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	The New Social Consciousness of Business By Anne Glauber

The customers surrounding the African dancers performing in the middle of Macy's department store were spellbound. While the music pounded with a swaying beat and the riveting dancers in their brilliant batik costumes circled the floor, a wide-screen TV projected pictures of Rwandan women making the baskets and crafts that were for sale. Then the music stopped, and a Rwandan woman, a guest of Macy's, stood before their customers and began in a soft voice to detail how purchases of these baskets had transformed her life and thousands of the poorest women in Rwanda.

This was not a typical fundraiser for a nonprofit organization fighting poverty in Africa or a charity shopping spree; rather, the event was a celebration of an extraordinary business relationship between Macy's and some of the most marginalized women of Rwanda, the widows and women survivors of the genocide, many of whom had been raped and infected with HIV/AIDS as a tactic of the war.

Several years previously, when the executive director of UNIFEM, Noeleen Heyzer, had traveled to Rwanda to address the dire fate of these women, sick, destitute, traumatized, and ignored by the world, she asked them a simple question: "What do you make?" The women showed her distinctive Rwandan baskets based on an ancient design, and what struck Heyzer at the time was that Hutu and Tutsi women were making them together; the basket was enabling women to reconcile through the weaving.

She told the story to American business women who had come together at a global gathering of women leaders organized by Ruder-Finn's Vice Chair Dena Merriam at the Palais des Nations in Geneva in 2002. The purpose of the gathering was to mobilize women to take greater leadership in peace building, healing, and reconciliation. The idea to help the widows of Rwanda became the first project. Use the business and the baskets, not philanthropy and charity; to rebuild these women's lives. They brought the idea to Macy's.

Macy's executives, moved by the stories of Rwandan women and impressed by the beauty of the baskets, decided to take an unprecedented risk. They established a way to do business with these rural women and purchased a small amount of the baskets.When they sold out immediately, Macy's committed to a much more significant order, purchasing thousands of baskets, and thus putting thousands of women to work. The transformation of women's lives was dramatic. Women went from making less than a dollar a day to receiving collectively more than $500,000 dollars in revenues. Cooperatives were established to manage the orders, quality-control mechanisms were initiated, finance lessons were given, new designs were developed, and the Rwandan women were in business.

Through this business social venture, Macy's customers also had a very different experience, because not only were the baskets on display, so were the details of Rwandan women's lives. Through photographs, video, personal statements, and oral narrative, customers were told how the purchase of baskets was improving lives of women. What was global became personal. Issues of poverty, HIV/AIDS, lack of education for women in Africa, were brought to the American consumers firsthand through the baskets.

Anyone purchasing these baskets would know that the sale of one basket feeds a family of four for a month and thus a customer would have a direct stake in rebuilding the life of a woman and her family.

The key message of this initiative is that business can sustain change and consumers have a direct role in making change happen. In fact, to better understand how the consumer responds to a social business venture, Ruder-Finn conducted a poll in September through its research arm, RF insights.

The survey results were instructive. American consumers want their purchases to not only not cause harm — environmental degradation or sweat shops — but to actually use their buying power to foster a specific positive social impact. According to the survey, over 90% of Americans said they would prefer to purchase a product with a positive impact, and 54% said they would actually pay more for this product with all else being equal.

Also of importance, 87% of Americans said that they would be more likely to purchase a product if they knew the specific details of how the purchase impacted someone's life. And 54% said they would prefer to buy a product to help someone then to give to an international charity.

Strong communications with customers about the social impact of their purchases also strengthens the business relationship. Motley Fool, the investment newsletter, wrote about the Macy's venture: "As department stores consolidate and face the challenge of setting themselves apart in the consumer's mind... customers aren't likely to miss the point that Federated is indirectly helping people in need. Federated has to be applauded for taking a risk into largely uncharted territory."

This uncharted territory is opening up an entirely a new terrain of corporate involvement in social issues. Pioneering business leaders are changing corporate social responsibility from giving charity to an unprecedented level of corporate social activism, committed to using business itself to foster positive social change. Although businesses like Ben and Jerry's, the Body Shop, and Newman's Own are icons in their ability to marry profits with social responsibility, their initial efforts 30 years ago did not spawn an entirely new approach to solving social problems. What is taking place now is different. This is a concerted effort to research, analyze, and model best practices in this new CSR trend known as profit social ventures, social entrepreneurship, corporate social activism, or social innovation. Whatever the name, these are all initiatives designed to use the capital, talent, expertise, management, and entrepreneurial qualities of business to forge social change in ways that are consistent with business objectives — profitability.

Every major business school has created centers devoted to this practice — Columbia, Duke, NYU, Harvard, and Stanford, to name a few — where the focus of business as an agent of social change is elevated to the forefront of management studies. There are glossy magazines, e-newsletters, pod casts, and academic research on the subject. For example, Columbia's Research Institute on Social Entrepreneurship, RISE, recently interviewed over 200 CEO's of these profit social ventures to assess their profitability and social impact and provide other businesses with models to replicate. Interestingly, when Columbia asked what vehicle they use to bring about social change, these CEO's, typical of the new breed of social activism, cited corporate philanthropy the least. But the Columbia study was focused on newer emerging businesses; among the Fortune 1,000 companies, traditional philanthropy is still the norm.

Indeed, according to Stanford Social Innovation Review, $12 billion was spent on corporate philanthropy in 2005, and most of this giving followed conventional CSR practices. Typically, these are programs that provide funds to specific nonprofit organizations and are designed to build relationships with customers, employees, and communities. Companies chose these organizations and causes for a variety of sound reasons: the need to take a preemptive approach toward attacks by NGO's; the need to create cause marketing programs that reach customers in new ways; or simply to give back to communities in which companies operate and ensure positive relationships with employees, political leaders, and socially conscious shareholders.

For major global companies, CSR, a relatively new phenomenon of the 1970's, is now standard practice more then 30 years later. But just as CSR was pioneered by a few corporate leaders in the 70's, the 21st century corporate social activism is also now being pioneered by leading CEO's of major companies willing to take a risk and replicate the new entrepreneurial models of social change.

Two announcements this past September gave energy to this movement. When British billionaire Sir Richard Branson of Virgin Industries announced at the Clinton Global Initiative that he would provide $3 billion to help combat global warming, his statement drew puzzlement as well as praise. Commentators wondered out loud whether or not these funds were indeed a contribution, because the gift did not appear to be a gift. He told reporters that instead of providing funds to an organization engaged in improving the environment, he was going to invest the funds in businesses focused on producing alternative sustainable energy sources to fossil fuels. As he noted, "I want to utilize the wealth to create businesses in areas where I can make a difference, and create jobs."

In the same month, Google founders Larry Page and Sergey Brin announced that their new foundation, established with $1 billion, would seek to create companies that could improve the environment. Not only would their foundation not have a nonprofit status, it would aim to be profitable. Their first venture, an effort to expand the alternative fuel sector, would build several complementary businesses to strengthen the sector. As they told reporters, the foundation could form a company to sell converted alternative fuel cars, finance the company in partnership with venture capitalists, and even hire a lobbyist to pressure Congress to pass legislation granting a tax credit to consumers who buy the cars.

This is clearly a major departure from conventional corporate social responsibility. But there are other changes that are not so dramatic, where major companies are addressing social issues and working with nonprofit organizations in a more entrepreneurial way.

Some leading companies are helping to manage nonprofits to achieve a greater impact, and at times they are creating entirely new efforts that fill a vacuum that nonprofits have yet to address.

Timberland, a company whose reputation is deeply linked to its social responsibility, set the example of how to integrate its management and resources with a nonprofit partner. For decades the company has supported the work of City Year, a youth corps based in Boston that engages young people to do community service. It is a partnership that goes way beyond financial contributions. It is a tightly integrated working relationship where Timberland provides management expertise; its employees provide mentoring and volunteering; and the company actually provides City Year the office space in its own offices. In speaking about the relationship in a new book, The Business of Changing the World, CEO Jeff Schwartz comments how Timberland's involvement provides concrete business returns. He says, "Our employees care about their work here. It is not just their jobs, it is in their hearts. As a company it has made us more compassionate. It has made us more competitive. It has made us more powerful."

Liz Claiborne Inc. is an example of a company that has moved beyond standard corporate social responsibility by not only supporting nonprofit organizations but actually creating new programs and resources on a critical social issue where none existed previously. For ten years, the company had a strong commitment to combatting domestic violence, providing contributions to many domestic violence education and service organizations. Two years ago, it identified the fact that although there were many organizations advocating for adults, there were few resources for teens. The company commissioned research on teen dating abuse to determine whether it was a problem, and when the data showed that there were alarming levels of abuse in dating relationships the company decided to take action.

It initiated its own program to confront the problem in a way that went well beyond what domestic violence organizations were currently doing for teens. Jane Randel, vice president of communications for Liz Claiborne, decided the company could help teens by sponsoring the creation of a curriculum for ninth-grade students. It partnered with the Education Development Center and domestic violence organizations to create a curriculum that is now in over 450 schools, filling a need that nonprofit groups or government agencies had yet to fill.

By talking with teens, the company identified the need for a national teen dating abuse hotline and brought the idea and its funding to the National Domestic Hotline, which will launch the hotline next year. At the announcement of the hotline, teens from around the country came together at Liz Claiborne headquarters to speak openly and frankly about their experience being hit, pushed, or burned by their boyfriends. Their parents told company executives that the curriculum and the opportunity to speak out had totally changed their daughters' lives, turning them from victims to empowered young women, willing to help others. The company clearly filled a void in services, at the same time that they increased public awareness of their deep commitment to the issue, thereby helping to strengthen the company's brand and reputation among all its stakeholders.

What is also spurring companies to take new approaches to social problems may be the extraordinarily broad and high-profile consensus that individual action is urgently needed to solve these problems. Bill Gates, Warren Buffet, and George Soros have publicly declared their huge, mind-boggling donations to help improve society and the lives of the world's destitute. Fortune Magazine featured a cover story on the power of philanthropy, calling it "a cool-eyed look at a new business model to save the world."

Newsweek magazine devoted a cover story to its "Giving Back Awards, 15 Who Use Fortune, Fame and Heart and Soul to Help Others." With Brad Pitt's blue eyes gazing intensely from the pages as he describes his work with Global Green, an environmental organization, the underlying message is that each of us — corporations, individuals, civic organizations — must engage in a greater level of social activism.

Communications plays a central role. The pace, depth, and individualization of communications through blogs and websites have brought us personal connections with people we did not think possible — from African women in Rwanda to children traumatized still from the tsunami devastation in Banda Aceh, in Indonesia. Individual lives and suffering are communicated so quickly, with such detail, that there is an almost immediate need to act. In fact, this response was documented in research by psychologists at Carnegie Mellon University. They determined that when it comes to generating compassion and action, aggregated data on poverty or HIV/AIDS rarely compels a response. They note, "The identifiable individual victim with a face, a name, a life story has no peer."

In addition to this heightened awareness of social problems, there is also increasing recognition among corporate leaders and business scholars that social innovation, activism, and entrepreneurship provide their operations with an edge. As Rosabeth Moss Kanter, of Harvard Business School, explains, "Companies have learned that applying their energies to solving the chronic problems of the social sector powerfully stimulates their own business development." Building and distinguishing a company's culture, strengthening teamwork among employees, and pushing the boundaries of creativity through new types of problem solving are all elements that comprise successful high-performance enterprises.

This remarkable coincidence of interests — the need to take urgent social action coupled with the corporate recognition that this action can enhance business performance — has fueled the emergence of this new wave of corporate social activism. Among many types of corporations — large and small — there is the bold realization that improving the world and the bottom line are the same thing.