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Bridging Shared Value with Impact Investing & Social Enterprise: Highlights from the Corporate Impact Innovation Workshop at SoCap

Why don't we see more collaboration between global corporations, impact investors and social enterprises?

Submitted by: Guest Contributor

Posted: Nov 19, 2013 – 09:00 AM EST

Tags: impact investing, business, collaboration, innovation, socap, idev, social enterprise, socent, sri

 
Patricia_chin_sweeney_headshot_8-23-13

By Patricia Chin-Sweeney

In the more than seven years after Michael Porter and Mark Kramer’s seminal article “Strategy & Society: The Link between Competitive Advantage and Corporate Social Responsibility” in Harvard Business Review heralded in an age of “shared value” and strategic alignment of CSR and core business interests, why aren’t we seeing the collaboration and convergence between businesses and the “impact sector?” At this year’s Social Capital Markets Conference (SoCap), the largest convening of global impact investors, I-DEV International and SoCap launched the Corporate Impact Initiative to bring global corporations and leaders from the impact sector together to explore these questions.

I-DEV International works with both the impact sector and global corporations to build and grow globally-competitive and sustainable businesses in emerging markets. We have seen firsthand the power and impact that cross-sector collaboration can have when done well. For example the coffee industry we know today (and the coffee we drink) would not exist without close collaboration and support from the impact sector- USAID, Technoserve, Root Capital, FairTrade USA, etc. Collaboration between total and social enterprises, D.Light and Greenlight Planet, has led to increased access to lighting in slums and off-grid communities throughout Africa and Asia, while GE’s partnership with Embrace, has resulted in a low-cost, low-energy solution to reduce infant mortality among premature babies in India. But far too often corporations and the impact sector develop their impact strategies in parallel, completely SoCap13 Photodisconnected silos that often limit effectiveness. So, why does collaboration remain the exception rather than the rule?

I-DEV sought to uncover this mystery and catalyze change through a series of panels featuring successful high-growth partnerships between social enterprises and global corporations; corporations who have built social impact into their mission; and advisors who shared examples of successes, failures and lessons learned from past and for future collaborations. The culmination was a closed, invitation only workshop that brought leaders from the corporate and impact worlds together to uncover existing bottlenecks and to brainstorm on solutions. Participants included heads of partnerships and emerging market strategy for Google, Unilever, Grupo Bimbo, Gap, etc.; corporate advisors from Saatchi & Saatchi S, FSG, BSR and Natural Logic; and impact players including Acumen Fund, Bamboo Finance, ANDE, Omidyar Network, Inter-American Development Bank, World Bank, USAID, OPIC and more.

The Workshop: Breaking Down Silos & Fostering Collaboration

The workshop sought to answer three key questions:

  • What are the biggest challenges inhibiting greater collaboration between corporations and the impact sector – impact funds, social enterprises and their funders;
  • What are potential solutions;
  • And, what role can each actor play in addressing these challenges?

To facilitate open discussion and break down professional silos, workshop participants were asked to engage in interactive session to foster creativity and uninhibited honesty – something often restricted in the workplace or public sessions! For example, our Stereotype Speed Networking exercise forced participants to step outside of their professional roles and role play as another to uncover the common personality or organizational traits that create collaboration bottlenecks.

Ultimately, six key challenges emerged:

1) Misalignment between incentives (e.g., financial or social returns) and risk tolerance; 2) Lack of awareness of opportunities for potential partners; 3) Confusing organizational structure/processes that make navigating corporation or DFIs challenging and slow; 4) Language barriers or different lexicon/acronyms used; 5) Mismatches related to scale and impact potential; and, 6) Lack of tools & resources to facilitate collaboration or shed light on potential opportunity or impact investing collaborationfinancial returns.

Incentives (reward) and risk tolerance misalignment was by far the most common challenge mentioned. At the root of this, DFIs and corporations are well-funded to conduct R&D, but only “love innovation…if it has been done before” or if there is high potential financial return. However, DFIs and corporate CSR/sustainability teams face considerable political and PR risk, which makes moving fast and taking chances on out of the box impact strategies – in particular, “disruptive strategies” – challenging. Unlike the operational side of a corporation, where creative destruction and innovation is rewarded, often CSR/sustainability teams have more restricted budgets and less upside potential reward or accolade. Furthermore, there are limited high-profile examples that highlight corporate impact strategies that have generated financial returns or savings that appeal to the CFO or budgeting arms of the company.

Meanwhile, social entrepreneurs have the ability to take on high risk and can comfortably pilot new business strategies and technologies. What they lack is the experience, market knowledge and sufficient capital to develop their ideas into viable businesses. Too often, entrepreneurs are forced to shoe-string innovation and reinvent the wheel. Closer collaboration between industry, impact investors (who also have a fairly high risk tolerance) and social enterprises would leverage the expertise, market knowledge and insights on scale that corporations bring to the table. It would also help social enterprises grow faster and develop products, services and business models that help mitigate risk for corporations; build champions for their work within the corporation; and ultimately improve the strength of the investment for impact investors.

…So how do we begin change this?

Next Steps

The workshop and panels highlighted an ongoing need to foster cross-sector engagement and showcase successful examples of collaborations, and thus, the unique role that advisors can and should play in facilitating these types of activities. As a next step, I-DEV has committed to working with leading corporate advisors like Saatchi & Saatchi S, Natural Logic, BSR and FSG to review their existing corporate clients’ impact strategies and map out potential opportunities for win-win partnerships with like-minded impact investors and social enterprises.

Additional take-aways from the workshop include hosting similar forums or workshops, as well as developing related tools to educate corporations, DFIs and foundations on the opportunities and upsides to cross-collaboration and to facilitate organizational intra-preneurship. For example, developing financially-based research and business case studiesbusiness collaboration that demonstrate meaningful bottom line returns, resulting from “risky” cross-sector collaborations, as well as incorporating panels and workshops on cross-sector collaboration into leading industry conferences will get the attention of a broader corporate audience, including the C-suite, R&D and in-country management.

For those who are interested to learn more, the overview of the 2013 BSR Conference panel, which featured Jason Spindler, I-DEV’s Managing Director, as well as Green Mountain Coffee Roasters, Novartis and SoCap, can be seen here: “Maximizing Investments for Social Impact.”

About the Author:

Patricia Chin-Sweeney is co-founder and Africa Director of I-DEV International, a management strategy and innovation firm, specializing in emerging markets and impact strategies. Patricia leads I-DEV's Insight group, which advises corporations, foundations and impact investors on investment, R&D and supply chain development that simultaneously achieves scalable socio-economic and environmental impact. She has spoken on water, conservation enterprise, impact investing and corporate engagement at leading conferences, including the Social Capital Markets Conference. Patricia previously worked in investment banking and consulting for the infrastructure sector, and she has an MBA from NYU's Stern School of Business.

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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