4 Lessons From 2010: Why Bad Social Impact Happens to Good Companies

More and more, entrepreneurs and businesses are looking to make money while also making a difference. Yet every day we see examples of smart and successful companies bungling their efforts at achieving social impact. This begs the question: Why does bad social impact happen to good companies?

We have spent our careers working with businesses, foundations, and entrepreneurs on models that spur social change. While there is no silver bullet for successful social entrepreneurship, we know what does and doesn't work. Our goal is to demonstrate that business objectives can be amplified by social impact activities, and vice versa.

We have no interest in "blurring the lines" between the two sets of objectives—they're very different. Rather, we want to connect the two wires in a way that lights up the grid, illuminating a simple truth: the firewall (both mental and structural) between business success and social purpose must come down. Not because it's the "right" thing to do, but because it's the successful thing to do.

With businesses considering objectives for this New Year, what better time than now to review the most important lessons learned in 2010 that can inform social impact and business success in 2011?

You Can Leave Your [Business] Hat On

CEOs and entrepreneurs often make the mistake of assuming achievements in the business sector will translate to philanthropic success. Yet savvy business leaders often do things they would never do in the business world. We've written extensively on the bold efforts of Facebook founder Mark Zuckerberg, who donated $100 million to Newark public schools. While his act was a generous one, to ensure the success of this $100 million, he should have backed his contribution with intellectual capital.

The Long and Winding Road

It is all too common for businesses to write a check for a philanthropic endeavor and then walk away. While giving money feels nice, to make a difference you have to bring more to the table. This means approaching philanthropy with a strategy that considers the near and long-term effects of specific social impact actions, and execution that delivers on a commitment to accountability and measurement. Effective social impact requires both foresight and staying power. Philanthropy cannot be an afterthought, and with more and more people looking for "meaning" to define their careers, we must recognize that meaning takes work – often the same amount of work as brokering a contract or business deal.

Give it Up (Turn it Loose)

The return on your social impact investment is amplified exponentially when you communicate what you've figured out in a way that others can understand, leading to widespread shifts in perception and behavior.

A perfect example: The former CEO of General Electric Jack Welch who has years of business experience under his belt was approached by Joel Klein, departing Chancellor of the New York City Department of Education, for suggestions on improving NYC's public schools. Klein understood that Welch could offer unparalleled experience, and Welch came through by developing a successful model for a NYC leadership Academy for school principals.

Those in the business community have an abundance of experiences to share. The key is to find ways to impart this knowledge and make it stick. Transferring knowledge opens the doors to lasting solutions for some of our greatest challenges.

Get it Together

The new entrepreneur is someone who wants social change to be part of her business model rather than an afterthought. It is misguided to think that making a social impact can stand alone as a marketing tool; there must also be a good product and a strong business foundation backing social intent. The best test: If you removed the "doing good" from the equation, would the entire value proposition fall apart? If the answer is no, you're doing it wrong.

Take the example of TOMS Shoes. TOMS Shoes both look and do good, with a pair of shoes going to a child in need for every pair sold. They're helping millions of kids while raking in millions of dollars because people can't get enough of their trendy footwear.

The test for a properly aligned business/social impact model is this: If you were to take the "good" out of your value proposition, would the overall business model be seriously compromised, if not reduced to zero?

________________________________

The most rewarding part of our work with entrepreneurs and businesses is that moment when we take down the firewall between market opportunity (profitability) and social impact. Suddenly their entire perspective shifts about what they're up to, and why. They realize (both intuitively and intellectually) that they can have both power and purpose, money and meaning, financial success and personal satisfaction.

Eliminating the false choices between these is what we're all about…and what success is about for all of us.

--By Suzanne Muchin and Rachel Bellow

Rachel Bellow and Suzanne Muchin are Partners at ROI Ventures, a consulting firm that offers strategic advice to innovative companies, nonprofits, foundations, and entrepreneurs, aimed at maximizing their social impact while fueling their core business.

Relevant Reading:

Lessons for Mark Zuckerberg and Tomorrow’s Philanthropists

Career Intelligence: What Is It That You Are Meant To Do?

Social Entrepreneurship: How to Pursue a Responsible Career in 2011