#44. A Summary of ‘The Solution Revolution: How Business, Government and Social Enterprises Are Teaming Up to Solve Society’s Toughest Problems’ by William D. Eggers and Paul Macmillan

'The Solution Revolution: How Businesses, Government, and Social Enterprises Are Teaming Up to Solve Society's Toughest Problems' by William D. Eggers and Paul Macmillan (Harvard Business Press Review; September 17, 2013)

‘The Solution Revolution: How Businesses, Government, and Social Enterprises Are Teaming Up to Solve Society’s Toughest Problems’ by William D. Eggers and Paul Macmillan (Harvard Business Press Review; September 17, 2013)

Table of Contents:

i. Introduction/Synopsis

PART I: FROM PUBLIC PRESSURE TO CORPORATE SOCIAL RESPONSIBILITY

1. The Public Demand for Corporate Social Responsibility

2. The Response from Business

  • a. Corporate Social Responsibility Reports (CSRs)
  • b. Corporate Philanthropy and Philanthropic Projects

PART II: BIG PROFITS IN THE DEVELOPING WORLD

3. Unilever and the Wheel Soap Project in India (and Beyond)

4. The Direct-Sales-Agent Model

  • a. Living Goods, Health-Keepers and Toyola Energy

5. Profitable Public Services in the Developing World: Education in Kenya

6. Partnerships that Help the Poor Help Themselves: The Amanco Project in Mexico

PART III: PROFITABLE SOLUTIONS IN THE DEVELOPED WORLD, AND THE NEW GOVERNMENT APPROACHES

7. Recyclebank

8. The Pay-For-Success Model

  • a. Doncaster Prison
  • b. Social-Impact Bonds (SIBs)

9. The Prize Model

10. Open Data

11. Citizen-Sourcing

12. Conclusion

i. Introduction/Synopsis

Prior to the 19th century, public goods and social goals such as sanitation, health, affordable housing, education, and environmental protection were largely left up to individuals to sort out for themselves. Beginning in the 19th century, though, more and more governments—particularly in the industrialized, democratized world—began taking these responsibilities on themselves. In the latter half of the 20th century, the promotion of public goods and social goals expanded as governments in the developed world intensified their efforts at home and began spreading their attention to the developing parts of the planet, and large non-profits and NGOs started cropping up to help with the issues both domestically and abroad.

Recently, we have seen a new trend develop, as in the past two decades businesses and corporations have themselves increasingly entered the fray. Now, this may seem odd, given that business is often seen as indifferent—if not downright hostile—to public goods and social goals. However, several developments have occurred in recent years that have flipped this logic on its head.

To begin with, many consumers have begun to demand that companies display real concern and commitment towards the issues that mean something to them—and have begun to shun companies that fail to show a sense of social responsibility. This trend has caused businesses to respond in several ways. First off, most companies now assess the social and environmental impact of their business practices, and have taken measures to ameliorate them under a Corporate Social Responsibility report (CSR). Even more impressively, corporate philanthropy has skyrocketed in recent years; and, what’s more, companies are increasingly moving beyond donating, and are instead using their peculiar expertise to help directly with social projects and development efforts.

Business involvement with public goods and social goals goes well beyond just brand-building, though. Indeed, it turns out that big profits are also at stake. To begin with, many companies have come to realize that there is a fortune to be made by entering non-traditional markets and catering to the unmet needs of the world’s poorest people—and in helping them bootstrap themselves out of poverty. For though the so-called ‘bottom of the pyramid’ may not have much, they do have some, and collectively they represent an enormous business opportunity. Indeed, the bottom of the pyramid has been estimated to represent a $5 trillion market.

Still other businesses in the social economy are organizing themselves from the beginning around a particular public problem (such as traffic congestion or waste control), and then cleverly designing a business model that helps solve the problem—all while turning a profit.

Aside from these self-starting enterprises, other companies have been lured into the social economy by governments or non-profits who are looking to exploit their expertise—or who are looking to capture the benefits of competitive organizations more broadly (specifically increased innovation and efficiency)—and who are willing to pay top dollar to do so.

These types of collaborations (between governments, non-profits and businesses [and other types of groups]) have actually become quite a theme in addressing public goods and social goals—and author William D. Eggers makes a special point of addressing it in his book. The beauty of the arrangement comes from the fact that each type of organization has access to a special class of information, expertise, and resources, which, when brought together, can help yield solutions that are particularly effective.

As you might expect, many of the developments spoken of here have been made possible by recent innovations—everything from social networking, to crowd-funding, to crowd-sourcing, to micro-financing, to prize and pay-for-success exchanges, to socially-responsible and impact investing etc.—and the author is sure to touch on all these as well.

Here is a trailer for the book:

What follows is a full executive summary of The Solution Revolution: How Business, Government, and Social Enterprises Are Teaming Up to Solve Society’s Toughest Problems by William D. Eggers.

PART I: FROM PUBLIC PRESSURE TO CORPORATE SOCIAL RESPONSIBILITY

1. The Public Demand for Corporate Social Responsibility

As mentioned in the introduction, one of the major impetus’ that has driven businesses into the solution sector has been public pressure (loc. 2178-90). In this new age of big wealth and even bigger problems, there is a growing sentiment that it is no longer acceptable for businesses to blindly chase profits. Rather, the expectation is that businesses will also keep the public good firmly in mind as they operate. And with the emergence of social media, this sentiment is only becoming more powerful. As Eggers explains, “the field of sentiment analysis has exploded with the emergence of social media. Millions of consumers now voice their views on companies, positive or negative, and in turn influence others. Negative reviews that appear via a common Google search or a wave of caustic tweets can have devastating effects on an organization’s reputation. Ratings extend the reach of an individual’s opinion beyond a circle of friends to anyone with a computer. And consumers increasingly realize that each purchase is a vote. Successful branding efforts now speak less to actual products and more to core traits that the company—and its consumers—want to embody… Companies that translate lofty aspirations into an elevated consumer experience can benefit from higher premiums and stronger brand loyalty… Transactions that once exchanged money for status symbols now trade in a new status entirely: social value: Companies such as American Apparel (which offers American-made, sweatshop-free clothing) and Origins capitalize on their customers’ desire to maximize social good alongside private utility” (loc. 2188; see also 1390).

In addition, the public pressure to induce businesses to behave in a socially responsible way is not only finding an outlet in where consumers are spending their dollars; rather, it is also finding form in where they are choosing to invest. Indeed, an increasing portion of the population is opting to invest in companies that demonstrate an explicit commitment to social and/or environmental goals—in addition to profits. Known as double- and triple-bottom-line investing, this practice has been picking up momentum in recent years. As Eggers explains, “socially responsible and environmental investment, for instance, accounted for 11 percent of all US assets under management in 2012, a 22 percent increase from 2010” (loc. 464). Elsewhere, the author adds that “socially responsible investing has grown to a $1 trillion industry” (loc. 172).

And it is not just consumers that are beginning to think in terms of social and environmental responsibility. Many business leaders themselves have stood up against the old model of business, and advocated instead for a newer, more nuanced approach. As the author explains, “the widely held notion of businesses’ role in society was succinctly captured in the title of Milton Friedman’s famous 1970 New York Times piece: ‘The Social Responsibility of Business Is to Increase Its Profits’. Recent years, however, have seen many business leaders rethinking this basic premise. John Mackey, the founder of Whole Foods Market, is at the forefront of this evolution. A proud libertarian, Mackey strongly and unapologetically champions the free market. Nonetheless, his central idea, which he writes about in his book Conscious Capitalism, is that investors are only one of multiple constituencies with which a company must engage. Customers, employees, vendors, and the community at large represent other important stakeholders. Since a company’s choices can affect each stakeholder, it should pursue value for all constituents to create lasting financial and social returns” (loc. 562).

Regardless of where the voices for change are coming from, though, many businesses have certainly begun to heed the call, and they are responding in many different ways.

2. The Response from Business

a. Corporate Social Responsibility Reports (CSRs)

One of the first and more popular responses has been the development of Corporate Social Responsibility reports. Essentially, these reports outline a company’s social and environmental goals, and chart out how the company hopes to achieve them—and they are catching on like wildfire. As Eggers explains, “in recent years, CSR has taken off. Contrast the mere seventy CSR reports published in 1990 to the thousands produced today. In 2006, only 25 percent of Fortune 500 companies produced CSR reports. Today that figure has climbed to 80 percent” (loc. 551).

*For prospective buyers: To get a good indication of how this (and other) articles look before purchasing, I’ve made several of my past articles available for free. Each of my articles follows the same form and is similar in length (15-20 pages). The free articles are available here: Free Articles

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