Social Innovation in Business

Let’s do a quick word association with CSR.  What comes immediately to mind?  Philanthropy, volunteerism, 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.  So, if you’re looking for something new, search the term “social innovation.”  You’ll find over 430 million hits (that’s one-third more than for CSR!). 

Could social innovation soon be top-of-mind in the CSR lexicon?

What is on our minds this end-of-year month:  Where is the “new” in CSR?  And could social innovation soon be top-of-mind in the CSR lexicon?

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 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. 

Looking ahead to 2012, 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,” attributes their decline to “active inertia.”  In other words, they just keep on keeping on, insensitive to changes in the business context.  And Jim Collins, in his new book on “How the Mighty Fall” 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” business issues into global events.  Examples:  Bank of America raises its fees on debit cards and gets F-bombed on Facebook.  Lowe’s pulls its ads from a reality TV show on Muslims, then actor Kal Penn tweets, “Our next movie: "Harold & Kumar Do Not Go To @Lowes”” and launches a protest petition.

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. 

Reinventing CSR though Innovation

Throughout this past year, we’ve argued in this blog that “a crisis is too important to waste”and that the time is right to make CSR and sustainability “real priorities”for business.  But to keep on like this risks active inertia on our part.  So let us turn our attentions in the year ahead to reinventing CSR through innovation.

Innovation is active, not reactive, creative, not routinized, and aimed at breakthroughs, not incremental change. 

Innovation is active, not reactive, creative, not routinized, and aimed at breakthroughs, not incremental change.  This is what society needs in the teeth of tough and intractable social-and-environmental problems and it is what business needs to reestablish trust and to reinvigorate its leaders, employees, and many stakeholders.

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 in the first quarter of 2012.  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.

Toward Social Innovation

What happens when you click on websites found under the term “social innovation?”  You find sites featuring social entrepreneurs starting NGOs to address community needs and social issues, small business owners who describe their company as a “B Corporation” or “social business,” virtual networks of young people sharing ideas about progressive social change and its practical manifestations, and academics and engineers talking about new models and methods of innovating through, say, design thinking and stakeholder charrettes.  Suffice it to say, there is lots of stuff bundled into the field of social innovation and the landscape is anything but coherent.

They are exchanging tips on cradle-to-cradle product designs, on linking employees to customers in brand communities, on multisector partnerships to address business-relevant social issues, and so on. 

Keep browsing and you come across chat rooms and blogs featuring self-styled social intrapreneurs who work inside companies to reshape the culture and launch innovations.  They are exchanging tips on cradle-to-cradle product designs, on linking employees to customers in brand communities, on multisector partnerships to address business-relevant social issues, and so on.  Dig deeper and you’ll come across sustainability skunkworks, social innovation labs, and experiments applying biomimicry to business. 

In short, these are new voices, new ideas, new processes, and the passion that can drive social innovation in business.  Let’s jump-start the reinvention of CSR in 2012.  Best wishes to all.