Corporate Social Innovation

How smart companies increase revenue, productivity

and secure talent by addressing social problems.

1
Introduction
Yes everything you’ve heard is true... by addressing social problems we can make
our companies increase revenue and productivity, reduce costs and attract talent (not to
mention all the raging fans you'll get *wink* ).

But I want to warn you, we discuss good old business strategy — at its core. It’s
about doing some damn good business. This book is not about philanthropy, charity nor
corporate social responsibility. We are not going to try and convince you to do good, just
because we say it’s the right thing to do.

Over the last 10 years we have worked with organizations using social innovation,
business and even philanthropy strategies. We’ve have seen the sole most successful
and future proof way to secure growth to your company: use your business infrastructure
to solve social problems. It’s not temporary fad a pattern, or a passing trend. It’s the most
effective growth strategy for any business we've seen since the industrial revolution. And
just in case you missed it, I will repeat it once more: This is not a philanthropy, do good,
heart warming book. This is a business strategy book.

Despite of how counterintuitive it might sound, by solving Social Problems — using

Corporate Social Innovation Strategies — we are actually addressing our internal
business challenges. Imagine that your business can increase sales, become more
efficient and have armies of new talent knocking at your door, begging to work for you.
Not only is this possible, but it is already happening for many companies. All the most
visionary companies — perhaps even your own competition — are already taking
advantage of this opportunity to drive their growth.

2
 For the past 10 years our team has worked and consulted in entrepreneurship,
business strategy, charity, and social innovation. We’ve tested every organizational
structure and strategy under the sun, and nothing compares to the revenue and scale
that Corporate Social Innovation can generate.

This is not an academic book. You won’t find over-complex remarks, emotional
arguments or guilt trips. This is a book written for business people, in simple everyday
practical language. I’m personally an advocate of hyper-effective work, so I wrote this
book as concise and practical as possible, because I understand and value time. In this
book you will find sound business and economic arguments for why our companies
should address social problems. Yes... you guessed it, because doing good is good damn
business.

You will learn how the smartest most visionary companies — from Nike to Unilever
— are achieving record profits by going beyond Corporate Responsibility and take a
serious approach on addressing social problems. By doing so they secure millions and
even billions of dollars in new revenue. For example, learn how Walmart increased 3.3%
their revenue by solving the lack of affordable prescription drugs, how or GE’s
Ecomagination that generated more than $17billion!

What is more important, you will be able to outline your own “Corporate Social
Innovation Strategy” (wow that’s a mouthful) designed to drive growth for your company.
Just like many other companies have done before.

Before we continue I want to make sure we are not wasting your valuable time. If
you are going to read this book is because you want to drive sustainable growth for your
company. If you don’t have any problems attracting talent or increasing revenue, then this
book is not for you.

3
 But if you are like most of us, we do want to secure growth for our companies, and
adopting a Corporate Social Innovation Strategy will help you achieve just that. Just like it
has for the most profitable, fastest growing and visionary companies already have… and
you are running late.

Audiobook & Community

This book comes with a free audiobook version for download. Join us in a
community of Corporate Social Innovators that just like you, are working inside a
company and want to build a purposeful career.

Please visit ​http://humana.mx/csi​to register for download after launch.

How is This Book Organized

The book is divided in three parts plus a bonus chapter:

● Part I: The love and hate story between business and society.
● Part II: Corporate Social Innovation
● Part III: Defining your own Strategy
● Bonus: Tools and Resources

4
Table of Contents

Introduction
Audiobook & Community
How is This Book Organized
Table of Contents
Part 1: The Love and Hate Story Between Business and Society
Method 1: Greenwashing
Method 2: Philanthropy And Nonprofits
Method 3: Dumb Volunteering
Method 4: Corporate Social Responsibility
Method 5: Government
Part I Conclusions
About the Author

Part II: Corporate Social Innovation

Part III: Defining your own Strategy
Bonus: Tools and Resources

5
Part 1: The Love and Hate Story
Between Business and Society
We will start with a quick overview on how businesses have been addressing social
problems through the last century. Don’t worry, we are keeping it short and sweet. To do
so — we are going through the most common approaches used by business. We will
explain what doesn’t work and what to do about it — in case your company is making any
of this mistakes.

6
Traditional and Failing Approaches

First of all, I need to warn you. This first section is not that much fun, but it will help
you understand why this methods fail. So if your company is using any of them you can
understand what works and what to do to fix what doesn’t.

You don’t have to go over all of them if you don’t want to, perhaps you only need to
read about the methods that you are currently using. Or even if you are in a hurry, you
can go directly to Part 2: Corporate Social Innovation to jump right into the fun part, and
return to this section when you are done with the book.

Let’s get to it.

When people think about big corporations, they usually think about problems,
corruption, destruction and impunity. The root of all evil and cause of everything that
afflicts societies all over the world.

While this — corporations being evil —is not entirely true, we have had a fair share
of wrong doers. And still today you will see irresponsible companies having a negative
impact on the environment and peoples life. Yet people often forget that companies are
not out there to destroy the world.

Yet our businesses are constantly under the pressure of two — apparently —
opposing forces. On one side we have shareholders demanding non-stop growth and
larger profits every quarter. And on the other side they have society demanding honesty,
justice and responsible behaviour.

For the last century or so, the business answer to society’s demand was
Philanthropy, Non-Profits and most recently Corporate Responsibility. And It worked...

7
sort of...for a while. Ok it doesn’t but hey, it was good press while it lasted, right? But now
society is becoming less forgiving, more critical — and above all — started voting with
their wallet.

Now, smart companies have to take their role seriously, for they cannot have their
way with by just writing a check or skin-deep greenwashing campaign. Speaking of
which, let’s get started with failing methods.

8
Method 1: Greenwashing

Greenwashing is marketing strategy that deliberately promotes a product or service

in a way that it is perceived as good for the consumer or the environment, when it cannot
sustain its claim with facts or data. It’s basically lying, your PR team knows, your
marketing department knows it, and you know it. And you know what? The entire world
knows it too. You are not fooling anyone and your company is just making a fool out
itself.
If you work for a company in any department that has to interact with humans —
such as communication, marketing or human resources — you have seen first hand that
the old tricks have no effect, and sometimes have backfired badly.

A few​examples​of greenwashing gone wrong includes Comcast's

“PaperLESSisMORE” campaign, that promoted going paperless — yet failed to address
the consumption as they rely heavily on tons of paper for direct marketing.
 
Or Tyson when ​promoted their chicken​meat as “All Natural” but were busted
injecting them with salted water and feeding GMO Corn.
 
This is the biggest no-no in the toolbox, not only is a waste of marketing and
advertising money, but you will lose the credibility if your market and inflict great damage
to your brand’s reputation. Every time you do greenwashing, you are losing market share.
Just stop it, really.

What to do about it ?
1. Simply search for ​greenwashing​, you will see thousands of examples of this efforts
going wrong. At the moment i’m writing this sentence there are 706,000 results.
9
 You don’t want to end up with them.

2. Are you still tempted to deceit your customers, test your campaign before you
launch it. Publish at ​GreenWashing​Index​to see if it passes the test. Better make
sure before it explodes in your face.

3. And if on the contrary, might you be wondering if a company is trying to deceit

you? Check out this resources, your customers are already doing it:

○ Good Guide​Find safe, healthy, green, & ethical product reviews based on
scientific ratings. ​http://www.goodguide.com/

○ Glia​Matchmaking app that help you find business that represent your
personal values. ​http://www.glia.is/

○ FRDM​Software that helps you analyze your company’s entire value chain
and detect slave-hiring providers. That means that even if you don’t buy
from slavery directly, you can detect if any of your raw material provider
does. I highly recommend you try this for your company — if you dare to
handle the truth. ​https://madeinafreeworld.com/business

There is not much to do about Greenwashing other that just stop doing it. There is
no argument here. You are insulting your market and will only lose money and damage
your reputation. I’m sorry that I have no witty advice other than stop it. Got it? STOP IT!

If you have already hit by damage after greenwashing, there are ways to clean-up.
Start by addressing the problem, fix it, and be honest with your efforts. There is a good
book called ​Masters of Disaster​that will help you get out of the problem. Go to this page
and ​read a summary​.

10
Method 2: Philanthropy And Nonprofits
Now, before you call Saul or raise your torches and pitchforks please give me the
opportunity to make my case. Both activities have their place in our global economy and
any modern society. Yet this place is not in Corporate Social Responsibility.

If your company is doing philanthropic donations, you are probably doing more
harm than good. You know those holiday gifts, and in-kind donations are not solving
anything. If anything they are institutionalizing a problem. That doesn’t mean that
corporate philanthropy is wrong. You just need to know when to use it: Donations vs.
Investments.

Philanthropic Investments, for example are a great method to fund long-term

research and to validate high risk hypothesis. This is called Impact Investment, which
according to The Global Impact Investment Network, they are1 :

“Investments made into companies, organizations, and funds with the intention to
generate social and environmental impact alongside a financial return”.

This means that companies doing impact investments — while doing philanthropy —
are not just trying to give money and deduct taxes. It means that they expect their money
back, so they can reinvest it in more causes. And this difference — between donations
and impact investments — has profound effect in society. Because when companies are
investing, they expect provable results that can be measured. This way they know if their
actions and money are being wasted or actually having results. They know they can
measure and share with the world how they are making society a better place.

1
"About Impact Investing." ​Global Impact Investing Network​. Web. 2 Mar. 2015.
<http://www.thegiin.org/cgi-bin/iowa/resources/about/index.html#1>.
11
 Furthermore we — society — do not allow nonprofits or their workers to become
wealthy. We frown upon the slightest hint that someone can make money by doing good.

Why are we so comfortable with someone making good profits and selling harmful
products or destroying the environment? But we don’t like the idea that someone can
build wealth by solving social problems?

We feel perfectly fine when Big Soda makes millions taking a public good such as
water and makes millions by turning it to soda or resell it as bottled water. Some people
even admire the company. But for some reason, we wouldn’t feel good if a non-profit
tries to make a profit by bringing water to vulnerable people.

Because we feel cheated, that’s why !

After the industrial revolution our companies boomed, people started to amass new
amounts of riches and wealth as never seen before. But this flourishing didn’t come
without consequences.

As new technology enabled massive growth and productivity, new kind of

businesses arose. And with them, new kinds of social problems too. Jobs shifted,
distances got shorter, and resources that were once used for the people now had to be
reallocated to feed this new beast called “industry”.

Just to make a point, let’s continue with the Big Soda example. It’s not that we have
nothing against the industry. I’m sure there are better cases to study, but it’s a problem
and industry easy to understand.

12
 When we think about Big Soda and the massive amounts of water they appropriate
for themselves, we tend to think about the water that was destined for human
consumption and farming. When we think of the Food Industry we think about all the land
and food that it has claimed for themselves. In their search for growth they have
devastated entire ecosystems, relocated and privatized natural resources.

The list can be endless and we — society — are to blame too. After all if we didn’t
buy what they sell, it wouldn’t be produced in the first place.

So what was our answer to our society’s new found problem? Instead of addressing
the root problem — we as businesses and society decided to create separate and
independent institution: “The Nonprofit”.

Since making profit was the “root of evil” so to speak, this new type of institution
was to be free from such element. If they don’t look to maximize profits they won’t be
pressured to prey and pillage our sacrificing our resources and wellbeing. That will be
enough to mitigate the damage... we thought.

Blindfolded we were fast to place all our society's problems into the hands of
Nonprofits. But flaws in the system started to appear. Since they are morally and
sometimes legally forbidden to profit, they can’t generate wealth, compete for talent,
grow, etc. Therefore they started to depend on the kindness of philanthropists that would
be kind enough to fund their resources. Then companies started to become

A Nonprofit ends up being a terrible solution to society's problems. By design most

Nonprofits lacks of the resources to have a professional operations. Since they can’t
afford competitive salaries, they can’t attract or retain talent. Since they are not allowed to
generate wealth, they can’t scale their solutions, which is dwarfed by the dimensions of
the social challenges they are trying to solve.

13
 For all this reasons, they end up focusing their efforts in small scale, symptoms of
the problems, rather than solving it for good.

Now — You’ve surely seen those “top 100 lists” in business magazines, right? They
make them for everything, the top 10 benefactors, the top 10 donors, the top 10
volunteering, the most candy given away... bla bla bla

Ever wonder why they don’t make a list of “the top 10 companies that actually
eradicate problems”? Because they don’t. Ha !

Don’t be distracted by this lists, they are just propaganda, in most cases you can be
on them by simply paying to be featured. Worst of all — nobody believes in them
anymore. When everyone is special for being on some list, no one is.

They are fooling no one, stop being distracted, it’s like those greenwashers.
Nobody believes or care for those lists, except the companies appearing on those list.

What to do about it ?

Philanthropy is deeply rooted in most company’s cultures. That is why it’s hard to
change. Changing the culture of philanthropy in companies is changing their culture. In
old or family owned businesses it can be even more challenging since it has become
family traditions.

If you must do philanthropy, make sure you are doing impact investments. That way
you can measure the social impact of your actions. If you can’t measure your progress
towards solving a problem, it’s probably a bad idea to donate money through those
channels.

14
 This a three better ways you can still make philanthropic donations and have great
social impact.

1. Create an Emergency Fund

Create an emergency fund provide aid in case of natural disasters. With Global
Warming, there will be no shortage of humanitarian aid emergencies that will need help.
Depending on the hemisphere your company operates, you will have disasters in the
early weeks of winter or spring.

The rest of the year you can invest in actually avoiding such disasters, for example
investing in better urban infrastructure to avoid or mitigate the harm from floods or
habitat for the most vulnerable people. Just make sure you work towards avoiding
damage in the future, not just having extra cash for emergencies.

Pick a huge audacious goal. Aim at least at a national scale — minimum. The larger and
the goal the bigger the reward.

2. Invest in long-term Research

Invest in research, or long term goals. That is actually some GREAT way to invest
your money.

Think about the investments done by the ​Bill and Melinda Gates Foundation​. They
don’t go around making tiny donations to attack symptoms. They go all-in to fund the
research of people working on the worlds big problems. In February 2015, Bill Gates
guest edited​The Verge, where he and Melinda shared the vision for their philanthropic
investments. You can find great examples on what kind of impact investments you can
do.

15
 While very few companies could make donations that match the Gates Foundation,
the lesson is clear: invest in long term research to eradicate a problem. And why not, you
could even join efforts with competing or adjacent companies to maximize your return on
philanthropic investment and share the benefits.

Oh and by the way, when you document and communicate properly your smart
philanthropic investments, and their progress you can get tons of free marketing and
publicity. Just like The Gates foundation, which don’t rely on “top lists” from business
magazines, they appear on frontpage and edited an entire edition from one of them most
iconic cultural magazines of our generation.

3. Fund a Corporate Social Venture Builder

A Corporate Social Venture Builder is an organization that solves a social problem

by addressing a business challenge. It basically, creates startups that designs a solution
for business and social problems in a single package.

This is by far the best approach to Corporate Social Innovation. It has the agility of
startups, the scale of global business and the social impact of nonprofits. It’s almost like
the unicorn of business and social innovation — but it’s real! You get to generate
sustainable growth in the short term and solve social problems in the long term. A

We are about to finish Q1 2015 and we are already working on the third Corporate
Venture Builder of this year. Just go ahead and build one, already. Just drop this book
and go work on your Corporate Venture Builder, now ! Nah I’m kidding, you first need to
learn how to design one. But don’t worry. We have an entire chapter dedicated to that in
Part 3.

16
 I’ll just add that this is my favourite approach and the most efficient, scalable
solution to solve social problems. Let’s continue with by discussing “Dumb
Volunteering”, how it’s different from “Smart Volunteering” and why you should be doing
the latter.

17
Method 3: Dumb Volunteering
I’ve just deleted 5 pages from this section because I promised to deliver a short
straight to the point book. You only need to know two things about corporate
volunteering programs:

a) they are not part of CSR, and

b) they come in “Dumb” and “Smart” programs.

Corporate Volunteering belongs to Human Resources — not Corporate Responsibility.

This is a mind-blower, right? When you think about it, there is not a single Corporate
Volunteering program designed to solve a social problem. They merely focus their
attention to social problem’s symptoms. They are meant to engage employees, make
them happier, create that warm fuzzy feeling and and hopefully more productive.
Therefore Volunteer belongs to Human Resources.

That is, unless you adopt a “Smart Volunteering” strategy and implement it inside a
Corporate Sustainability program. But we will talk more about that in Part II of this book.
Where we go over all the things that you can do to actually solve problems to increase
revenue.

Dumb and Smart Volunteering

What is “Dumb Volunteer” and why is it being called that way? Well it’s quite simple,
really. Dumb Volunteer — which uses people’s time — gets its name thanks to its
counterpart the “Smart Volunteering” — which uses your organization’s core skills.

18
 What do we mean by this? Using your people’s time for volunteering is like using
flamethrower to light a candle: a complete waste of energy and resources.

If you are thinking of — or perhaps already — running a corporate volunteering

program, it means that you have a large number of smart people collaborating in your
organization. As any smart organization would do, you want to make the most out of your
resources.

Let’s say for example that you have a great team of financial planners and an
orphanage with bucket-full of challenges. Which approach do you think is smarter?

a. Sending a brilliant financial manager to paint a wall of an orphanage for an entire

saturday morning, or
b. Having him meet for an hour with the orphanage’s accountant ?

You wouldn’t pay a painter the same hourly rate that you pay your CFO, right ? So why
are you spending the same amount of money by sending a CFO to do a painters work?
Now multiply that by hundreds of collaborators and imagine the amount of value your
organization would be wasting.

A few years ago an international non-profit arrived to México. They (still) offer
outsourced corporate volunteering programs, where they take your employees and make
them build wooden houses, paint walls and sometimes even plant trees. Their selling
point is that your employees would feel engaged and happy for helping people in need
spending their weekend doing physical work. Notice there is no real impact in the value
proposition.

Storytime !

19
 Back in 2008, one our corporate clients called us in. They wanted us to assess their
strategic programs and improve them. Impact-wise, something didn’t sum up. When we
inquired about the performance and indicators of this particular program — the
house-building volunteering — they spilled the soup and told us what really happened.

Even when employees where given incentives to participate, few actually assisted.
The few that participated made a terrible job out of building and painting. They simply are
not skilled construction workers, they don’t enjoy doing it. And worse of all when the
employees left the place, the non-profit that offered the program had paid real
professionals come in to undo and redo the job that the employees thought they did.

Let alone the fact that this is quite dishonest for people tricking into making them
think they are actually helping. It’s simply a really stupid and inefficient use of any
company’s resources. Yes... I said it — it’s stupid — deal with it.

Your employees are smart. Really! That is why you hired them. You need to treat
them as the valuable high skill talent they are. They don’t longer buy the “let’s go paint a
wall” — “building a 2x2 wooden house” volunteer programs. That perhaps used to work
for some baby-boomers. But no longer works for Millennials. If you even get them to be
part of it, they will sooner or later find out how their time is being invested and they won’t
like it. Perhaps they already know they have little value to add to “dumb volunteering”
and your participation rates are already low.

You remember the Orphanage example I was telling you about? It’s actually a true
story. Back in sunny Mexico, we were invited to a planning meeting. The head of
Corporate Social Responsibility gathered me, the leaders of an orphanage, and the
responsible of their corporate volunteering program.

We were there to come up with a solution for two challenges. The lack of:

20
 a. Employee engagement, and
b. Orphanage funding

All the usual ideas you might imagine were mentioned: let’s have the kids write
letters for donors. Let’s make a new marketing campaign to motivate our employees... bla
bla bla (same old ideas that come from old-school advertising and marketing schemes).

On a side note:
C’mon guys, stop running Corporate Responsibility as a marketing or advertisement.
Really, no one is buying that. We need marketing people in the team, but get extra skills
in there, get designers, engineers, business modelers and researchers. CSR can’t survive
with marketing alone.

OK, back to Storytime:

21
 When it was my turn to speak, I offered a drastic solution:
— “Why don’t we get rid of the orphanage”.

By the face of the orphanage’s president you could have imagined said “Let’s bomb
the children”. After their silence I continued:

“The real problem here is not the lack of engagement, although we could fix that,
and it’s not the lack of funds, neither. Next year you will come back asking for more
money.” ​— I said.

“The problem here is that that there hundreds of children without a family, most of
them are given away or abandoned by their families. And — on the other side of the
problem — you have parents willing to provide a nurturing home for them.

So instead of spending more money and annoy employees, let’s focus our
resources on improving the adoption program that helps parents meet with single
mothers and families that can’t have their child so they can have a family — that way
children will get adopted faster and someday eventually skipping the unnecessary
orphanage experience.

You will still operate as a non-profit, slowly transform yourself into an adoption
agency and eventually actually managing to close the housing division. That way
children do not have live in orphanage until they are kicked out at 18, but instead secure
a family, even before they are even born.”

They didn’t like it. Actually the Orphanage’s leaders even hated it. Because this
meant they were going out of business, they would have no more jobs. And as for the
volunteer program coordinator, she hated it too. Because this meant she would need to

22
find something else for their employees to volunteer and be forced to actually solve a
problem instead of simply organize weekend events.

I don’t blame them. I mean, here come this kid (I was the youngest in the room) and
tells you that he wants to change our entire organization’s strategy, which you have been
running your entire life! Who the hell does he think he is, right?

They didn’t do anything different, they took the marketing, sending even more
emails to employees. Sadly, today the orphanage is closed, they couldn’t sustain the
operation, and the company is now trying to find new causes for their volunteering
program, which only a fraction of employees support.

I’ve no idea of where have the children ended up and no one got any value out of
having “dumb volunteering” program.

What to do about it:

Instead go for Skill Based Volunteering, the Smart Volunteering.

Smart Volunteering enables your employees donate their skills to the causes they
choose, not the sweat to the causes you chose for them. This is a great talent attraction
and engagement honeypot. Not to mention that it increases your rates at popular
rankings like “Great Place to Work”.

Let me guess... You are probably having trouble attracting and retaining talent for
your business. All of our clients have. With global economy and the best talent being able
to choose any company in the world to work for, there is great pressure for securing
talent before the competition gets them. We can’t seem to find enough people to meet
your demand.

23
 I know this because, I have to solve this problem for our own companies, and we
also run our own Venture Builder. Not to mention every-time I speak with investors fellow
venture builders, accelerators etc., they ask help to find talent. Everyone is trying to get
top talent into their companies. It doesn’t matter if you are a Fortune 500 or a growing
startup. We all know we need talent, and a good paycheck no longer does the trick.

But if you never have trouble getting all the top quality talent you need, you can
skip ahead to the next chapter. I don’t want to waste your time.
.
.
.

Ok, you are still here. Now, please consider that you might have problems attracting
talent, it might be because your are not helping your collaborators to have meaningful
jobs. It’s that simple: we want meaningful jobs — whatever that means for your
employees.

You see, companies, used to engage employees using extrinsic motivators such as
bonuses, appliances or god forbid public recognitions like recognition diplomas you see
in old people’s office.

What we need to do now, is aim for intrinsic motivators. They are simple things, but
mostly allow us to have a sense of purpose and meaning. In his Book ​Drive: The
Surprising Truth About What Motivates Us​, Daniel Pink lists the following:
1. Mastery​: being allowed to reach for that desire for perfection.
2. Meaning​: allow people to develop a sense of purpose and reach it.
3. Community​: help people build strong relationships with others.
4. Autonomy​: allow people to have control over their work and actions.

24
 Smart Volunteering has them all!

● Mastery: ​We are practicing and getting better at what they do best, they job.
● Meaning: ​We know they are helping solve problems, not attending symptoms.
● Autonomy​: We decide what causes and activities to invest our skills on.
● Community: ​Having recurring interaction with people you help and others that
enjoy their actions does help build strong relationships.

Conclusion
Time based volunteering is “Dumb Volunteering” — a waste of time and resources. Not to
mention that it can even damage your reputation and trust amongst your employees, who
are no longer engaged by such programs.

Instead adopt “Smart Volunteering” — skill based volunteering that helps people develop
purpose, meaningful careers and live fulfilling lives. This is by far the second best way to
engage your employees. (I’ll tell you the best way further in the book in Part II when we
talk about what strategies work best).

25
Method 4: Corporate Social Responsibility
Most CSR programs were born as some kind of initiative to prevent business
operations from being assaulted by social protest. Slowly they have been evolving
towards helping companies behave like responsible members of society.

The CSR model is not free from flaws. CSR programs are usually designed to
engage employees or to improve the company’s public image — Yet neglecting the one
thing that they should be paying attention: the company’s behaviour towards society.
Why is this mistake so common?

Well, CSR programs fail to do any profound change or social impact because
managers tend to mistake CSR with philanthropy or sometimes even marketing. They
take whatever resources the company had left to spare last year and use them to try and
help causes their employees are interested or causes they can find to ensure their
operations. CSR is not about Philanthropy nor Engagement. CSR is about helping your
company not to be a sociopath.

Imagine that your company was a person who is part of the community. Lets call this
imaginary person George. What would happen if one day George moved into a small
town, and started to do any of the following:

● pollute the drinking water,

● cut down the trees from the park,
● destroy systematically public spaces, or
● dump his trash in your door.

26
 Not a respectable neighbour right ? I bet George would get a hard time from
neighbours and definitely a really bad reputation. Depending in the harm done he would
probably end up in jail or at least to pay repair for the damages after promising never to
do it again.

But wait ! George thinks that he can make it all good by throwing a thanksgiving
dinner and paint the local school, while he continues to trash the neighbourhood. That
doesn’t fix ANY of the damage that he has done, and what’s worse. He keeps dumping
his trash in your doorstep and poisoning your drinking water ! DAFUQ?!?!

In what kind of mind, does painting a school, and throwing a party gives you
permission to destroy the neighbourhood ? Would you be ok if George uses your house
as a dumpster, just because he have toys and candy to your children ? Of course not,
only a sociopath would think that is ok!

Then why would we think it’s ok for our businesses to donate some money, throw
away holiday parties and make everything ok? In order for George to become a
respectable citizen again, he should stop doing harm. Instead has to repair what he has
done and improve the community.

For our companies, that means that we need to have responsible operations. If your
company pollutes water, make sure you replace it and make it clean again. If you have to
cut down trees for whatever reason, make sure you plant double of what you cut down. If
you destroy a mountain top, make sure you restore the ecosystem. You get the idea
right?

Those philanthropic donations don’t work anymore. This type of corporate

greenwashing still kind of works for baby boomers — but Millennials don’t buy it. The

27
confusion and mix between philanthropy as part of your CSR, is probably one of the
reasons you can’t attract or retain talent.

Storytime !
During and petite soireé someone asked my opinión on the philanthropic programs
that several companies had been running for decades. Being as honest as always,
instantly, without hesitation or filtering replied: “​
They are useless, their only benefit is to
entertain the executive’s wifes.​” For everyone’s delight, one of those executives was in
the table. “​
That is untrue! ​” he was quick to correct me. “​WE​have been doing this for
decades, ​
WE​are very happy with our actions and the changes in the people’s lives that
WE​have done, and ​WE​will continue to do it​”.

As he ended speaking leaving most of us eager to listen a valid argument, I realized

I was mistaken. Not only the wives but the entire family was entertained. Did you noticed
how all the sentences where about them and not the people that need help or even the
roots of the problem? Ha! Of course you did, I marked all the WEs to make sure you did.

They had been doing this for decades and still are absolutely nowhere close to
solving the problem. They did this not to solve any social problem. They did it because
they felt good about doing something.

Later in the night, I approached Mr. Executive. And as he saw me getting closer he
gave me his best ​I’m-still-mad-at-you​stare he could. I apologize in case I had upsetted
him in any way — and for my surprise — his attitude changed entirely. I was then able to
explain why he shouldn’t use philanthropy for CSR and why CSR is not about solving
social problems, but being a good citizen.

28
 After a really nice debate he changed his mind. He gave himself the best argument
after realizing that after decades of donations, they were nowhere near to make any
progress on eradicating the problem, and they will probably never will.

They didn’t stopped doing philanthropy right away. They still did it for a couple of
years as a family activity, not as part their business. Hopefully their next move will be
Impact Investment or even better, create a Corporate Venture Builder.

What can you do about it?

Corporate Social Responsibility shouldn’t focus on solving social problems. It’s not
about how you spend your extra wealth, it’s about how you generate wealth. That about
having responsible operations. It must focus on transforming the company’s value
generation process. It should minimize the companies impact on society and the
environment.

It is about being a good citizen, a good neighbour and the people’s friend. I would
go as far as promoting the idea that we should simply drop the “social” call it simply
Corporate Responsibility.

We cannot expect society to respect us as a business when we continue to do

harm, just because we bring small gifts and throw a party now and then.

Instead, fix your operation and make sure to communicate your progress. Stay away
from greenwashing, publicly recognize your challenges and communicate your progress
as openly and honestly as you can. Society, specially Millennials will applaud you and
even will reward you with their wallets.

You Don’t believe me? Think McDonalds vs Chipotle. McDonalds was losing so
much market share to Chipotle that they had to buy as much shares from them as they

29
could. They also had to do it before Chipotle become so big it would kill MacDonald’s
business. Still McDonalds is losing market and if they still want to be alive in the next
decade, they will need to fix all the problems in their value chain. You can read all the
juicy details of McDonalds story with Chipotle on ​Bloomberg’s report2.

Now think about Patagonia. They can’t stop growing, even when they ask their
customers ​not to buy they clothes3 unless they need to. They even help their customers
fix their clothes so they don’t buy more from them.

Just be honest. Be a responsible member of society and your monetary rewards will
be more than generous.

Conclusions:
Corporate Responsibility is not about volunteering programs, solving social
problems or making “gifts” to society.

It’s about being taking responsibility for our companies’ actions. It is as easy as
reducing our impact and reversing any harm done by our business processes.

The following chapter is one the shortest in the book. We will quickly go over the
reasons why Government is a terrible institution to solve any social problem.

2
"Chipotle: The One That Got Away From McDonald's." Bloomberg.com. Bloomberg. Web.
http://www.bloomberg.com/bw/articles/2013-10-03/chipotle-the-one-that-got-away-from-mcdonalds​14 Mar.
2015.
3
"Environmental and Social Responsibility." Patagonia Environmentalism Essay: Don't Buy This Shirt
Unless You Need It- by Yvon Chouinard & Nora Gallagher. Web.
http://www.patagonia.com/us/patagonia.go?assetid=2388​14 Mar. 2015.
30
Method 5: Government
In some countries it is expected that government solves every problem society has.
Some governments work better than others. In France I used to have trouble explaining
what is a social business. Since most of my examples where for Social Businesses Mexico
and in Latin America where government does a terrible job providing even the most basic
security and education. All this “services” are well provided to french people, so it was
hard to imagine why anyone would need a separate company as wellbeing provider. I
was used to explain it in a mexican context with a phrase such as “a company that solves
a social problem which government can’t”.

Regardless if you live in a country with a functional government or not, governments

are meant to provide basic security to its citizens. It’s a well-being and shared resource
manager. The government ran by politicians is an organization lead by short-term
mindsets, pushed to please crowds, or in some cases sometimes completely ignoring the
citizens needs and acting against its own people.

Rarely will you find one that is actively finding new ways to solve social problems or
its citizen’s demands. Yet there are a few governments that manage to do good and
implement solutions to social problems. They do so by partnering up with a innovation
lab, a company or Nonprofits — but never alone.

If you find yourself in a complex situation where government is involved, you need
to play the role of the “Adaptive Leader” term coined by Ronald A. Heifetz to explain how
to lead where there are no clear answers or there is a great deal of uncertainty. Here is
how it works:

31
 It is called Adaptive, not because the leaders needs to adapt — but because a
society or organizations needs to adapt to a new reality in order to thrive and grow. This
can be a city, a corporation or even a government branch.

Leadership necessarily involves values, not just a combination of authority and

skills. That is why when a community trusts someone with power it is trusting that leader’s
values. Ideally — like in the majority of government officials — politicians get elected
because people believe that person will represent their actions according to the values
he professed. But depending in your country you might find this is more or less accurate
and you might end up with someone who will represent you — or his/her self interests.

This is why the authority to lead often comes in two types: formal and informal. A
formal authority can be an elected official, and an informal authority might be a respected
community leader or journalist. This also applies for companies, where a new manager
can be recognized as formal authority, and good old Jerry that has been in the company
for 30 years has the informal authority that employees look for.

While sometimes formal and informal authorities can be confronted, this is usually
not the case. And you will find that combining them will provide a great partnership to
confront any problem.

What do about it
When you have a social problem that requires immediate solution like disaster
recovery, formal authority — such as government — is better equipped to act faster and
provide effective solutions. In contrast when society needs to make changes for medium
to long term solutions, informal leadership is usually a better approach.

When collaborating with formal and informal authorities, it takes a lot of effort. You
need to calculate the amount and order of information you provide to key decision

32
makers, helping them to think and evaluate society as a complex system rather than only
simple one dimensional problem - solution system. Above all, you need to learn how to
frame a problem in a way people understand the nature of the challenge and pace the
flow of the actions so change doesn’t hit anyone in the face and all your efforts are
thrown away.

We could go on and on and write volumes on how to solve social problems

combining Government and Adaptive leadership. But Professor Ronald A. Heifetz has
already done it. If you want to learn more just go ahead and buy his ​Adaptive Leadership
Collection​
, true masterpieces. Harvard Business Review also has ​tons of articles​on the
topic.

Conclusions
Government doesn’t generate wealth, it depends on the people’s and businesses’
tax money to provide security and ends up managing our wealth. It doesn’t generate
wealth. If you are part of government, save yourself tons of headaches and look for a
partner that can help you move quicker and avoid internal silos.

On the other side, if you need to work with government, you need to remember that
your informal authority has an important role to play and both need to collaborate in
order to make work. Specially if you are trying to solve deep problems.

33
Part I Conclusions

Solving social problems is a question of delivering a scalable solution that solves

the problem from it’s root, not entertaining yourself with symptoms.

As we’ve mentioned, none of the methods previous approaches work, mainly

because they attack symptoms and they are not able to generate their own wealth or
resources, and depend on third parties to be able to support themselves.

In the second part of the book, we will look at what strategies yield results. How can we
design solutions that scale. But above all we will learn how solve business challenges
that bring growth, revenue and attract talent, by simply solving social problems.

We will place special attention to on one my favourite strategies Corporate “Venture

Building”. It’s the fastest and most effective approach to achieve growth without
disrupting your operations, enabling breakthrough innovation and unparalleled social
problem solving.

Sounds incredible right ? It is and I can hardly wait to share our strategies with you.
See you soon.

Get Part I and II as soon as they

become available.
Sign-up​to be notified when they are published

34
About the Author
While I typed most of this book, it’s is hardly written only by me — hj barraza. It’s the
compendium of experience acquired by myself and colleagues during the last decade.
We have been working with under our different brands and projects in social
entrepreneurship and social innovation with personal and consulting projects that has
allowed us to learn — a lot. We’ve had some great hits and also made tons of mistakes.

Above everything else, we have learned a lot in this journey. Now after so many
years it’s time for us to give back and share some lessons with our colleagues.

About Humana
About 8 years ago we started in Mexico city a small project we wanted to help
Nonprofits be more efficient in their fund-raising. We created at a time a unique tool for
anyone to fundraise money online and we provided a legal tax-deductible receipt. Little
did we knew about strategy, innovation or design.

Fast forward to present days, we now specialize in strategic and corporate social
innovation. That’s fancy talk to say we help companies solve business and social
problems.

If you want to talk to us, drop us a line at ​hello@humana.org.mx

35