I recently spoke on a panel about cause marketing at the Kellogg School of Management, where an MBA candidate asked a simple but fundamental question: “Who is driving cause in the marketplace, consumers or companies?” The answer: both. And things are about to get a lot more interesting. Marketers and brand builders take note: the future will be all about leveraging societal impact as a source of innovation and business advantage. Here’s a look at some key trends showing where things are headed.
We live in a time of expanding expectations, with people around the world increasingly demanding companies do more than just make money. Consumers, employees, investors and other key stakeholders are expecting corporations to productively use their assets—whether money, products or know-how—to drive meaningful societal impact. This pressure is pushing companies to act and provoking questions across organizations about the appropriate level of corporate commitment. Leadership companies are expanding their involvement, going way beyond basic actions to pursue strategies that are ripe with business and social opportunity.
Recent research by my firm shows just how high consumer expectations have reached. The 2011 Cone/Echo Global CR Opportunity Study found more than 80% of consumers expect companies to address key social and environmental issues. An overwhelming 94% say companies must evolve their business practices to make positive impact. Just a tiny minority—only six percent—say companies should only make money.
Responding to this pressure, companies are increasingly stepping up to drive positive change. Whether doing simple things to save resources (e.g., no-brainer operational changes like reducing waste), or taking things to the next level (e.g., integrating cause branding and advocacy into brand and business strategy), companies are leveraging their corporate assets to tackle pressing societal issues. This is dramatically shifting corporate social responsibility straight into the heart of business strategy, as companies leverage commitments to positive societal impact to create business advantage. In the process, companies are expanding the scope of their corporate impact and leveraging societal commitments to create new markets—two important trends likely to gather momentum in 2012 and beyond.
Expanding Scope of Corporate Impact
Companies are increasingly taking on expanded roles in their communities by moving to address societal issues historically viewed as business externalities. In the process, they are redefining traditional boundaries between the company and its external environment, resulting in a dramatically expanded corporate impact footprint.
Consider the case of a company that took a unique approach to make the communities in which it operates in Central America more resilient. Realizing that when extreme weather and earthquakes, which are common in the region, destroy poor workers’ makeshift dwellings, families become displaced and the company’s workforce suddenly disappears. The company worked to solve the problem by investing in sounder employee homes made of easily assembled, prefab, reinforced concrete panels. Here, a modest social investment by the company protects its people and supply chain, preventing lost revenue.
Another example: a manufacturing company operating in an unstable country where travel to work is dangerous is significantly expanding its corporate impact footprint to protect employees well before they set foot on company property. Recognizing that the local government is unable to act, corporate security undertakes elaborate daily operations, with large numbers of workers meeting at ever-changing locations for transport under heavy security, all on the company’s dime.
Leveraging Societal Commitments to Create Markets
Increasingly, companies are using innovative approaches that build brands and drive incremental revenue, while delivering positive societal impact. Take the case of Google in Africa, where the company is dedicating resources to develop what it calls “a relevant, accessible, vibrant and self-sufficient Internet ecosystem.” This means investing in infrastructure, incubating start-ups, nurturing developers and increasing local content. A giant step forward for Africa? Absolutely. Also for Google, which has identified Africa as a significant growth opportunity. Remember, for Google’s business model to work, it needs people using the Internet as a core part of life—all so they can sell those ads.
Another innovative example: the push by shoe giant Adidas to develop low-cost, functional footwear for consumers in developing markets. A pilot in Bangladesh is now being expanded to rapidly growing India, where Adidas will leverage its manufacturing and supply chain know-how to bring shoes to the market under its Reebok brand that are designed to be durable, functional and, most importantly, affordable (they are rumored to cost only $1 per pair). Call this philanthropic market creation.
Examples like these of blurring lines between societal impact and corporate self-interest point to an exciting, integrated future of business and social innovation. Consumers around the world are already there, holding a strong and overwhelming view that the role of business in society is to change it. Smart leaders will hear this mandate, integrating positive societal impact into the DNA of their brands and businesses to drive growth and advantage.