Making Money, Doing Good: How Innovative Businesses Create Social Change

People around a table collaborating on a project
 
 

Call it enlightened self-interest. As the story goes, Henry Ford, one of America’s most iconic entrepreneurs, paid his workers a living wage so they could afford the cars they helped produce. His reasoning? What good is a product if most people can’t buy it?

It’s a nice story, but probably wrong. As Forbes points out, even with higher pay the workers would have had a nearly impossible time saving enough for a Model T, and their collective purchases wouldn’t have meant much to the company’s overall success. More likely, Ford paid higher wages so he would have less turnover and better quality work.

In the end, though, it doesn’t really matter. Whatever the rationale, Ford’s decision created at least three winners: his company, his workers, and the society in which they lived. In a fairly basic way, he was modeling what a growing number of corporations are doing today on a world stage, using sophisticated strategies to effect not just the bottom line, but social change as well.

“Leading companies aren’t just redirecting profits by giving back to society through more traditional ‘corporate social responsibility’ (CSR) tactics,” said Robert Haynie, an impact-investing strategist based in Washington D.C., who works with governments, companies, nonprofits and others to develop cross-sector partnerships. “They are figuring out how to address social and environmental issues while simultaneously advancing their business interests.”

At the center of this new “social” enterprise (or purpose-driven organization) is the corporate communicator, whose own role has expanded far beyond the days when public relations meant sending out a few press releases. Now, how an organization communicates both internally and externally—to empower its workforce and collaborate with new partners—is integral to the success of its core mission. And because of this imperative, the corporate communications officer has become a key element in achieving this strategy.

As Haynie put it: “The communicator has to be at the forefront of this new reality by helping to translate between social impact and business objectives.”

“A Fundamental Shift”

CSR, which rose to prominence in the 1960s, ’70s, and ’80s, can mean many things, but it is widely thought of as the good things companies do to give back to society that are separate from their core business. Often, they do this through monetary donations to charities or in-kind contributions. But while CSR is still an important part of the corporate tool kit, Haynie is referring to something more ambitious: collaborating with governments, foundations, nonprofits, and other entities to solve social challenges in order to advance business interests.

He points to the experience of the Swiss food company Nestle, which in 2008 began exploring initiatives in three core areas related to its work: water, nutrition, and rural development. Noting the high incidence of iron deficiency anemia in Central and Western Africa, where it sold its immensely popular Maggi spice bouillon cubes for making soup, Nestle, after much experimentation, was able to add iron to the product without altering its taste. Short-term profits were sacrificed to cover part of the expense, but the company recouped it with increased sales and market share.

“This is a fundamental shift in business strategy,” said Haynie, who also teaches in the Georgetown University Executive Master’s program in Global Strategic Communications. “They’re not just reacting, talking about the good they’re doing in society.” Instead, they’re working to shape results though a “collective impact” approach by collaborating with a variety of players, who bring a diverse set of skills necessary to address a complex issue.

An Urge to Contribute

One reason for doing this is to attract talented employees. By 2025, millennials, those born between 1979 and 1999, will represent 75 percent of the workforce, and numerous studies show that these young people want to be able to make a difference though their work.

“Many millennials feel unable to exert any meaningful influence on some of society’s biggest challenges,” said the Deloitte Millennial Survey 2017. “But in the workforce, they can feel a greater sense of control,” as active participants rather than bystanders.

Another reason to engage is even more basic: If a society stagnates, so does business. But if society thrives—economically, socially, politically—business will prosper as well. Businesses are highly organized operations with expertise not found in other sectors. When society advances as a result of their efforts and those of other stakeholders, the businesses that are the most socially engaged stand to benefit the most.

“Companies that turn to collective impact will not only advance social progress, but also find economic opportunities that their competitors miss,” write Mark R. Kramer and Marc W. Pfitzer in the Harvard Business Review.

Haynie, of Georgetown, put it this way:

“When leading companies collaborate across sectors, it drives innovation and R&D, and helps grow the broader ecosystems in which businesses operate.”

Request Information