CR 3.0: Good & Networked

Neanderthals, once regarded as the bigger, dumber, slower precursor to us Homo sapiens, might have actually been stronger, smarter, and faster than us. But the archeological record shows that every time Homo sapiens encroached on Neanderthal, Neanderthal eventually died out. The working theory: while smaller in both body and brain, Homo sapiens out-collaborated the more hermetic Neanderthal. Our principle competitive advantage as a species is our ability to collaborate. In fact, an increasing body of evidence across multiple fields of study shows that the propensity to collaborate has a profound impact on the success or failure of human endeavors, including corporate responsibility.

 

In a forthcoming study by the U.S. Chamber of Commerce Foundation, the research team (of which I was part) found that leaders in corporate responsibility are borrowing a number of lessons from other parts of business on collaboration in general and on how to use “network effects” in particular. Business functions, from marketing to supply chain management, use network effects to unleash the potential of their full value chains. Now it’s CR’s turn.

 

The research points to the emergence of CR 3.0. If CR 1.0 was “do good because it is good,” and CR 2.0 was “shared value—do good in alignment with your business strategy,” then CR 3.0 is “networked value—do good in alignment with your business strategy and tap into the power of your value chain and social network to create greater social and financial net worth.” By doing so, CR executives can follow their peers from other parts of the business by leveraging several characteristics of modern network effects:

 

Visibility. Now more than ever, thanks in part to tools like LinkedIn, Twitter, and more, our networks are increasingly visible to us and others. If you haven’t yet, try LinkedIn Labs’ Network Map which quite literally builds a visible map of your networks. It uses a series of complex algorithms to determine the connections between different people in your network and clusters them accordingly, showing your different “worlds” of affinity and connection.

 

Vital Connectors. Network maps reveal the value and impact of connectors—those that sit at the intersection point of different networks. In ancient times, vital cities such as Timbuktu sat along the spice routes, quite literally connecting East and West. Today, key individuals and organizations span different “worlds” connecting us to one another. The Timbuktu-like people that connect your different worlds together have a peculiar power precisely because they span different worlds. In a recent article in Harvard Business Review, disruptive investor Whitney Johnson showed how the really big insights and breakthroughs almost always come from people working across multiple fields, not by being steeped in one. These vital connectors not only facilitate communication, they are the source of breakthrough innovation.

 

Instantaneity. On December 17th, 2010, Mohamed Bouazizi, an unassuming Tunisian street vendor, went to his local municipal office and lit himself on fire. Social media spread the word, and within hours protests broke out across the country and region. Self immolation is not new, nor are spontaneous protests. The difference today is time-compression—people around the region and around the world knew about Bouazizi’s act almost as it was happening.

 

Mobilization & Scale. Not only did people know about Bouazizi’s act, they did something about it on a grand scale. Within months, the Arab Spring was in full bloom, and long-reigning autocrats tottered or toppled. Network effects have greatly increased the ability to mobilize people into action and from there to magnify the scope of their impact on almost unprecedented scales.

 

These network effects have created the conditions for CR 3.0, with profound implications for how companies, NGOs, and governments should think about corporate responsibility. One of the principle lessons of CR 1.0 was that companies do not exist in isolation from society or the environment. Each impacts the other and “externalities” are an illusion. Ignoring the pollution downstream or a human rights violation lurking in a third-tier supplier will come back to bite you. One of the principle lessons (and allure) of CR 2.0 was the potential for additional revenue generation in “do-gooding.” By listening to the underlying values of customers and investing in suppliers, companies realized they could create high value products and services that attract new customers at a premium.

 

CR 3.0 builds off of more than just these realities. American companies, for example, have more than 95 percent of their potential customers living outside the United States. At the same time, government spending on development projects has declined. These are the types of projects that build roads, ensure rule of law, power our infrastructure, and transform development recipients into customers and customers into markets. Increasingly, companies and NGOs fill the gap left by the decline of these government projects, not out of the goodness of their hearts, but as part of their CSR 3.0 strategies.

 

“We don’t do philanthropy,” said DSM North America’s President Hugh Welsh at the U.S. Global Leadership Coalition’s (USGLC) annual conference on June 25th, “this is our business.” Welsh’s company is part of Partners in Food Solutions (PfS), a public-private-civil partnership between Cargill, General Mills, Royal DSM, Buhler, and USAID to strengthen food supply chains in Africa. In 2008, all of these companies came together to form PfS. Their objective was to create an organization that would make long-term investments in Africa. While PfS might not have an immediate payoff for the sponsors, they see it as a vital tool in their ability to grow within the region.

 

“We’re the best in the world at designing the next generation of aeronautics,” a senior aerospace executive told me recently, “but it takes 30 years for us to develop these products, and we have no idea where the markets will be 30 years from now. . . . I think it’s Mozambique, but it might be Mali,” she continued. “That’s why we need strong relationships with folks like USAID and NGOs on the ground in those countries now, helping us build up the social capital we need so that when we do come to market, we’ve got the relationships we need.” That’s CR 3.0: using the broad reach of your company’s network to open minds and open markets.

 

It’s not coincidental that a number of the leading conferences on corporate responsibility have started to examine these network effects. The COMMIT!Forum (October 8-9, 2013 in New York City) has always had the idea of cross-sector collaboration at the core of the commitments it calls on companies to make. The U.S. Chamber of Commerce Foundation’s Business Civic Leadership Center (BCLC) is hosting its own event on the “Network Effect” (October 9-11 in Washington, D.C.). Interestingly, an organization previously on the periphery of CR, the U.S. Global Leadership Coalition, has launched a “Smart Power Innovations Campaign” to highlight how companies, NGOs, and governments are using their respective value chains to solve big problems around the world while creating value for shareholders and taxpayers here in the U.S.

 

But it’s not just the dyed-in-the-wool CR types who are thinking about network effects. On his recent trip to Africa, President Barack Obama announced his “Power Africa” initiative. Under this program, the U.S. government will invest $7 billion to help bring 10,000 megawatts of power generation capacity to Sub-Saharan Africa. Electricity, he said, is “the lifeline for families to meet their most basic needs, and it’s the connection needed to plug Africa into the grid of the global economy.” Not only is this a literal investment in growing a network, it also creates a new network of governments, NGOs, and private sector companies. The $7 billion given by the U.S. will be matched by $9 billion in private sector investment from companies such as GE. The U.S. government, like most governments, is unable to front all of the expense for projects such as these anymore. Private partners are needed to fund the creation of market-sustainable solutions.

 

Oliver Bell, Microsoft’s chief technology officer for the international public sector, recently told me about Microsoft’s “White Space Project,” a major part of their 4Afrika Initiative. The White Space Project takes unused portions of the television spectrum, so called “white space,” along with solar-powered base stations to bring wireless broadband internet connections to rural Africans. The program is currently being piloted with the Kenyan Ministry of Information and Communications and Kenyan internet service provider Indigo. Microsoft didn’t join this network of governments and NGOs to just “do good.” Without broadband internet, Africans have little use for Microsoft’s products.

 

In the same way that Homo sapiens out-collaborated Neanderthals, CSR 3.0 leaders are forging new pathways to prosperity; turning their networks into net worth. By bringing all their assets to bear—supply chains, brands, philanthropy, and more—companies can out-collaborate their peers, solving big social problems while creating value for shareholders. That’s the ultimate competitive advantage.

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