Musings: 2008

I had the opportunity to attend a fantastic conference on Sunday – Harvard Business School’s 2008 Social Enterprise Conference. I wanted to share some highlights and a few learnings from the conference with you all, as it was one of the best conferences (content-wise) that I’ve ever attended. Grab a coffee before you read this one, as it’s a bit lengthy.

My exhaustive notes are below, but the entire conference got me thinking about putting together a simple CSR Report – would certainly be an interesting task to take on.

Keynote by Jan Egeland
(Former UN undersecretary general for humanitarian affairs and emergency relief.)
• Egeland shared the history of some international conflicts where he had been a chief negotiator (Israel/Palestine, Sudan, Columbia, etc.,) and some of the success stories he’d had the chance to be a part of.
• Most notably – the world’s response to the Indian Ocean tsunami and the Pakistan/Kashmir earthquake. In both cases, the global response was massive enough to supply enough food, shelter, etc., to quell any increase in mortality beyond the regular annual tolls (excluding the actual event).
• He also talked about climate change as a human rights issue – using Darfur as an example where improper land use has resulted in one of the world’s worst humanitarian crises. I’ve heard a lot about this “environmental rights” issue recently from a good friend of mine who works for Oxfam. They are really leading the conversation on this issue and questions like “should more developed nations be legally liable for environmental damage that results in poverty in lesser developed nations?”
• The direct connection between humanitarian and “green” issues has made me think twice. I will make a eco-conscious choice when it is just as easy, but not when it is more of a sacrifice. “Helping people” has always been my thing, but drawing the link between climate change and people is eye-opening for me.

Panel #1: The Growth of Corporate Social Responsibility: Is it Sustainable?
• Moderator: Herman “Dutch” Leonard, Co-Chair of the HBS Social Enterprise Initiative; Eliot I. Snider and Family Professor of Business Administration; George F. Baker, Jr. Professor of Public Sector Management, Harvard University
• RAPHAEL BEMPORAD Principal & Founding Partner, BBMG
• ROBERT GLASSMAN Co-Chairman & Co-Founder, Wainwright Bank & Trust Company
• ALEX HAUSMAN CSR Reporting Manager, The Timberland Company
• CARLY JANSON Social Impact Director, Boston Consulting Group

In this panel, was lots of chatter around how CSR work also has to make sense for the bottom line, which is conventional wisdom by most people in this field these days. I have heard Raphael Bemporad, one of the panelists, a few times in my former non-profit life, and was excited to hear him speak again – very impressive presenter. His firm has conducted some research (in an anthropological study format) on segmenting “conscious consumers.” Two concepts that I thought were valuable:
1. The example of a “box turner.” Someone who doesn’t believe the “organic” (or low-fact, etc.) label on the front of the box and turns it over to read the ingredients.
2. The importance of practical trade-offs. They used a woman in her 50’s who tries to eat local food, recycle, etc., but uses a week killer that she knows is bad for the environment because she is old and it is hard for her to bend over and pull weeds in the garden.

The panel also brought up Hannah Jones from Nike Corporate Responsibility and used one of her programs as an example: as they have been pinged for factory violations in the past – they have actually put cameras on the shop floor! They have acknowledged there are problems, they are trying to solve them and welcome any better ideas that anyone wants to share. (I have yet to find those camera feeds online…) Timberland has added a “nutritional label” to their shoeboxes that gives information about the environmental and social impact of buying their shoes. I can’t imagine how much work this would be to do, but I am watching to see how consumers respond and if this idea spreads beyond Timberland.

There was lots of “devil’s advocate” talk around how companies can enforce international human rights labor protocols in their factories without harm to their bottom line. Interestingly enough, when I spoke with kids at a local high school last week – though it wasn’t exactly my topic – they had tons of questions around this topic as well. I think corporations have an opportunity here to provide practical, exemplary leadership and be more up front about exactly how much these efforts cost them…and sharing best practices for being responsible without breaking the bank.

Another speaker on this panel was from Boston Consulting Group. This woman had begun a CSR advisory organization of her own, then came on to lead “Social Impact” work for BCG. Turns out, they were already doing lots of this work, more than their competitors, but believed it was best to not talk about it. However, they were getting beaten out by groups who were known to have a specific non-profit consulting practice (Bridgespan). They are working on sharing this work externally now, but it is a slow transition.

Core themes:
• Need for humility in this work. Consumers are smarter than you think. You have to actually DO this work first, before talking about it. You have to be able to back up your rhetoric with action.
• Bottom line rule of thumb – the spend on the actual good works has to be more than the amount spent talking about them.
• CSR vision MUST come down from the top. Social entrepreneurship and values leadership are inexorably linked.
• The rise of the values-driven entrepreneur and conscious consumers.
• Also lots of conversation on Coke’s new “green” focus and their desire to make water preservation their” issue.” Makes sense for them – no water = no Coke. This is a good example of a “socially-aligned business initiative,” if they actually follow through.
• CSR work can be done at any company. The structure might look different – it can be centralized or spread through organizations, but needs to accrue to bottom-line company strategy and be part of the brand conversation. Not as a message on the marketing plan, but actually woven into the company’s being.

Panel #2: Profitable Social Impact
• Moderator: V. Kasturi “Kash” Rangan, Malcolm P. McNair Professor of Marketing, Harvard Business School
• COLIN BRADY (HBS ‘04) COO, (Product)RED
• CLIFFORD HENRY Associate Director, Procter & Gamble Global Sustainability
• ZLATA HAJRO Associate, Microfinance Institutions Group, Morgan Stanley

Another fascinating panel sharing examples from institutions who have managed to profit in this social/sustainable space. Less focused on academic/theoretical discussion, more on each company’s experiences and challenges.

(Product) RED
• Close to four billion people live on less than $5 a day. One billion live on less than $1 a day. (I have heard many variations on these stations – all estimates, but shocking no matter how you slice it.)
• 4400 die daily in Africa due to lack of access to drugs that exist. RED’s goal is to catalyze for-profit entities to meet this need.
• In the last 1.5 years, RED has been able to share $100 million with The Global Fund (created for public/private partnership). Prior to that, the private sector had only contributed $5 million.
• Their idea is to create a sustainable positive stimulus for people who participate in a RED transaction. If you are told, “if you don’t buy this product, babies will die in Africa” you will buy out of guilt. If you are told “buy this and you get something cool and help someone who is suffering,” you feel good about it and hopefully keeping coming back.
• In initial discussions on partnership, Gap said “sure, we’ll make one RED t-shirt and give you all the money.” RED said “no, we want you to make money too – 50% of the profits – go back to the drawing board.” They ended up with 150 Gap/RED SKUs!
• They also work on the prevention side – preventing HIV/AIDS transmission from mothers to babies with a drug that costs $0.20USD/day – taken by pregnant and nursing mothers. (300,000 mothers have used this drug successfully.)
• Brady also addressed the criticism RED has received about spending millions on ads – he clarified. RED itself does no advertising, the partner organizations do it. Ex: Gap owns a billboard that always has a Gap ad. They just replace it with a Gap RED ad for a cycle.

P&G Global Sustainability
Heard from Clifford Henry (Assoc. Director of Global Sustainability) – fantastic presentation. For P &G, the focus is not “responsibility” because corporations have to be responsible. They need to look beyond that - to the triple bottom line (sparked some discussion here, since this is not a universally agreed-upon practice). P&G talked specifically about marketing products to the bottom of the pyramid to make a profit - but also creating products that are needed…and that are in the necessary price range, but not of sub-standard quality. They use Population Services International (PSI) to distribute and sell their products in much of the developing world. Their channel is well-developed as they are the world’s largest distributor of condoms.
• They get significant criticism from marketing to the bottom of the pyramid. They argue that marketing personal care products to very poor people adds value. Ex: For poor women, even though a significant expense, wearing makeup allows them to feel good about themselves when they look good despite their circumstances. (As you can imagine…this is a controversial proposition, but very interesting to consider!)
• Goal: by 2012, want to do $20 billion in sustainable products revenue.
• P&G sustainability structure: wouldn’t give a direct answer on how his team is structured or where he reports in, but shared that the goal is for all 138,000 employees to integrate sustainability into their work.

P&G examples:
Success: They developed a $0.10USD packet of laundry detergent that eliminates the need for multiple rinse cycles for clothing. This is a boon for women who have to walk long distances to collect water and is clearly also a conservation tactic. (But they know it isn’t perfect as the plastic detergent packet isn’t biodegradable. Product has chlorine so needs to be in plastic. Working on a solution.)
Success: PUR water tablets and filtering system makes any water (swamp, etc.,) potable.
Failure: Still working to make a success from Millstone Organics coffee – consumers are just not buying this product. I think it must be that people who buy Millstone instead of Starbucks, Gevalia, etc., are much more price-sensitive, care less about organic/fair-trade. (Perfect example of practical trade-offs example from above – they are happy to buy this product, but not if it costs more.)
Closer to home: Tide cold water. In Europe, positioned as “environmental product” to increase sales. In U.S., positioned as cost-savings (save $X USD by washing in cold water). Once again, P&G as the Gold Standard in product marketing - know your audience, right?

Morgan Stanley Microfinance:
• Practice begun by lower-level Morgan Stanley staffers who got together and asked senior management why they weren’t involved in this business.
• They began to offer baking services (not just loans) to low-income entrepreneurs who are traditionally risky investments.
• Microfinance – 97-100% loan repayment.
• Today there are 10,000+ micro finance institutions around the world. They focus on top 10%.
• She is a proponent of double bottom line (social mission/financial profit).
• Projects still in beginning stages, but lots of interesting ideas in the works.

Final Keynote: Nicholas Negroponte (One Laptop Per Child)
• The program receives 20+ unique written stories per day. Lots of praise and lots of criticism.
• TODAY (all approx): 500,000 laptops have been ordered, 250,000 shipped, 125,000 in country, 62,500 in kids’ hands.
• This is an education project. Making OLPC a non-profit was the “best decision he’s ever made.” He almost decided to make this a profitable business after getting advice from HBS friends that he should make it profitable.
• Sharing laptops with kids in developing world began in 1968 by Seymour Papert, founder of MIT Media Lab. Negroponte got involved in the ‘80s.
• Computer programming is the closest we can come to “thinking about thinking.” The open source technology on these computers encourages kids to figure out how to program and debug the computers themselves.
• All about scale – will distribute two million laptops in 2008. 10-50 million in 2009, focusing on lesser-developed nations. Target volume: 50 million units/year.
• Requirements for computer: <2 watts (most laptops are 30-35), dual mode for sunlight viewing, wi-fi mesh (computer-to-computer) network, rugged casing.
Need to make antenna “ears” out of new material – they are now rubber/non-recyclable.
• Q: Biggest challenge in all this? A: Relationship with Intel. They go to government officials after our meetings and convince them that they don’t need so many laptops and that by the way, they should buy them from Intel, instead of OLPC. *Note on this answer: One gentleman I spoke with afterward said he saw an Intel executive speak recently whose position on the feud is that Negroponte has lost sight of the “one laptop per child” mission and has morphed it into “one of MY laptop per child.” I don’t know who is right, but I can say that Negroponte’s presentation overall was very convincing.

Other Notes:
• The conference also hosted a “pitch for change” competition, where students presented their business plans to the entire conference (approx. 1100 people) and HBS professors to win a prize of seed money to implement their sustainable business ideas. The winner was Global Citizen Year, a group trying to put together a national “gap year” program (with public/private/university funding) for graduating high school students to spend a year abroad before entering college (or military, etc.)

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