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A Q&A with

Jason Saul

Q: WHAT MAKES SOCIAL INNOVATION PROJECTS DIFFERENT FROM COROPORATE SOCIAL RESPONSIBILITY PLANS? WHAT WOULD YOU SAY ARE THE TOP DIFFERENCES?

A:  Most CSR plans are about managing risk and doing good.  Social Innovation is about profits and business strategy, first and foremost, and social change as a means to those business ends.  Social Innovation has 4 key components

1. Intentional Business Strategy

2. Leveraging the Core Business

3. Creating New Value

4. Positive Social Change

It’s not about making the business more relevant to socially responsibility; it’s about making social responsibility more relevant to the business.  

Q: THE WSJ RECENTLY RAN A PIECE ARGUING THAT CSR IS DEAD. DOES THIS HOLD TRUE FOR SOCIAL INNOVATION TOO?

A: WSJ Article written by Professor Aneel Karnani argued that there is an inherent tradeoff between solving social problems and making profits.  Social Innovation argues that there is a third way, that the very path to profitability depends on solving social problems. The notion that CSR as a business strategy is ineffectual is correct.  However, the notion that the argument that social change is a key profit driven business strategy has never been more alive.  For example GE’s HealthyImagination strategy is solving healthcare issues and projecting revenues of 2-3x the US GDP and Vinod Khosla’s  recent 117 million dollar windfall from the IPO of SKS in India are examples of just how alive Social Innovation strategy is.

Q: ARE YOU SEEING COMPANIES IN A PARTICULAR FIELD OR INDUSTRY RESPOND MORE SWIFTLY OR MORE POSITIVELY TO THE IDEA OF SOCIAL INNOVATION VERSUS CSR PROGRAMS?

A: The idea of Social Innovation is more a function of management and vision than industry.  However there are a number of key industries that are completely rethinking their approach to CSR. Industries ike banking, financial services, extractives and pharmaceuticals.  I think these industries are probably most ripe for social innovation.

Q: WHAT ARE THE LEADING COMPANIES IN THE U.S. TODAY THAT HAVE DEVELOPED OR ARE DEVELOPING SOCIAL INNOVATION PROGRAMS?

A: I think this a trend that is still emerging but there are some companies that are getting it right.  I think Jeff Immelt at GE is a great example of finding creative ways to drive business growth through social change.  Both his EcoImagination and  HealthyImagination programs  are projecting revenue in the billions.  CocaCola’s manual distribution centers in Africa are already generating half a billion dollars annually. And  Unilever’s Shakti initiative is generating $ 100 million annually.

Q: ABOUT HOW LONG DOES IT TAKE FOR A COMPANY TO SEE THE PROFITS YOU TALK ABOUT? HAVE ANY OF THE COMPANIES YOU WRITE ABOUT IN THE BOOK SEEN THIS BENEFIT YET?

A: I think it depends. WellPoint within 1-2 years of launching its Tonik Product acquired 780,000 new customers who were formally uninsured and GE’s EcoImagination contributes $17 billion a year to company’s top line. At the same time other initiatives might be more capital intensive.  For example Tesco’s Fresh and Easy Neighborhood Markets have required hundreds of millions of dollars of upfront investment and aren’t expected to be profitable until 2013.  However, the long-term payoffs are expected to far out way the upfront cost. Already Tesco’s U.S/ business has increased by 47%.

Q: HOW DID YOU CONDUCT YOUR RESEARCH FOR THE BOOK? ARE THE COMPANIES PROFILED YOUR CLIENTS?

A: We analyzed the business value of social strategies at more than 30 Fortune 500 companies.  The research was conducted over a five year period, using meta-analysis, primary data collection, focus groups and in-depth interviews with senior leadership.  The research identified the subset of companies that showed direct business results from social strategies, and then isolated/determined common elements and capabilities among those strategies to determine the five categories/strategies of social innovation/strategies. In the subsequent concept testing phase, we conducted a broader landscape analysis and literature review to identify other corporations pursuing social innovation strategies.

Q: DO YOU THINK COMPANIES ARE LOOKING FOR SOMETHING TO REPLACE THEIR CSR PROGRAMS, OR DO MOST FEEL THAT “IF IT AIN’T BROKE, DON’T FIX IT”?

A: Social innovation is designed to be a new business strategy more than a way to “fix” CSR programs.  At the same time, because of their strategic importance and increasing budgets, CSR departments are under pressure from shareholders and management to demonstrate value to the business.  This requires a more market-driven approach to social change, and new ways to leverage the core business to achieve social and business objectives.  This book is as much intended for business units, marketing departments and corporate strategy leaders as much as for CSR and philanthropy managers. 

Q: HOW HAS OUR INCREASED INTEREST AS A CULTURE IN “SOCIAL GOOD” HELPED SPREAD THE SOCIAL INNOVATION PHILOSOPHY?

A: The trend is not so much about public interest in doing good as it is about the increasing economic value of solving social problems.  Solving healthcare, education, environment, health lifestyles and global development problems are all multi-billion dollar market opportunities.  It is the economic currency of social outcomes that is driving interest in social innovation.  It is as much about doing good as it is the need for corporations to find new growth opportunities.  These social problems are now presenting themselves as major economic opportunities for businesses.  It is not just an idea of doing good  but there is a real market driver for what we call doing good.  Doing good is no longer just another way of saying that we’re meeting unmet market needs. 

Q: WHAT DO YOU THINK ARE THE MOST IMPORTANT FACTORS A COMPANY MUST CONSIDER WHEN FORMULATING ITS SOCIAL INNOVATION PLAN?

A: First companies must identify their key business objectives.  Social Innovation always begins with a clear business driver.  Secondly, a company should analyze the social issues that intersect the business.  These are social issues that offer opportunities to value creation.  Third, companies must identify their core business assets that can be leveraged to solve social problems and create value. And finally, companies need to innovate.  Companies can do this by developing sub-market products and services, entering new markets, investing in talent pipelines etc..

Q: HOW HAVE COMPANIES DECIDED IN THE PAST WHAT SOCIAL PROBLEMS THEY ARE GOING TO FIX?

A: Typically, companies have looked at social problems as an impediment to business growth not an enabler.  Moreover companies have viewed classic social issues as homelessness, the arts, hunger, and education as an externality. But today, companies are using a different lens to view social issues and social innovation provides a way for companies to use their profit motive to affirmatively address social needs instead of seeing society as a tax write-off. 

Q: HOW CAN THE PRIVATE SECTOR HELP THE FEDERAL GOVERNMENT WITH SOME OF OUR MOST DIRE PROBLEMS TODAY?

A: Many of the gateways to positive social change require creating economic opportunity.  In announcing the administrations’ first Global Development Policy  President Obama stated as much: ”To unleash transformational change we’re putting a new emphasis on the most powerful force the world has ever known for eradicating poverty and for creating the opportunity…broad based economic growth.”  In other words the US Government now realizes that it cannot achieve its goals without the private sector.    From my research there are 3 specific ways that companies can partner with government to solve social problems. 

1) Job Creation (education and workforce development)

2) Investment in Infrastructure and Economic Development

3) Increasing Access to Vital Products and Services.

Q: HOW CAN NON-PROFITS BENEFIT FROM SOCIAL INNOVATION PROGRAMS THAT COMPANOES PUT INTO PLACE?

A: Nonprofits can benefit in three ways. First, Social Innovation offers nonprofits a more rational allocation of resources meaning companies are going to invest in nonprofits that help them achieve their outcomes.  Second, the outcomes that nonprofits produce which historically have been viewed as “nice to have” by companies is now vital to the company’s prosperity.  And finally, companies offer nonprofits a potentially transformational delivery platform for effectuating their social strategies.  In this way corporations may well be the ultimate answer to many of the problems faced be nonprofits.