In addition on the investor point, the longer term thinking is also linked to both risk and reputational management perspectives - the more you know about a business the better placed it will be to manage the future…
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Totally agree Justin that “longer term credibility and legitimacy” are some of the key incentives businesses would have to target more positive social impact in future. I often think the degree to which a business is willing to target a positive social impact is directly linked to how far into the future the CEO/board is willing to plan for…in the longer run, everyone needs to be more sustainable in order to continue to turn a profit!
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I am Ignatius Odongo, a strategist and Managing Director of Entrepreneurship Journey PTY Ltd. and a partner of Youth Café, Kenya.
Question 2: What are the challenges of embedding societal innovation into the core business, and how can we overcome these hurdles?
Challenges:
• Buy-in from stakeholders
• Slow uptake of the initiative
• Limited (slow) immediate benefits
• High initial investments required, ultimately impacting the balance sheet
Dealing with the challenges:
• Creating awareness – aggressive marketing of the benefits/value of the solution to targeted audiences
• Phased implementation and adapting with new knowledge emerging
• Public-private-partnerships
• Deliberate/planned corporate social investment (impact investing)
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Agreed Anna, and even sometimes leveraging compliance and real or potential regulation is a very good way to get leaderships’ attention.
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One of the challenges of achieving societal innovation in business is the need for collaboration across industry, e.g. to agree on common standards or minimum wages. A ‘safe space’ is required where participants can freely discuss difficult areas without commercial inhibitions. In our Resilience in Flower Supply Chains project, led by Fairtrade and MM Flowers, such a safe space - with Chatham Houses rules - was developed for British retailers to discuss how they had responded to COVID-19 and how they could take forward lessons to create a more sustainable and resilient flower supply chain.
The outcomes of these roundtables, convened by Coventry University, has led to a commitment from the retailers to continue building societal innovation strategies through a permanent forum. In addition, the recommendations drawn from these sessions, as well as learnings from the project through its support to Kenyan flower farms, will be developed into a policy paper that make recommendations to both the UK and Kenyan government.
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Firstly, Lack of public policies and institutions supporting the growth and development of social businesses. This plays a key role in inhibiting their growth especially at a start-up level where they not only have to focus on growing the business but also navigating institutions that do not work in their favor. Secondly, access to financing and funding especially for small social businesses is a big challenge as they are unable to meet financial institutions collateral requirements. These challenges can be overcome through creation of awareness on the importance of social businesses in the economy with the aim of influencing policy and involvement and capacity building of social businesses in advocacy campaigns, Secondly, access to affordable funding channels will result in the scaling up of social businesses to a level where their impact will be widely felt.
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One challenge is that what is regarded as ‘success’ doesn’t always align with bringing about societal innovation. An energy company for instance, about to shut down a coal fired power station that is a key community employer, may have shareholders and senior management that view success as minimising losses - financially and reputationally. This will drive very different behaviour to an energy company who has a CEO and senior management team that have bonuses tied to just transitions or shareholders who see long term community resilience as a goal.
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Hi,
Just a quick introduction of myself.
Founding Director of Australia for Cedar Tanzania. We are registered in Australia as well as Tanzania.
Working holistically in rural Tanzania serving about 30,000 residents within healthcare, poverty alleviation, entrepreneurship and community empowerment.
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Clearly this is not always an easy path… We work with corporations willing to improve the economic, social and environmental situation where they operate. Yet, finding the right formula can be tricky:
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Lack of methodology to define, design and integrate innovative programs close to the core activity. Pilots are common but scaling ventures remain rare.
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Difficulty to build a business case and to assess impact-oriented investments, because societal innovation does not speak the same KPIs. How do we obtain insiders buy-in?
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Weak logistics capabilities to reach and integrate local entrepreneurs and their communities, especially around the First-Mile and Last-Mile.
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Limited knowledge and understanding of local communities, preventing appropriation and diffusion of innovative solutions developed by corporations
At FUNDES Catalyst, we try to contribute to the solution
We created FUNDES Catalyst, a social venture builder to start, accelerate and scale startups leveraging the power of MSMEs, in alignment with the agenda of the Sustainable Development Goals. We partner with corporations and investors to bring sustainable business models to life.
- Business rationale and impact model formalized from the beginning
- Monetization of networks and aggregation: aggregating demand and/or offer, operating from first-mile to last-mile
- Development of proprietary tech assets to reach the most vulnerable stakeholders with cost efficiency
- Co-design of innovative, long-term financing models that mix grants, debt, equity
One of the challenges, if not the core challenge, is to take social innovation beyond internal and external communications and beyond pilots or programmes to truly embed it in strategic and operational decision-making. Those “say” and “do” elements are important parts of embedding but to truly embed you have to get into the incentives, the budgets and the strategic priorities. We are often helping clients build the confidence (via data, benchmarking, analysis, workshops, etc.) to set strategic objectives and budget targets based on measurement frameworks that work across the business. For the team driving the process, it is a lot like riding a bike with no hands: you have to set the conditions and have the balance but you also have to let go!
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Thanks Asa for this clear example of how large organisations can support small entrepreneurs. This is definitely something we are trying to facilitate in our partnerships across the board, i.e. combining philanthropic and market based support where possibe to ensure sustainability and growth
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Another challenge is overwhelm and lack of capacity. An energy company shutting a plant down isn’t necessarily equipped with people with strong skills in participatory processes and network trust building. And it is easy to see trying to bring about structural systemic changes in even small communities as in the “too hard, not my remit” box even if the benefits are very clear. This is where good partnerships are imperative - and true abundance based partnerships rather than extractive ones where one organisation relies heavily on another for something they will gain the most from.
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Grassroots entrepreneurship embeds social innovation because it has to. Small-scale entrepreneurs spot emerging challenges and opportunities and seek to address them. For established players, especially in areas such as agricultural value chains, there is an existing system that needs to change and this can be difficult and take a long time. Smaller farmers or entrepreneurs are more adaptable, especially if the business case for doing things differently is clear.
Thanks Ignatius, the insights on marketing are particularly helpful. I am convinced the right marketing approach, and empathy building, is key to understand audiences and foster appropriation of new solutions.
Treat “societal innovation” just as you would any other part of the business or a business investment. A potential project or initiative will require the same level of professional discipline, due diligence, project management etc. Where the outcomes may differ is the timeframe, as well as the lens through which success is both measured and viewed. SI may enable tangible outcomes that have intangible benefits to other parts of the business (e.g. employee motivation).
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This is so true. There are so many that don’t get past the pilot stage because of that desire to grab the handlebars again! It’s not easy, but there are ways to be braver. What have you found that helps people have that courage?
I agree with you perfectly
Capacity for system thinking and action was already mentioned, but building on it here: social innovation, when done right, expands the universe of what the business needs to know and worry about. It is key to understand the ecosystem in which the business is operating and that is usually a lot broader than its supply chain and even its value chain. Mapping the system, plotting risks, spotting opportunities and finding new partners is a new challenge and a necessary step.
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With an organisation the size of IKEA comes both challenges and opportunities. Clearly if there is a big difference in size, it can be a hurdle and both partners will need to think and act in new ways.
To pilot new solutions one way is to do a a social innovation process involving key business stakeholders and social entrepreneurs. We for instance did that together with IKEA France. What are the main societal and business challenges that we are facing but can solve together? With IKEA France, a services ‘micro-hub’ was tested in central Paris with the social enterprise Carton Plein who hire, train and coach people experiencing homelessness back into society. Carton Plein refurbish and resell waste cardboard collected using electrical bike collection rounds. They train up and provide a space for the employees who receive support in finding their way back into the job market, who also get to earn an income from collecting the waste cardboard.
The social innovation process can be applied to many more areas where there is a social and a business challenge, not only at IKEA, but across other business sectors and societies.
At IKEA Social Entrepreneurship we capture and share our approach and learnings to be transparent with our learnings.
Very true Justin. We need to build capacity on systems thinking
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