Trigger 2: The Role of Business in Solving Social Problems

In the past, the business had only one objective- to achieve its strategic goals and to generate profit. Nowadays, the businesses are required to respect the environment in which it operates. Since a business enjoys a variety of benefits provided by the society, the business is also expected to 'give back to the society'. The consumers especially in the developed world pay increasingly high attention to how and where products are made and are ready to 'punish' unethical behavior. 

Every company has a set of stakeholders (individuals or groups that have some interest on the way the company operates). Every company's objective should be to satisfy a wide range of stakeholders in order to sustain growth and remain competitive.
Porter highlights the specifics of today's world, naming awareness as an important factor. He claims that often businesses are perceived as the problem (creating pollution), which is true only for some businesses and large portion of businesses are already or have the potential to become the solution.

How to do this is our main problem for this PBL. Our group agreed on the following three objectives:

• How a company should choose, which problems to address
• In what way does a company profit from solving social issues
• What are some companies that managed to successfully address and solve social issues

1. How a company should choose, which problem to address

Porter sees businesses as responsible for solving social problems because as oppose to Governments and non-profits, businesses have enough resources. What he suggest in the interview provided, is a cooperation of these three entities. Meaning that businesses do not necessarily have to seek the social problems themselves, instead they can address problems raised by governments or NGOs and cooperate together in a way that the business provides the resources and supervises the solution, while NGOs 'do the work' and ensures effective communications and the government provides the legal environment.

Of course, nobody expects every business to be involved in solving all kinds of issues. APCO states that there are five types of approaches a business can take when deciding on addressing social issues. Those approaches can be put on a line that states the level of independent seeking the problems to address as well as putting high importance to solving them;

• Bystander (generally not connected with solving large issues)
• Joiner ('Wait and see' not actively seeking but joining when an interesting opportunity arises)
• Uniter (strong belief in cooperation with other businesses in addressing social issues)
• Soloist (Taking on and trying to solve isolated cause that is close to the brand perception)
• Activist (behaving consistent with the customer base, strong belief in 'helping those left behind')

Each company should be able to position itself on this scale and also set a target where the company want to be. 

APCO also suggest questions that can be asked to determine, which problem to get involved in. Those cover the issues of relativity to the business, competitor's position, engaging with other companies, etc.:  

Solving social issues does not necessarily mean that the company has to immediately establish and heavily fund a charity. Instead, the company can address many problems relatively easily by implementing solution within its operations. For example as Porter states (and for example Worldcoo supports) that simply providing healthy and safe workplace in factories can already make a huge impact.

A good summery to this question can be found from Worldcoo, where it says: 'business should analyze social problems that can be related with their business activities and close to their group like another market segment and define appropriate value offers to serve them' In other words, solving the social issues should be done within the core business operations and be a part of a company's business model. 

2. In what ways does a company profit from solving social issues

The general belief (among people and companies as well) has been that solving social issues (reducing pollution, creating safe workplace) costs more money than not doing so. So actually businesses are supposed to lose money by solving social issues. 

Porter argues, that the opposite is true, especially in the long term. Solving social issues actually generates profit and is beneficial in more ways, he literally says: 'we have learnt today that actually reducing pollution and emissions is generating profit, saves money, makes the business more productive and efficient, it doesn't waste resources'.

McKinsey supports the same trend. According to a survey MCKinsey conducted among top executives regarding the linkage between social issues solving and profit growth, the majority of companies involved in social development confirmed growth in profit (either already happening or forecasted in the near future)

APCO states, that nowadays it is not only a benefit for a business to address social issues, instead it is expected by public that companies do so. 82% of people believe that it is the right thing that businesses are involved in solving social issues. Therefore avoiding social issues can result in consumers refusing to pay for products or services from a specific company if they see that the company isn't doing enough. 

However, companies profiting from solving social issues is not a new trend. Even Henry Ford managed to decrease turnover of his employees and increase their productivity by doubling their salaries in the early 20th century. 

The problem that some businesses may see is that the profit of socially responsible business isn't obvious immediately, but rather (as any other investment) in a longer term horizon. That's why companies, which only focus on a quick rise in the value for their shareholders fail to see the benefits. Those companies might actually face unexpected costs in the future through higher taxation or even fees for irresponsible behavior to the environment.

According to Global Citizen, the ultimate goal all businesses should head towards and the ultimate goal that maximizes the benefits for both, company and society is self-sustaining through sales rather than relying on the generosity of donors. This means making an impact with each product sold. An example of a company that implemented this approach can be TOMS shoes. The very main idea of TOMS is that for each pair of shoes sold, one pair is given to a child in Africa. The concept has been so successful that it has now spread and TOMS also provides glasses, safe births and clean water in Africa.

Last but not least, especially young people are becoming increasingly aware of the values a company they work for shares. Increasing amount of people gives the company values and sustainability as one of the main factors when choosing an employer. By implementing solution of social issues and communicating it effectively with the public, a company can attract talented workers.

I would also like to end this question with a quote by Global Citizen: 'It blows my mind when I imagine what kind of world we could create if more businesses followed the examples of these incredible companies. And what better time than now? The rivalry between public and private is officially over. Together, we can create the world we want to live in.'

3. Companies that successfully address and solve social issues

After defining the way and reason, why companies should implement social issues and their solutions within its strategy, it is also important to demonstrate this on cases of companies that have managed this well.

Traditionally, the largest corporations have been seen as 'the worst ones' and the ones that only take from the society and hunt for profits. However, the opposite is often true as the largest businesses often have the largest resources. For example Unilever, one of the biggest companies in the world is active in numerous projects and actively supports sustainable growth. 

I found particularly interesting their project regarding hand washing. Unilever set its goals to teach 1 billion people to wash hands using soap by 2020. Not only does Unilever address the problem with hygiene in the developing world, it also creates a potential market of 1 billion for its products, which would mean a substantial growth for the business. 

But this is one of many project Unilever is involved in. On their website there is a section called 'What matter to you', where consumers can find information on how Unilever deals with (among many others) human rights, eliminating deforestation, farm animal welfare and sustainable sourcing.

I cannot forget the company that is considered as a pioneer in the field of modern corporate social responsibility- Body Shop. This company has been involved in solving social issues of all kinds since the very beginnings. The issues it addresses are both within the key operations (no animal testing- one of the main values of this company) but also issues that are not directly related to those operations, such as campaigns against domestic violence or  sex trafficking. Some of the most recent campaigns can be seen below:

The last example I have chosen is the case of Starbucks. This company is often criticized for selling overpriced, too sweet coffee and some think of Starbucks as a place for teenage girls, who go there to get a cup of mostly milk only to take a picture of this cup with their name written on it and post it on social media. The truth is that Starbucks was a pioneer in offering take-away coffee back in 1971 when the company started. The discovery of this niche has been one of the reasons of Starbuck's enormous success. 

Regarding social responsibility, from its beginning Starbucks promised to operate ethically focusing mainly on sustainable producing of the coffee it uses- fair trade coffee, to ensure fair working conditions for the coffee plantage workers as well as the protection of the environment. Apart from that Starbucks also supports various projects and campaigns, for example support of military veterans, diversity and inclusion or farming communities. This company heavily supports local projects in the USA, where it originated and where the market for their products is the largest. All of their campaigns can be found from the Social Impact section on their website.

I am really happy that when looking at any company's website, one of the main things is the information on social responsibility, it is great to see all the campaigns and projects companies are involved in and how much good have the companies been able to do. 

Sources

AdAge. 10 Companies With Social Responsiblity at the Core. Available from: http://adage.com/article/cmo-strategy/10-companies-social-responsibility-core/143323/. Accessed: 5.4.2018.

APCO. Great (Societal) Expectations: How Companies Navigate the new Normal. Available from: http://www.apcoworldwide.com/blog/detail/apcoforum/2017/11/28/how-companies-navigate-the-new-normal. Accessed: 5.4.2018.

Driver, M. (2012). An Interview With Michael Porter: Social Entrepreneurship and the Transformation of Capitalism. Academy of Management Learning & Education, 11(3), p. 421.

Global Citizen. Solving Social issues = good business. Available from: https://www.globalcitizen.org/en/content/solving-social-issues-good-business/. Accessed: 5.4.2018.

McKinsey & Company. Rethinking how companies address social issues: Global Survey Results. Available from: https://www.mckinsey.com/global-themes/leadership/rethinking-how-companies-address-social-issues-mckinsey-global-survey-results. Accessed: 5.4.2018.

Starbucks. What is the role and responsibility of a for-profit, public company? Available from: https://www.starbucks.com/responsibility. Accessed: 5.4.2018.

TED Talk. The case for letting the business solve social problems. Available from: https://www.ted.com/talks/michael_porter_why_business_can_be_good_at_solving_social_problems/up-next#t-826521. Accessed: 5.4.2018.

The Body Shop. Commitment Campaigns. Available from: https://www.thebodyshop.com/about-us/our-campaigns/. Accessed: 5.4.2018.

TOMS. Improving Lives. Available from: http://www.toms.com/improving-lives. Accessed: 5.4.2018.

Unilever. Changing handwashing habits for better health. Available from: https://www.unilever.com/sustainable-living/improving-health-and-well-being/health-and-hygiene/changing-handwashing-habits-for-better-health/. Accessed: 5.4.2018.

Unilever. What matters to you. Available from: https://www.unilever.com/sustainable-living/what-matters-to-you/. Accessed: 5.4.2018.

Worldcoo. How companies can be a solution for social problems. Available from: http://www.worldcoo.com/blog/en/how-companies-can-be-a-solution-for-social-problems/. Accessed: 5.4.2018.