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Good Business

A young animator had figured out a new way to streamline the animation process. He approached the Information technology, Communications and Entertainment (ICE) practice at MaRS, a "convergence innovation" centre located in downtown Toronto, to help him commercialize his idea. He was given access to market intelligence, skilled and experienced mentors, networks and opportunities to raise capital - and thus BitStrips was born. But, because he came to MaRS and not a standard business incubator, he was asked to think about his business through a "social innovation" lens. Does this process allow people to create their own avatars? Yes, that's the whole point. Could students do this? Absolutely! Do you think you could create a product that schools would be interested in purchasing and that could help students? Why not? We just hadn't thought about it before.

The outcome: a new market opportunity is opened and their largest client is the Toronto District School Board (and more recently other school boards in Ontario) who are using BitStrips for Schools, a newly designed product wherein students can create their own avatars to tell stories using comic strips. Students are now using the comics to learn another language; French doesn't seem so intimidating when it involves cartoon characters talking to each other. The animation process is used to reduce bullying, as it is a safe way for children to tell stories, even painful ones. And the result is a whole new level of engagement to increase literacy rates. Hardly an intended consequence of the comic strip development process, but one that bodes well for the future of the company and of the students who are using the product.

This is what we call a "double-bottom line" business. One that is clearly focused on making a profit, but it also has a social bottom line, in this case, increased literacy and decreased bullying rates.

The new way

In the old way of thinking, the bifurcated world of business and social good would never meet. One side of the continuum would be occupied by charities doing good and surviving on government grants and philanthropic donations, and the other side would see companies who only care about making money. But the world does not work that way any more. Charities and not-for-profit organisations (or NGOs) are working hard to increase their own sustainability and lessen their reliance on declining grants and donations. Many grants come with "strings attached" and are given for designated purposes. These funds are essential, but they can also be problematic in that they direct what the funds may be used for and they may not give the organisation the flexibility they need to meet the changing needs of clients. The outcome: many organizations are finding ways to generate income that will ensure funds are flowed to support their social mission. Some high profile examples include Habitat for Humanity who run ReStore, retail outlets where they sell surplus donated building materials that can be purchased by consumers who are renovating their homes; the YMCA who offer fitness programmes for a fee for health conscious enthusiasts and free or low-cost programming for those in need; and Me to We, a for-profit arm of the charity, Free the Children, that sells organic, fair trade clothing with 50 percent of the proceeds being fed back to the charity.

On the for-profit side we have businesses moving from thinking only of the single bottom line (profit) to those who capitalise on what they understand to be their "social license to operate". Some businesses meet that obligation through donations to charities, which is great as charities need these funds to realize their mission and they depend on donations from corporations to do their work: think donations to local children's hospitals or the United Way.

The win-win combination

Other companies, particularly those that are more progressive, are also thinking about their opportunities to create social impact as a part of their business. By moving along the continuum to corporate social responsibility (CSR), which may include aligning business needs with social needs. One example is Johnson & Johnson who support Safe Kids Worldwide. This corporation understands their consumers and their desire to keep their kids safe so instead of funding every request that comes their way from charities, they strategically align their support to this specific cause. And the support goes far beyond writing a cheque. They provide executive level support to assist with marketing and branding; they sponsor learning events; and they have picked a flagship event - Safe Kids Week - that includes leveraging their shelf space in retail stores and flyers to display safety messages.

Many other corporations are thinking about corporate social innovation (CSI) or, as Michael Porter and Mark Kramer call it in their 2011 Harvard Business Review cover story on reinventing capitalism - creating shared value (CSV). They see the issue as follows: "Capitalism is an unparalleled vehicle for meeting human needs, improving efficiency, creating jobs, and building wealth. But a narrow conception of capitalism has prevented business from harnessing its full potential to meet society's broader challenges. The opportunities have been there all along, but have been overlooked. Businesses acting as businesses, not as charitable donors, are the most powerful force for addressing the pressing issues we face. The moment for a new conception of capitalism is now; society's needs are large and growing, while customers, employees, and a new generation of young people are asking business to step up".
Porter and Kramer site the work of Cisco, a global innovation company, and their Networking Academy as an example. The Networking Academy was established to meet a business need - the lack of administrators trained on Cisco's products. Cisco then established over 10,000 academies in over 165 countries that trained over four million students. The outcomes: 70 percent of those trainees now have a better job, increased responsibility and/or increased income as a result of taking this training. The quintessential win-win outcome. Cisco gets their business need met and the trainees benefit through better social and economic outcomes.

The alternate approach

Thinking this way is also critical if you are concerned about engaging young talent. Talk to anyone in their twenties and you will find they are very articulate about their desire to work for a company with a clearly outlined approach to corporate social responsibility. It is simply an issue of employee recruitment and retention. For example, many established businesses accept that to retain talent the business needs to be engaging in human resource policies that promote social participation through volunteering and some even give their employees time off to volunteer. This may sound like a "nice to do" but in fact, what we see is that employee loyalty increases. And with such a mobile work force, retaining top talent is something we should all be concerned about.

Our corporate structures have not kept up with this demand either so we are seeing a demand for new corporate structures that reflect this desire to achieve double or triple (environmental) bottom lines. For example, the UK now has Community Interest Companies (CICs). These are described as follows: "Community Interest Companies (CICS) are limited companies, with special additional features, created for the use of people who want to conduct a business or other activity for community benefit, and not purely for private advantage. This is achieved by a "community interest test" and "asset lock", which ensure that the CIC is established for community purposes and the assets and profits are dedicated to these purposes. Registration of a company as a CIC has to be approved by the Regulator who also has a continuing monitoring and enforcement role".
The US has Low-profit, Limited Liability Corporations (L3Cs). "An L3C is a for-profit, social enterprise venture that has a stated goal of performing a socially beneficial purpose, not maximizing income. It is a hybrid structure that combines the legal and tax flexibility of a traditional LLC, the social benefits of a non-profit organization, and the branding and market positioning advantages of a social enterprise. The L3C is designed to make it easier for socially-oriented businesses to attract investments from foundations and additional money from private investors".

There is also a trend to B Corporation certification, which "is to sustainable business what Fair Trade certification is to coffee or USDA Organic certification is to milk". There are currently 650 B Corporations in 19 countries representing 60 industries. In addition, the US has recently enacted Benefit Corporation legislation in 12 States with 14 others working on it. "Benefit corporations are exactly the same as traditional corporations except for three little things that make them game-changers: higher standards of purpose, accountability, and transparency".

These new corporate structures recognize that, in addition to the demands on not-for-profits to think about revenue generation on one side and for-profits to think about creating social impact on the other side, there are actually companies that exist with an embedded desire to make money and make a difference as part of their articles of incorporation. Companies who are oriented to doing good and as a result doing good business.

At MaRS we urge companies to consider how their product or service can be used to meet a social (or environmental) need while generating income. It is our belief that this is not only the right thing to do, requiring us all to think about our future in a ways that considers the economy, society and the environment, it is also good business. One that leads to new market opportunities and increased sustainability. We do hope you will join us as we believe ignoring this trend may leave you far behind in a very competitive and global market.




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Allyson Hewitt leads the social innovation programmes at MaRS including the Ontario node of the national initiative, Social Innovation Generation (SiG@MaRS). She is also establishing the MaRS Solutions Labs, a change lab designed to tackle complex challenges. She last worked at SickKids where she led Safe Kids Canada. She was also the Executive Director of Community Information Toronto where she initiated 211, providing streamlined access to human service information. For this work she received the Head of the Public Service Award and several other prestigious awards for meritorious public service. Allyson's academic background is in Criminology, Law, Public Affairs, Voluntary Sector Management and Organizational development including Leading Change.
Published on 26-02-2013 13:59 by David Tee. 1083 page views

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