How corporations and social enterprises can team up on social innovation

The Covid-19 pandemic has devastated the social sector, exacerbating the very needs that social purpose organisations work to solve. Nonprofits and social enterprises alike are struggling with resources and liquidity while rapidly transitioning their organisations to operate in a digital economy. Faced with unprecedented challenges, corporations are also confronting critical questions around preserving their longevity and fulfilling their commitments to various stakeholders, including employees and communities. The need to rebuild the economy, alongside the unprecedented crisis and its accelerated impact on some of the most vulnerable populations around the world, has created a unique opportunity to transform how we approach social innovation.

A social enterprise uses a market-driven model to solve a social challenge. This enables the business to deploy its product or service for financial return while furthering progress towards one or more of the Sustainable Development Goals (SDGs), covering areas including environmental sustainability, education, workforce development, and equality.

However, social enterprises struggle with scaling up. Through co-innovation, joint go-to-market strategies, and partnerships between purpose-driven corporations and social enterprises, both parties can exponentially accelerate their impact.   

Social enterprises rooted in local communities bring an agile culture and innovative solutions to solve some of the toughest challenges faced by their communities, working directly with those affected. Not only do they present a far more reflective representation of community needs, but they also provide access to a network of key players in the local ecosystem across the value chain. In turn, corporations can bring their own networks, financial resources, brand recognition, and management know-how to propel these enterprises forward.

Creating a shared social innovation agenda 

Instead of building solely in-house social innovation infrastructure and systems, corporations should take four key steps to develop a corporate social innovation agenda, revolving their strategy around collaboration with relevant social enterprises.

• Clarify: What social problems is the corporation most adept, positioned and committed to solving? 
• Focus: Which subset of issues related to these problems is addressable by the corporation in some way today?
• Align: Who are the leading or cutting-edge social enterprises working on these issues, and what value can the corporation offer these partners?
• Measure success: How will the corporation measure success including the impact, market growth and its contribution to enhancing connectivity within the social sector ecosystem as a result of the intervention? 

The shared social innovation agenda serves as a way to re-assess and improve both the solutions and the collaboration itself. It also enables more mature corporations seeking to stay flexible and innovative (such as Google) to benefit from the agility of social enterprises while solving some of the world’s social challenges.

If an innovative atmosphere is not active in every part of an organisation, it won’t work

Developing internal structures and processes 

Corporations must develop an engagement model to align and advance their social innovation agenda by leveraging the range of assets they bring. Noah Redler, CEO and founder of management consulting firm Arche Innovation, which specialises in implementing innovation programmes in organisations, further defines such an engagement model as “an organic solution – if an innovative atmosphere is not active in every part of an organisation, it won’t work.” 

We believe that this engagement requires integrating an impact mission into the core of the business. A comprehensive model would include:

• Business model innovation that values impact alongside profit, making it acceptable and in some cases, desirable, to seek lower margins throughout the value chain for higher impact.  
• Structural innovation that organises talent and assets around social causes while building the employee skills needed to serve these challenges and the social sector.
• Philanthropic or funding innovation to move towards a strategy that employs blended capital such as grants, loans / debt, and guarantees that also serve to prepare enterprises for future equity investment consideration. Corporations may employ catalytic capital to match enterprises’ needs at each stage of their development.

Social enterprises, in turn, must:

• Make choices among partners early by considering how their product-market fit aligns with potential corporate partners, and deciding whether or not to explore collaborations further.
• Allocate time and resources, often from the CEO and leadership body, to build  committed and focused engagements with corporate teams.
• Be flexible in adjusting products/offerings based on corporate feedback. 

Leveraging an expanded network

Social enterprises can benefit corporations by serving as local representatives who bridge the gap between individual needs in the community and a distanced executive board that finds it challenging to fully understand and serve harder-to-reach groups. By leveraging corporate brand and access, corporations can in turn, provide social enterprises with connections in the corporate community through their customer bases and partner ecosystems. The current lack of collaboration between social enterprises and corporate networks leaves many missed opportunities for innovative collaboration; an expanded ecosystem will accelerate solutions for both corporations and social enterprises alike. 

Network-based models to support the social entrepreneurial ecosystem are starting to take shape through initiatives such as the World Economic Forum's Alliance for Social Entrepreneurs. Formed when the Covid-19 pandemic began, it brings together organisations, including corporations, capacity development providers and intermediaries to coordinate a response for social entrepreneurs. The alliance launched a cross-sector Action Agenda in September and has now grown to include more than 80 organisations. The agenda calls upon corporations, impact investors, funders / philanthropists, and government institutions to support social entrepreneurs (such as Malaysia's Dignity for Children, pictured above) through specific actions, including cross-organisational initiatives and activities.

Ensuring long-term success

In addition to implementing a clear joint social innovation agenda rooted in internal processes and structures enhanced by networks, both parties must remove barriers that could impede a mutually beneficial partnership. Pilot projects between social enterprises and corporations to test assumptions and choices should be carefully designed with clearly articulated criteria for success. Social entrepreneurs must remain open to receiving advice from corporate leaders in a mutual learning relationship.

Corporations must commit to long-term relationships, with the intent to bring social enterprises into their ecosystems. This differs from the current corporate philanthropic paradigm

To maintain this continuous collaboration, corporations must commit to long-term relationships, with the intent to bring social enterprises into their ecosystems. This differs significantly from the corporate philanthropic paradigm at many companies today. Corporations typically approach philanthropy by contributing product, services, or financial support to specific nonprofits. Our proposed model requires a shift from traditional CSR towards a solution-driven focus that supports the most promising innovators.

Corporations paving the way

Salesforce.org, a social impact business unit of Salesforce, emerged from an original 1-1-1 model, supported by Salesforce, wherein 1% of the company’s time, equity, and product go towards furthering social good in communities. They have been able to leverage capacity building via tech for good as a scalable model. 

Further examples include Ikea, which partners with a global accelerator programme run by Ashoka to support social enterprises through a mentorship program for selected businesses. One organisation in Ikea’s program, Brazil-based Programa Vivenda, provides affordable kits for five-day home renovations to address the Brazilian housing crisis. As a furniture company, Ikea can provide the ideal support for this type of social enterprise. With the help of its Ikea advisors, Programma Vivenda launched an online platform connecting families to the necessary resources and information for home renovation. By working with an organisation relevant to its mission, Ikea provides the most relevant information and resources from a passionate, knowledgeable team that will actively further the impact of Programma Vivenda far beyond a one-off financial contribution. Initiatives like these create the foundation for a model that brings a multitude of corporate assets to social sector challenges in collaboration with systems change actors. 

Our shared future

As corporations around the world rebuild their internal processes and strategies in adapting to our post-pandemic “new normal”, they can now leverage their many assets to exponentially compound the impact that social enterprises already create through their innovative products and/or services.

This requires readdressing the way that corporations traditionally engage with social purpose organisations. Matthew Harrison, leader of the National Startups and Emerging Technology team at BDO Canada, one of the country’s top accounting services firms, describes the potential as this: “Startups have the drive and passion to disrupt industries, and corporations can greatly benefit from this energy.” There is an opportunity for corporate changemakers to coordinate with changemakers on the ground. In the context of the current pandemic, health social enterprises have a uniquely important role to play in vaccine distribution, especially in harder-to-reach communities. This rich source of active innovation pairs perfectly with corporations looking to focus their philanthropic contributions, investments, or financing and create a stellar brand image, ultimately attracting more clients through the process.  

In today’s digital era, consumers are holding corporations responsible not only for their business practices, but also for how they actively use their expertise and resources to further a relevant cause. Social enterprises provide in-depth knowledge about a community’s pressing issues and financially sustainable ways to address them. Pursuing a deeper collaboration is now more “lucrative” than ever in terms of future profits and impact. By building a symbiotic relationship between social enterprises and corporations, we can both propel the economy forward and transform the traditional corporate philanthropic model to ultimately benefit both parties, while enriching a culture of social innovation.

• Samira Khan is a senior manager for global impact engagement at Salesforce; Caitlyn McConnell is a Schulich Scholar at McGill University and editor-in-chief of the McGill Business Review.

Image: A sewing business (pictured pre-Covid) – one of a number of social enterprises run by Dignity for Children in Kuala Lumpur, Malaysia. Dignity is among those to be supported by the WEF Covid-19 Alliance for Social Entrepreneurs through technology and other contributions (credit: Samira Khan)

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