Justin Bakule, Angela Simo Brown and Tim Faveri sharing their stories of Shared Value at TSSS.
On May 28, 2014 Toronto Sustainability Speaker Series (TSSS) held its first event hosted by Ryerson University. TSSS Founder Brad Zarnett began by announcing the launch of the TSSS Innovation HUB, a meeting place for sustainability thought leaders which will showcase, explore and celebrate progressive companies to uncover what allows innovation to flourish.
The audience was then welcomed by Dr. Marie Boutrogianni, Dean of Ryerson’s G. Raymond Chang School of Continuing Education and former Ontario MPP and cabinet minister. Dr. Boutrogianni explained Ryerson’s commitment to our shared future and the university’s dedication to pursuing environmental and social responsibility through its programs and research, including its Certificate in Sustainability Management. She spoke about lessons learned in her political career, including the value of stakeholder engagement and collaboration.
The Shared Value Promise
It was in this spirit of collaboration that Justin Bakule (Executive Director, Shared Value Initiative), Tim Faveri (Director, Sustainability & Responsibility, Tim Hortons), and Angela Simo Brown (General Manager and Co-Founder, AIR MILES for Social Change (AMSC)) shared their insights and experiences in what proved to be one of TSSS’ most animated discussions. The idea of achieving a competitive advantage while experiencing the satisfaction of knowing that you’re helping to solve a social problem is the promise of “Shared Value”, a phrase coined three years ago by Michael Porter in the Harvard Business Review.
Who is responsible for social change?
Bakule began by presenting a confusing dichotomy: When asked, “Which institutions are most responsible for delivering social change/impact?”, rarely does anyone answer the private sector, and yet, when asked, “Which institutions are most capable of delivering social change/impact?”, most people answer with thoughts of the private sector. As Bakule explained, “We are in a moment right now that is a tectonic shift between sectors; the realization that the private sector has a role to play in driving social change is becoming more prevalent.” Bakule’s passion was evident as he spoke of the “fascinating” situation that exists: private companies have the potential to solve social problems, yet most people see those companies as the cause of social problems. “Shared Value” is about creating real business value (e.g. enhanced brand, increased revenue, decreased cost, limiting risks) and social value at the same time. Bakule also emphasized, however, that Shared Value is not intended to replace other forms of engagement (e.g. philanthropy), nor is it intended to suggest that the private sector will solve all of our problems.
Air Miles for Social Change: ‘Doing More’
Zarnett asked the speakers to describe some of their Shared Value experience. Simo Brown began by explaining the acquisition of Green Rewards by Air Miles five years ago and how they needed to decide how to maximize its value and integrate it into the Air Miles brand. She and her colleague, Andreas Souvaliotis, looked at what they had: a huge contact database, over a million annual marketing outreach communications, and a visionary CEO. Their CEO believed that since they knew Air Miles had the power to influence people’s behaviour, they had an obligation to ‘do more’ and in so doing, drive business forward. Thus was born Air Miles for Social Change, a program that has increased the company’s “brand halo” and customer involvement.
Lessons Learned
Simo Brown summarized some of her most important lessons learned:
- There must be a culture of risk taking and innovation, one that endorses setting risky goals without fear of career suicide if goals aren’t met. There must be room for mistakes.
- We need to get away from talking about good vs. bad/evil.
- “We need to focus on the reality that we are working within a capitalist model and have to collaborate to succeed – polarization won’t get us anywhere.”
- An initiative project must be scalable to be sustainable. “We’re a publically traded company; we’re not doing philanthropy.”
- Shared Value programs are about the journey – to focus only on the destination is to wear blinders to the possibilities. “Some of the wins will be completely different from what you thought you were going to get.”
- Detailed measurements are needed throughout the process to assess projects/initiatives and decide the best way to proceed.
Corporate Culture: Tim Hortons
Faveri explained some of the history of Tim Hortons to help the audience understand that the “spark” which inspires Shared Value initiatives is, “nestled within the culture of the corporate entity and the restaurant owners.” Tim Hortons was founded 50 years ago by a police officer and a hockey player who shared an ethic of hard work and community service. Despite now being a publicly traded company, it retains its culture of community owner operators and has many well-known community capacity building local programs (e.g. TimBit Minor Sports) started by individual restaurant owners.
Tim Hortons Coffee Partnership
In 2004, restaurant owners came to the Tim Hortons corporate group concerned about poverty in coffee farming regions. The corporation decided to help the farmers build capacity in their local communities. Tim Hortons knew that assisting farmers with such things as farm management, business skills, and communications would help the coffee farmers “get skin in the game” in the world’s second largest traded commodity (after oil). Tim Hortons worked with the local farmers to identify their needs, rather than imposing upon them a pre-determined set of requirements to “get our label/seal on their product.” The result included programs focusing on youth, gender equality, and agricultural practices (e.g. ratio of shade grown to sun grown coffee, water conservation/use).
Shared Value or Philanthropy?
Zarnett asked Faveri: “Where is the line between philanthropy and good business?” Faveri answered that while the coffee partnership program was not initially “procurement driven” (and thus more philanthropic to help the farmers), they found that, “as we worked with them, their coffee quality was improving and thus it worked its way into our main blend. After a few years, we realized we had enough partnership coffee to close the loop and specifically brand it.” This was one unexpected result of their initiative. Additionally, Faveri explained that if it wasn’t for the partnership program, their company never would have gone into certain regions in Honduras and Guatemala. This ultimately proved to be a great ROI when coffee prices increased worldwide, new supply was needed, and their company had access to high quality coffee from those previously untapped regions.
Selling Shared Value to the C-Suite
Bakule explained that a Shared Value initiative must have an Innovation Mindset of “Pilot, Learn, Test, Evolve“ and if the initiative doesn’t work, then it’s not the right plan or approach. He explained that, as in the Tim Hortons coffee partnership, philanthropy can be a “tool in your Shared Value toolkit,” one that acts as a way to “de-risk investments when you’re not yet sure about ROI.” Bakule cautioned, however, that philanthropic efforts must be aligned with the rest of your business to offer the promise of Shared Value. Faveri echoed this thought, saying that to sell your program to the C-suite, link it to some form of core business strategy (e.g. supply chain, communications) – don’t just present it as the ‘right thing to do’. You should start small so that you can test the waters without a huge capital investment, and if you can tie it in to something like risk management/mitigation, even better.
Challenges along the way
There was much discussion among the three speakers about challenges along the way. Bakule spoke of Coca-Cola’s success in expanding its distribution chain by providing employment to youth in Brazil’s impoverished favelas, but that there was criticism of expanding the provision of products lacking in nutritional value to people who are already suffering from poverty and poor nutrition. Faveri spoke of the challenges facing coffee farmers in the developing world that are beyond the control of the farmers and/or Tim Hortons, such as the effects of gender inequality, climate change and regional political instability. He emphasized the need to overcome challenges by engaging with others and bringing them to the table: “If an organization has the mindset that it can do it on its own, that’s a false sense of security. You need to constantly collaborate to keep the pilot project alive, to get it to next stage, and then ultimately to scale it.”
Don’t be Evil, I’m Loving It, Swedish for Common Sense: Who Will Lead the Way?
As usual at TSSS events, the main presentation was followed by an animated breakout session during which participants discussed which organizations have the responsibility and/or capacity to drive social change. Is it Google with its worldwide reach and its “Don’t be Evil” motto? Coca-Cola with its ability to impact worldwide water supply and use? IKEA with its minimal packaging expertise and ability to help save our forests?
Measurement: Social Sector Holy War
During the closing Q&A, the group explored such issues as what Bakule termed the “Holy War of the Social Sector: The Topic that is Measurement”. How do we measure if what we’re doing is working? What are you measuring and for what purpose? Since the issues that are important to a stakeholder may not be all that important to your business, do you measure only things material to your business, or all things that interest your stakeholders? At a minimum, Bakule explained, we must show outputs and outcomes and how they link to the business case. Beyond this minimum, the holy war rages on.
Innovate, Collaborate and Go Forth
So, you’re convinced that it’s time for your organization to embrace Shared Value but how? As our speakers explained, it’s about linking the new program to your existing corporate culture and goals. It’s about promoting the program internally, organically, with ‘sustainability champions’ spread throughout diverse internal business groups. It shouldn’t be about solving a problem, but rather seizing an opportunity that meshes with your corporate strategy. Measure what you’re doing and what you’re achieving. Collaborate, collaborate, collaborate. And above all, be ready to adapt to changing circumstances and unexpected developments. Enjoy the journey, and don’t be surprised when you arrive at a destination you never even knew existed.
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TSSS is widely recognized as Canada’s premiere forum for dialogue and problem solving among sustainability professionals. Each year over 1000 sustainability change agents attend TSSS events to exchange ideas and delve into trends, risks and opportunities that are presented by our shifting business model. Follow us on twitter and/or LinkedIn