Why integrate a social mission into your business?

You’re an entrepreneur with an idea and maybe a business plan, a small-business owner or the head of mid-sized company.  To expect you to add social purpose to your business just because it’s a good thing to do, is foolish.  You have a bottom-line and other obligations to meet.  You don’t have extra resources to allocate to ‘doing good.’

But doing good is a business strategy, not merely a moral argument or trend.  Businesses with a strong social mission have a competitive advantage.

1. People will talk. consumers, competitors, investors, suppliers and the press.
2. Increased productivity and employee morale.  People want to work for a greater purpose and want to know that their work makes a difference. Employees who are happier work harder and smarter because the work has become personal.  These type of employees are advocates for your company, not just employees of it.
3. Consumer preference. Consumers prefer companies that make a positive impact on the world.  Eighty-three percent of U.S. consumers want more of the products and services they use to benefit causes (2010 Cone Causes Evolution Study) and 62% of global consumers will switch brands if one works with ’good causes’ and the other does not (Edelman, 2010).
4. Innovation.  More companies like Nike, GE and Interface are using sustainability to drive innovation. Seventeen years ago, the late Ray Anderson, who served as Interface’s CEO, committed to becoming a zero-waste company by 2020. Since then, Interface has eliminated hundreds of millions of dollars in resource and waste disposal costs, increased sales by more than one billion and changed the way the entire carpet industry does business.
5. Influence.  Your company’s initiatives will be modeled as more companies realize the benefits of having a social mission.
6. Lower marketing costs.  Your mission will help your marketing. A line of grocery products founded and once produced by Paul Newman (Newman’s Own) is a somewhat banal story that merits only a mention in the press. The fact that the company donates 100% of profits to charity is a story that sticks, intrigues and encourages participation through purchase.
7. Talent recruitment.  People want to work for employees that care; a social cause is indicative of a favorable workplace.
8. Attract talent for less. Kevin Jones of Good Capital calls this “meaning premium.”   People want to work for a company that allows them to contribute to a greater purpose and are willing to be paid less for the opportunity (NB: this isn’t an argument for underpaying employees).
9. Attract young talent.  Teach for America is a top employer of exceptional college graduates. Last year 12% of  seniors at Ivy League schools applied to work with Teach for America, vying for one of the most challenging and low-paying jobs out there.
10. Talent retention.  When employees are part of a larger mission and feel their contributions make an impact in the world, they’re engaged, proud and motivated.
11. Savings in resource and disposal costs. You’ll save money by reducing energy, water and material consumption. Producing less waste and reusing water or materials costs you less to purchase and less to haul away.
12. Supplier advantage.  Stonyfield Farm pays its organic suppliers a floor price that won’t ever drop, protecting its suppliers from market swings and production hiccups. In return, when supply for organic milk or sugar outpaces demand, Stonyfield is first on the delivery list and is guaranteed a fair price because it’s built a relationship with its suppliers.
13. Risk management. Being in tune with your stakeholders alerts you to potential risks and helps you safeguard against them. An offshoot of this is that your company is better informed and positioned to identify new business opportunities.
14. Future-bound company.  Successful companies that others evangelize and model represent more than just a product or service. They represent a philosophy, culture or experience. When you channel this back into your business, you’ve made your competitive edge that much more edgier.
15. Fun.  Science proves what most of us know–making a difference feels amazing. We feel happy, enlivened and creative.

Your company (1, 5 or 200 employees) is the ideal size to run a purpose-driven business. Although larger brands get more attention for the resources they can bring to their campaigns your company holds an advantage.

1. You’re more agile. You can plan, execute, track and revise nearly on-the-fly. Less memos, less approval, less internal politicking diluting the programs.
2. You can take more risks with your social mission. You have less of a reputation to uphold. You can be a renegade, a heretic, recognized for your commitment to social change and your willingness to try new ideas.
3. You face less financial accountability. Smaller companies aren’t held to the same monetary expectations as larger ones. Your programs’ strength lies in their impact and effect rather than your company’s financial commitment.  A big brand cosmetic company’s one-time campaign cost $500,000 in an upfront investment to its partner charity, the cost of a micro-site and prize expenses, and delivered just a luke-warm impact. Your cosmetic company can affect people more directly by offering products and makeovers to women re-entering the workforce in partnership with a workforce re-entry program and your local Dress for Success chapter. Cost? In-kind only.
4. You have a fresher slate. Small companies are often seen as more personal, less greedy and less noxious. There’s less initial cynicism of your motives and choices.
5. You entice stronger non-profit partners. Smaller companies are rarely able to attract (nor should they try to) the top crust of non-profits.  With fewer wooers and less brand value, a regional non-profit will be more willing to commit time and labor to the project, as opposed to just a sliver of its name recognition.
6. You can galvanize your employees around your mission more easily. As companies need to convince consumers of their sincerity, they also need to convince their own employees. The smaller a company, the shorter this process. Employees help determine the social mission, shape it and execute it.
7. You have more of your customers’ attention.  Generally, the larger a company is the more we view it as a commodity and the less likely we are to see it as an educator or driver of good. Would you be more willing to support a pin-up campaign at Walmart or your neighborhood cupcake bakery? One of your advantages as a smaller business is the frequency of touch points that you have with customers. Use these opportunities to bring them into your mission through storytelling, contribution and advocacy.

Having a social mission is not a drain on company assets or a tangential program, it is a business strategy that yields a competitive advantage, which smaller companies can better leverage.

Coke, it’s everywhere. It’s in communities without electricity, running water or proper nutrition. Why? Because it’s an innovator in distribution, consumer analysis and marketing. What can the social impact sector (nonprofits, social enterprises, the public sector) learn from Coke that will allow us to save more lives?  Melinda French Gates asked this question during a TEDxChange talk and identified three strengths that nonprofits can model:

1. Taking real time data and feeding it back into the product.
Organizations should establish mechanisms for gathering and evaluating data during a project and be willing to let the findings alter their approach mid-project. Coke’s consumer insight team focuses on tracking and analyzing where, how frequently and by whom each product is being consumed. This information is immediately fed back into product development, distribution and marketing. With economic development, evaluation typically occurs after a project’s completed, when it’s too late to use the data to improve project outcomes.

2. Tapping into local entrepreneurial talent
When Coke noticed that individuals were buying product in bulk and selling it to harder to reach places, it started training local entrepreneurs and set up micro-distribution centers and a small loan program.  Today, 20 years later, 90% of Coke sales in Tanzania and Uganda are by micro-distributors.

NGOs should look for opportunities to facilitate local action and innovation and build in mechanisms that incent people based on how they’re impacted by the organization’s work.

3. Incredible marketing
Gates makes the salient point that nonprofits and governments (and all other breeds of social crusaders) make an assumption that if they think people need something, they don’t have to make people want it.  Profit-driven entities rarely make this assumption, instead convincing us through inspiration, guilt, identity or insecurity that we need something we may never have wanted.

I’ve written before about Mechai Viravaidya’s irreverent and highly successful marketing tactics. Viravaidya is the founder of the Population Community Development Association, a hybrid social venture that aims to improve Thailand’s economy through population control.  To destigmatize sex and family planning, the association held condom-blowing contests and Miss Condom beauty pageants and offered condoms in place of dinner mints at Viravaidya’s Cabbages and Condom restaurants. To inculcate safe sex, Viravaidya made his product the condom and he made it desirable. His approach was so powerful that the condom is known as a “mechai” in Thailand.

I’m not close to advocating that nonprofits establish Coke-like distribution channels or that they spend millions of dollars of funding on marketing, but too often the nonprofit and private sectors are too reactionary to the other’s ways.  There are lessons from companies that nonprofits can apply that will strengthen their impact, and equally, there are lessons that companies can glean from nonprofits (performance of mission, for example).

What other lessons can we learn from other sectors and what are our sector’s strongest successes that we can share?

Image credit: Tielman Nieuwoudt

I’m not the first to make the case that crowdsourced social good contests should retreat quickly into the night.

• They’re inefficient at creating change;
• Their current popularity has diminished the value they bring to companies and brands;
• Consumers are fed up with them (how many vote-for-me solicitations do you get a week that make you feel more like a brand pusher than a change agent?); and
• For the money and hoopla they involve, they should accomplish more than marketing the company and channeling money to (often unvetted and under-qualified) projects.

Whether you agree or not, the next question is, What’s the alternative?

First, it’s helpful to understand what these contests do offer. They’re big and loud. They attract participants, voters, supporters, media and millions of tweets, blogs and Facebook likes. Through this lens, they do provide bang for their buck.  And they only require what many companies excel at–assembling the resources to design and run a colorful marketing campaign and to write checks to the winners. Deep-root partnerships, familiarization with target communities and evaluation and reporting on the awarded funds aren’t required.

So the new question becomes What’s an alternative that can offer companies the same level of virality and visibility without skimping on substance?

Looking for an alternative campaign format is too myopic. Instead, companies should look at a broader level of engagement that supports social responsibility as a business (not just a marketing) strategy.  Admittedly, this sounds obvious, but how can companies do this and still get their marketing kick?

I suggest that companies focus on developing long-term partnership that support a social enterprise abroad. Transferring energies from internal competitions to external investments* allows companies to explore and develop for new markets (BoP populations offer significant market opportunities), test new products, improve resource efficiency and ensure ethical supply lines.  Even thought these partnerships take place outside of the United States, companies still have ample opportunity to relay their work with these communities to American consumers.

P&G’s Children’s Safe Drinking Water program, led by P&G employee Dr. Greg Allgood, is a strong example of a corporate initiative focused on external impact that’s successfully connected American consumers to its work in developing communities. An education portal and upcoming social media campaign to fund clean drinking water for its partner communities and veteran organizations tackling this cause are two storytelling mechanisms.

*This post is the current culmination of several conversations I’ve had with leaders in social enterprise and CSR over the past few weeks, as well as Tim Ogden’s evocative article, in which he talks about external investment vs. internal competitions.

What do you think? Maybe I’m biting off something too big to chew, but there’s something bigger and better than crowdsourced contests that needs to be wrestled down.

Click the player to listen to our conversation. Prefer MP3? Right-click and download.

Download audio file (Cause-Capitalism_Mike-Dupee.mp3)

Michael Dupee began working with Green Mountain Coffee Roasters after graduating college in the early 90s. At that time, the company was mid-point between its modest beginning as a neighborhood cafe in Waitsfield, Vermont, in 1981, and it’s current state as a publicly-trade company with six subsidiary brands and more than $715 million in revenue in 2009.  In 1996, Mike left Vermont and Green Mountain Coffee for his MBA and spent a couple of years with Goldman Sachs.  He rejoining the company as its Vice President of Corporate Social Responsibility in 2004.

Born into Vermont’s climate of sustainability, Green Mountain Coffee has always been kind to the environment. The company began composting in 1983, switched to biodegradable coffee bags for bulk purchases and started contributing 5% of pre-tax profits to social and environmental nonprofits in the mid-90s.  But the enterprise’s (and its employees’) sustainable habits didn’t count for a cohesive strategy (and at times worked against one).

So Mike’s first priority was to create an overarching strategy that would unite and further sustainability efforts.  ”The biggest problem was getting organized,” says Mike. “We needed to identify a direction that we could all work towards.”  After a lot of listening and acting as a “thinking partner,” Mike and his team created a company-wide framework that defined success in six areas:  supply-chain communities, local communities, environment, sustainable products, working together for change and the workplace.

If you listen to our conversation you’ll hear Mike talk about some of the specific challenges inherent in formalizing sustainability, his admitted initial error when working with supply chain communities and the best kept secret of many CSR departments.

More on Green Mountain Coffee’s CSR

• The company specializes in fair trade certified and certified organic coffee.
• Green Mountain Coffee offsets 100% of its direct greenhouse gas emissions.
• In 2007, the company opened a 10,000 gallon biodiesel fueling station at its Waterbury, VT, distribution center.
• Packaging for Newman’s Own Organic coffees is made from partially renewable materials.
• In 2006, the enterprise launched an all-natural paper hot beverage cup developed in partnership with NatureWorks and International Paper. The cup is lined with a bio-plastic made from sugar.
• Employees can choose to receive paid time-off to volunteer in their communities (up to 52 hours per year) or to earn a grant for a nonprofit organization by volunteering on their own time.
• Green Mountain Coffee offers all employees a stock purchase program and profit sharing options for employees in the specialty coffee business unit.
• The company was ranked #1 in “The Best Corporate Citizens” in 2006 and 2007.

Referenced in our conversation
Revelation to Action is an online, open-sourced competition, run through Ashoka’s Changemakers platform, to find and fund ideas and organizations that strengthen communities in the Northeast.

Like this interview? You can thank Mike on Twitter like this.

Honest Tea was created 12 years ago as refreshing, non-sugary alternative to soda and syrupy fruit juices and teas. The teas are all certified USDA organic, eight varieties are fair trade certified and the bottles are made from fully recyclable plastic. In 2008, Coca-Cola’s Venturing and Emergy Brands group bought a minority stake, for $43 million, in the company.  Coke’s purchase was influenced by consumer demand for healthier drinks.  The trouble started several months later when Coke noticed that the Honest Kids’ products prominently stated “no high-fructose corn syrup.”

Coke felt this reflected negatively on the majority of its products, which contained ample corn syrup, and pressured Honest Tea to change or remove the phrase. But Honest Tea co-founder Seth Goldman felt that the lack of corn syrup, as well as the tea’s organic ingredients, was central to the product. Coke’s suggestions (Honest Tea retains ultimate control over its products) went against the tea maker’s principle to provide consumers with products that are not highly processed.  The linguistic debate continues today (you can read more here).

Coke, and others like Unilver, Clorox and Danone, has acquired or bought shares in smaller sustainability brands as an entry point into the sustainable market segment. From an initital marketing perspective it makes sense. But that’s the problem. Sustainability is not marketing. And while you can market sustainability, you can’t fake sustainability that you don’t really believe in or stand for.

Coke hung a metaphorical banner proclaiming its social responsibility in front of a belching factory.  But as soon as the clouds parted and the leeching factory loomed up behind, Coke’s values and priorities were revealed, and they didn’t have much to do with honest-tea.