to Tanzania; Pat Plonski, Executive Director of Books for Africa; David Murphy, President and CEO, Better World Books (Courtesy of Better World Books)

Better World Books has several rare characteristics. It’s a for-profit social venture with a true triple-bottom line. It gives stock options to its nonprofit literacy partners. And it’s received $4 million in equity investment in a round led by Good Capital.

Better World Books collects and sells used books online to fund literacy initiatives worldwide through its five nonprofit partners, Books for Africa, Room to Read, Worldfund, the National Center for Family Literacy, and Invisible Children. Books are shipped carbon neutral with offsets from Carbonfund.org, and those that don’t sell are kept out of landfills through a certified recycling program. Today, Better World Books collects tens of thousands of books per day, given to the company by college students, libraries and other individuals.

The company promises 8-10% of its revenues, not profits, to its literacy partners. President and CEO David Murphy explains that Better World Books makes a fiduciary commitment to its partners so that when a book sells “it’s a liability on our balance sheet, regardless of whether we make money or we don’t.”  Beyond this, which is the basis of Better World Books’ mission and its origin, the company wanted its partners to be able to share in its success.  So with Good Capital’s encouragement and guidance, Better World Books created a mechanism to give stock options and a board seat to its literacy partners, turning them into shareholders and giving them a voice in the company.  David and co-founders Xavier Helgesen and Christoper Fuchs diluted their own options to creat the pool.

Each year the five organizations are evaluated on how well they met their objectives and supported Better World Books; they receive additional grants for high performance, which they can use without restriction.

By turning its nonprofit partners (which many companies would think of as just charitable beneficiaries) into shareholders, Better World Books ensured that its social mission brought an economic value to the business, which would preserve the mission in the case of a buyout. Kevin Jones of Good Capital who helped structure the deal calls it “mission insurance.”

At the time of this post, Better World Books has diverted 33, 951,415 books from landfills and raised $8,446,480.37 for literacy and education by selling used books.  And it’s profitable, earning more than $48 million in revenue and growing at 30%.

If you like this interview you should thank David on Twitter like this. You can follow Better World Books at @BWBooks.