Corporate Social Responsibility is Dead: Long Live Corporate Social Innovation


As Harvard’s corporate strategy guru Michael Porter points out, over the past century the boundaries between business and social issues have undergone dramatic changes.  One hundred years ago a large business enterprise might have been the social patron, providing housing, education or other forms of welfare for its company town residents.  But over time the scope of corporate responsibility retreated.

Famously, forty years ago Nobel Prize winning economist Milton Friedman decried the notion of corporate social responsibility when he wrote his article “The Social Responsibility of Business is to Increase Profits”.  According to Friedman, writing in New York Times Magazine, when business leaders talk about the value of social responsibility it only “helps to strengthen the already too prevalent view that the pursuit of profits is wicked and immoral and must be curbed and controlled by external forces.” Friedman’s Times article reflected the beliefs he articulated in his book Capitalism and Freedom where he called social responsibility a “fundamentally subversive doctrine”.

In the subsequent era Friedman’s admonitions were ignored and corporate social responsibility has become more pronounced.

Today, are we at another inflection point: has CSR outlived its usefulness?
Michael Porter suggests that CSR has evolved.  He speaks about a concept he calls “shared value” or “corporate policies and practices that enhance the competitiveness of the company while simultaneously advancing economic and social conditions in the communities in which it operates.”

In a recent presentation prepared for a June Montreal conference on sustainability Porter argued that we need to transform the thinking and practice about the role of the corporation in society, using the concept of shared value, something akin to Jed Emerson’s earlier and broader concept of blended value.  Porter sees shared value thinking providing new catalysts for global economic growth and the next wave of innovation and productivity in the global economy. It is when “businesses acting as businesses, not as charitable givers”, says Porter, that they “are arguably the most powerful force for addressing many pressing issues facing our society.”

Like Porter and Emerson, many people are beginning to see traditional CSR as outdated.

One person who adamantly thinks so is Liam Black, one of the UK’s most prominent social entrepreneurs and commentators.  Liam is also on the board of NESTA (National Endowment on Education, Science and the Arts) and is an active participant on NESTA’s social innovation board committee.

Liam and Adrian Simpson have created a new initiative Wavelength, whose motto is Passionate about companies making a difference in the world through business. Wavelength, which works with private businesses and social enterprises, uses conferences and exposure trips to assist companies scale up their social impact. They don’t mince their words in going one step further than Porter:

“Corporate Social Responsibility (CSR) is dead. Giving money to charity, staff volunteering, painting the community centre – all good things but peripheral to the business. They don’t lead to the creation of new products and services, differentiate your brand, engage your people or achieve lasting social or environmental impact.

“The answers to the world’s biggest social challenges will not be found by governments, charities or NGO’s alone. Increasingly big companies are creating new business models, new products and services that deliver lasting, financially viable solutions to the big problems we face.

“We call this corporate social innovation (emphasis added) and we believe it’s the future of business.”

One global leader in the field of CSI is Danone, a French food products multinational that recently partnered with Grameen Bank to develop a yogurt business improving diets in Bangladesh. Last week Danone hosted its annual Social Innovation Lab in Paris to seek input on how they can be more socially innovative.

One attendee, The Social Business UK blogger and social enterprise advocate Rob Greenland returned asking himself two rhetorical questions: “Did Danone give me a glimpse of what a world could look like where big businesses went beyond CSR and put social impact at the heart of what they do? And should I be thinking how to work with other businesses to help them to do the same?”

Greenland answered yes by setting up Social Business Brokers CIC (Community Interest Company) to “help people to have more social impact. We’re explicitly looking to work across sectors – being socially enterprising is far too important to be left to social enterprises alone. So we’re actively looking at ways to work with private sector businesses to help them to find new markets, do things differently and collaborate with social businesses so that they can do more good.”

The marketplace for leveraging good through corporate social innovation is growing.  Who’s catching the wave in Canada and globally?  Let me know who you think is.  Corporate social innovation will be further covered in future blogs.

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Tim Draimin About Tim Draimin

Tim Draimin is the Executive Director of Social Innovation Generation (SiG)

Comments

  1. “being socially enterprising is far too important to be left to social enterprises alone”

    But so far the social enterprises have done a far better job at it then the corporate sector, so I believe a collaboration of the two is the best way forward.

    Markus Dietrich
    http://www.asei.com.ph

  2. This was very interesting to read.
    I want to quote your post in my blog.
    And you have an account on Twitter?

  3. Geraldine Cahill Geraldine Cahill says:

    Hi David, naturally you may quote Tim in your blog. SiG also has a Twitter account @sigeneration and Tim @TimDraimin

  4. Really interesting thoughts, Tim…

    While some folks continue to advocate Friedman’s position, most for-profit CEOs recognize that to advance the interests of their stakeholders IS to advance the interests of shareholders. To ignore off balance sheet factors (whether social or environmental) leaves the firm open to under performance and diminished returns to shareholders (see the book, “Firms of Endearment” for current research on this).

    And of course, for those coming out of the social sector, there is a realization that managing the economics of social change is as important as managing for direct social impact. We literally leave value on the table by not strategically managing for attaining efficiencies of both economics and social performance. These are integrated and must be taken into account concurrently.

    In any event, good discussion and look forward to more!
    best,
    jed

  5. Hi Tim
    Great post! Not sure if helpful – Rosabeth Kanter wrote an article using the term “corporate social innovation” as early as 1999 in the Harvard Business Review (From spare change to real change: the social sector as beta site for business innovation*). Be interesting to explore the differences/similarities of Kanter’s view of CSI to those at Wavelength and some of the barriers to CSI cf CSR.
    Many thanks
    Graham
    (*Kanter’s article – http://hbswk.hbs.edu/item/2974.html)

  6. Liam and Andrian Simpson –

    “Corporate Social Responsibility (CSR) is dead. Giving money to charity, staff volunteering, painting the community centre – all good things but peripheral to the business.

    My take: Are they not social activities? Definitely beyond business but that’s what Social Responsibility stands for!

    They don’t lead to the creation of new products and services, differentiate your brand, engage your people or achieve lasting social or environmental impact.

    My take: It is the onus of the research department of any MNC or Corporate to innovate business, Marketing department to differentiate brand, HR department to engage people in the business and “CSR department” to engage them in Social or Environmental Impact. SO how is it dead???

    “The answers to the world’s biggest social challenges will not be found by governments, charities or NGO’s alone. Increasingly big companies are creating new business models, new products and services that deliver lasting, financially viable solutions to the big problems we face.

    My take: Exactly, that’s what we call Responsible Business!

    “We call this corporate social innovation (emphasis added) and we believe it’s the future of business.”

    My take: I admire the concept of CSI but it is again the subset of a wider term CSR analogous to Philanthropy and CSR.

    Best Regards,
    Harsha Mukherjee

Trackbacks

  1. This post was mentioned on Twitter by Geraldine Cahill. Geraldine Cahill said: RT @sigeneration: New blog: Corporate Social Responsibility is Dead: Long Live Corporate Social Innovation by Tim Draimin http://sigeneration.ca/blog/?p=38

  2. Thanks to the wonders of Twitter hashtags (you can follow CO3tweets here), an article from the Social Innovation Generation website in Canada, came to our attention. Intrigued by something which starts with the notion that “CSR is dead”, we read on. The piece is interesting, insofar as its discussion of how the concepts of corporate social responsibility and their application to general business approach have evolved in recent times.

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