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CSIknowledge: Social Innovation in Business

Try doing a quick word association with corporate social responsibility (CSR).  What comes immediately to mind?  Philanthropy, volunteering, accountability, reporting, sustainability, and maybe the triple bottom line—these are the usual suspects.  Shared value?  The term is new but in practice it is a repackaging of “win-win” business models. If you’re looking for something more up-to-date, try googling the term “social innovation” under the “news” button. The results are interesting.
You’ll get about 79 million hits (versus 3 million for CSR) and be directed to Facebook, YouTube, and the web sites of Echoing Green, the Skoll Foundation, or the MPrize for innovations in managing. These sites are teeming with fresh and creative solutions to the same kinds of social and environmental issues that corporations are addressing through their CSR programs.

What’s different about social innovation? It is younger, bolder, more collaborative, less concerned with risk management and more so with making a difference. We have been watching social innovation practices and practitioners engage with business for several years now, and think they are beginning to make a big difference in how companies do CSR.

CSR in a state of “active inertia”

Everywhere we go, people say to us “don’t call it CSR.”  Why? They tell us because CSR is, well, just part of everyday business now. Indeed, recent surveys say that CEOs understand the business case for CSR, believe in it, and are investing more in it—throughout the value chain from their dealings with suppliers to their offerings to consumers, in all of their operations and, where appropriate, in recycling and reuse.

Progress on this front is undeniable and has to be a source of satisfaction and pride to CSR professionals and proponents. But here’s the glitch. Those same surveys report that CEOs are finding their companies’ efforts constrained by competing priorities, organizational complexity, and gaps in execution.  In other words, companies are pushing forward on CSR—just not very far, or very fast, or very effectively.

Taking stock in 2015, it seems that CSR is at an inflection point. Companies can continue to move forward incrementally, dotting the i’s and crossing the t’s, and CSR will become more or less “routinized” into business.

However, this routinization process has been studied by many scholars who conclude that it’s a recipe for disaster.  Don Sull, in his investigations of “Why Good Businesses Go Bad” in the Harvard Business Review, attributes their decline to “active inertia.”  In other words, they just keep on keeping on, insensitive to changes in the business context. And, in How the Mighty Fall, Jim Collins describes the implications as a “capitulation to irrelevance.” Is this where CSR is headed?

The new context

Consider the new context surrounding business. Since the turn of the century, business has lost the public’s trust, starting with Enron’s chicanery through to Wall Street’s misdoings. Oversized and undeserved executive bonuses keep the pot boiling. Occupy Wall Street brought into focus our widening economic disparity and social media are being used by everyday activists to transform “local” issues into global events.

Recent examples include:
McDonald’s raised wages for employees at company-owned stores but got F-bombed for not covering employees that work in its franchises;
Protestors in drought-stricken southern California formed a “human chain” to block Nestlé Waters from pumping water out of aquifers (for pennies) in order to sell it back to west coasties as bottled water (at a hefty profit).

Meanwhile, social-and-environmental problems, local and global, keep compounding. Obesity rates, climate-related calamities, declines in educational achievement, income gaps, and so on get worse rather than better. Sure it is affirming that business is greening itself, supporting causes in strategic ways, and becoming more transparent and accountable. But, sorry to say this in the midst of a victory lap, CSR as “just business” isn’t delivering enough for business or for society to keep pace.

So how does CSR reinvent itself through innovation? One of the classic concepts in innovation is the idea of “creative destruction” introduced by the economist Joseph Schumpeter who described it as “the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”

Now, we’re not recommending that companies blow-up their philanthropy programs, pole-axe their environmental initiatives, or do away with volunteering and cause-marketing—at least not this year. But how companies do CSR certainly needs some shaking up.

At its heart, successful innovation is about dramatically improving what currently exists or creating something completely new that is significant and useful. For CSR, this means reinventing practices to make them relevant in the new context and/or creating new ones that make a real difference.

This requires new voices, new ideas, new processes, and renewed passion.  And this is where social innovation fits in to CSR. Try googling Corporate Social Innovation!

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