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"Franchising" CSR: The Future of Corporate Social Responsibility?

"The key isn't to replace current strategies but to view CSR as a product, working to make interventions simpler to deliver and to communicate, especially in difficult operating environments."

Submitted by: Guest Contributor

Posted: May 16, 2014 – 09:45 AM EST

Tags: csr, community development, philanthropy, emerging markets, entrepreneurship, ibm, coca cola, general electric


By Andrew Mack, Principal and Founder, AMGlobal Consulting

Let’s say your company has just entered a new market: oil production in an African country. As the head of community relations in that country, what approach should you take?

Most likely, you would choose to follow a path similar to others before you: conduct some research, talk to the community, develop partnerships and spend a good deal of time and money implementing a well-meaning social program.

Sounds reasonable, right?

Sure—but there’s significant room for improvement.

That’s where a new approach is now gaining traction, one we like to call “franchising” CSR.

Entering New Markets

Let’s stay with the example of your oil company in Africa. Taking the traditional approach, you might help fund a local clinic, donate school supplies Entering New Markets Timeor promote biodiversity research. You could also pursue large-scale partnerships with carefully vetted NGOs, universities or other groups, funding priority areas they’ve already identified.

In most cases, you would be helping the local community. But you might also be taking the more difficult approach.

First, these efforts would cost you a lot of time. Researching different options, talking to potential partners and determining frameworks for implementation can take hundreds of hours—including a lot of time from managers and executives, a particularly valuable resource during the period of initial market entry. Time (and complexity), more than money, is often the biggest cause of inaction.

Second, this approach can be really expensive. Research and development costs aside, many companies either need to staff up to participate actively in projects (which are generally outside their areas of expertise anyway), or write big checks to support social programs run by partner institutions. Real impact often comes at a correspondingly high price.

Lastly, many of these efforts aren’t particularly cohesive: a donation here in one sector, a partnership there in another. It’s good to maintain flexibility in response to local community needs—but a localized approach can be hard to align with a company’s overall business strategy, and very hard to scale.

Despite growing recognition that companies should do community outreach work that points back to them—something that fits both their skills and the brands that brought them to a new country—it’s hard to move away from reactive, more charity-focused work.

But if companies like Coca-Cola and Unilever sell the same product in vastly different environments, why can’t we borrow from this approach when creating CSR strategies?

Franchising CSR: The Network Effect

Let’s look at what this means in practice.

“Franchising” CSR starts with identifying common needs across the geographies where your company works: health care or employment, The Network Effect Ripplefor instance. Then you would choose interventions that best fit your business and capacities, leveraging existing expertise wherever possible. You’d employ a modular approach that is smaller-scale and lower-risk, building projects that are easy to replicate.

The goal: to create a kind of “network effect,” making it easier for projects to get funded internally and be understood by the community, while enabling the company to build muscle memory around these modular activities.

This way you're not just investing in individual CSR programs—you're investing in a CSR system that's replicable and efficient.

Some companies have already adopted elements of “franchising” as part of their global CSR strategies. For instance, General Electric's “Developing Health Globally” program, although large in scale, looks basically the same in the 14 countries where it’s been implemented. GE works with health ministries to identify the most needy local hospitals and clinics and then provides tools and training to improve capacity—similar procedures, goals and partners worldwide.

IBM's Corporate Service Corps—which sends out groups of employees worldwide to address key problems in developing countries—is also highly replicable, and can be adapted to a variety of local needs. Many other firms have adopted similar kinds of secondment programs, even if the interventions themselves still seem a bit all over the map.

The key here isn't to replace current strategies, but to view CSR as a product, working to make interventions simpler to deliver and to communicate, especially in difficult operating environments.

So let’s revisit your situation in Africa.

In Practice: Choosing the Right Program

Your company has found oil and you need buy-in from local community members. Expectations are high, and you know your company, due to the nature of oil extraction, cannot hire a lot of local labor.

Fortunately your company has developed some “franchise” programs as part of your global CSR strategy. You get community input and choose the right one—in this case, say, an entrepreneur-training program that incorporates soccer. (Entrepreneurship addresses unemployment, a problem in most developing countries, and soccer is highly popular in many of the same regions.)

You implement the program according to a set framework, making necessary adaptations but keeping the game plan more or less the same. The community, your employees, and even the press know what to expect, and theKids playing soccer time from intent to value is shortened for the benefit of all.

By using the same template as you have in other countries, suddenly you have a viable network of projects and a simple social brand that can bring different parts of your network together. You can benchmark data across the system, allowing you to fix problems and perfect program strategy much more easily. Partners and co-financers are more eager to sign on to a known entity: a reliable, cost-effective model that brings demonstrated success.

And, of course, just imagine the buzz you’d generate with a regional soccer tournament linking all the communities—and company offices—that shared the entrepreneurship program.

Without question, elements of this movement are already in the works—the current state of CSR in many emerging markets is already improving. But with more companies adopting a “franchise” approach, the future state of CSR could be even better, with benefits extending to communities, governments and companies alike.

About the Author:

Andrew Mack is the founder and principal of AMGlobal Consulting, a firm that specializes in building business and social value in emerging markets through CSR, partnerships and market entry strategies. A former World Bank Task Team Leader and finance professional, Andrew has worked in over 70 countries and has nearly 30 years of experience in international business and development.

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

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