The path to business impact: why and how of doing good
What to consider
Companies not only shape the societies they operate in through their products and services, but also through their engagement with stakeholders: employees, suppliers, consumers, and the local community adjoining an office or production plant. Since stakeholders influence business performance through multiple touchpoints – by buying from you, investing in you, working for you, or supplying to you – an investment in them is an investment in your business. Furthermore, at a societal level, improved living standards of consumers, more sustainable use of resources, and a stable climate contribute directly to reducing legal, financial and operational risks for a company.
Yet many business owners shy away from investing in social impact because they find it to be either tangential to their core operations or find the space to be too political and confusing to engage with.
At Cicero, we help our partners discover the strategic benefits of social impact and guide them on a step-by-step journey to create shared value for business and society. We follow a simple principle in this work: focus on what you’re good at and what’s meaningful for both your business and your stakeholders.
Investing in your stakeholders is good business
The figure below illustrates evidence how business investments in social and environmental impact can result in business-level improvements.
But sometimes envisioning those benefits—and knowing how to achieve them—is challenging. An illustrative example may help. Let’s say a company sells health insurance products and wants to expand to geography X. The company initially acquires a mix of young and old customers. Several years later, the community profile changes as younger members leave for large cities, and those who remain get older, lonelier, and less mobile. A decline in local industry creates pockets of poverty that influences nutritional behaviors negatively. All these social determinants of health contribute to a general decline in health indicators. Claims go up, as do costs for the company. On the other side of the country in place Y, the company’s profits go up as young, active, urban populations surrounded by preventative health advice on social media avoid getting sick with lifestyle diseases. If the company re-invested part of its profits from geography Y to X it could reduce the social inequities between the two regions. By partnering with local community organizations and supermarkets, the company can promote health messaging at point of sales, and fund social events for the elderly that enable activity and engagement. Over time, this can shape healthier customers who require fewer visits to expensive medical care facilities. Not only do costs go down, but people begin to tie the brand with their wellbeing rather than with episodes of sickness and paperwork. Social impact becomes good business strategy. While this may be a simplified case, here are some insights derived from real-world examples of work undertaken by our corporate partners Guardian and Prudential, amongst others.
Choose your area of excellence and expertise
What’s impactful for your organization and its stakeholders differs based on your brand and business model. There is no one right answer or approach. For some companies investing in the environment and securing equitable access to resources for future generations can be a great way to reduce operational risks. For others, strengthening the health and safety of employees can be a sound investment. And for others, it may be developing safe and vibrant communities that produce an active citizenry and future-ready workforce. Find what works for you. And do it really well.
At Cicero, we help you identify what components best relate to your brand and its stakeholders, what organizational capacity and expertise you can leverage, and how to achieve excellence in the space. By designing a comprehensive monitoring, evaluation and learning (MEL) framework around these activities, we help you discover what results your investments have yielded, how to strengthen them, and how to communicate your impact to your priority stakeholders. This process is underlined by the same principle that guides good business decisions: return on investment (RoI).
Below we describe the stages of moving from reactive to deliberate approaches to social impact.
Not all businesses need to go from state one to five. Each stage has its own merits. Doing it well is what matters most. This requires evidence generation to prove business and social benefits of an intervention. It requires the creation of small experiments to create proof of concepts of impact initiatives. And it requires measured but consistent changes in company culture and processes to embed this thinking into routine business activities. At Cicero, our mission is to help our clients overcome the barriers to each of these stages, create powerful narratives to help them internalize the benefits of creating shared value, and stand alongside as a trusted partner through the many phases of transition.