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Social Innovation Drives Profits - Jason Saul

CAC NewsBrief Jason Saul Image2If businesses knew getting involved in good works in their communities could boost their profits, would they be eager – even competing – to sign on?

Consultant and author Jason Saul says yes. The Chicago-based founder of an innovative firm called Mission Measurement, Saul shows corporations how to effectively compete in what he calls the “social capital market.” By driving positive changes in their communities, companies can build more than goodwill, Saul says. They can win new customers, increase sales, and secure a larger share of their markets.

The concept is called social innovation, and it goes beyond companies merely donating money or employee time to good causes, he says. Businesses can analyze social action opportunities for their potential positive impact on their bottom lines.

Saul explains how social innovation works. One of his clients, the retail giant Walmart, wanted to better align its corporate social responsibility strategy with its core business strategy. Poor citizens in urban areas often cannot afford fresh, healthy food, or access important health screenings for diseases like cancer. City governments also struggle to fund social service programs or implement them effectively – so Walmart stepped in to help. To fight hunger that can lead to poor health outcomes, Walmart funded programs to deliver its fresh food products to urban food banks in areas of great need.

The Walmart Foundation also gave a $2 million grant to the American Cancer Society in July 2011 to fund breast and colon cancer screenings in 30 communities nationwide. The program includes three $300,000 grants to provide breast cancer screenings to African American women in three different cities.

According to the American Cancer Society, more than half of cancer deaths could be prevented if more emphasis were placed on early detection and healthier lifestyles, including maintaining a healthy weight through diet and exercise, avoiding tobacco, and getting recommended cancer screening tests.

Why would Walmart want to fund these projects? Saul explains that their goals fit their business model, not just their desire to have a good public image.

Walmart wanted to build stores in lucrative, large urban markets like Chicago and Washington, D.C. They faced incessant opposition from local governments who wanted to protect their longtime retailers from the competition of this large discount department store. Saul stepped in to analyze the situation and came up with creative solutions to help Walmart penetrate the urban markets. The innovative idea pitted the corporation’s considerable muscle against one of the cities’ greatest social challenges: Hunger.

In his analysis, Saul learned that the urban markets had serious hunger rates. Many poor citizens could not afford fresh, healthy food, increasing their risk of serious diseases like cancer. “So we asked, ‘what social outcomes would be valued by their consumers and by the gatekeepers and influencers of those urban markets?’” says Saul.

Walmart stepped in to offer an immediate solution. The company had the resources and logistical systems to address the hunger problem more effectively than city governments could manage, because it was already in the food business, Saul says. Walmart is the world’s largest grocery retailer, with access to food growers and manufacturers, as well as their own truck fleet.

Walmart proposed Fighting Hunger Together, a program to deliver fresh food to local food banks and provide employee volunteers to help move donated food to those who needed it. “They would be creating hunger-free zones around Walmart stores that would be built in these cities. They realized they could have a huge impact, specifically eradicating food deserts, and enabling them to step in and be a solver of problems,” says Saul.

Now, Walmart stores – typically smaller in size than the stores in suburban or rural areas – are located in large cities like Chicago and New York, Saul says. Fighting Hunger Together is a $2 billion commitment, but the payoff will be much larger for the company. They now have stores in these major markets, and large numbers of new customers. “They chose to be strategic in what problem they wanted to solve. They own the outcome because it is a key business strategy. Walmart created a social value proposition to cities.”

Many cities also have large numbers of citizens who are at risk for developing cancer because they lack education on preventive care or access to disease screenings. By partnering with the American Cancer Society to fund screenings for breast and colon cancers, Walmart helps inform more people about how they can help prevent disease and stay well. In this case, social innovation may generate more potential customers for Walmart’s pharmacies and health-related services.

Corporate leaders can follow Walmart’s example to identify ways to capitalize on social innovation and build their market share and create new customers. They can also position themselves as solution drivers, Saul says. Analyzing opportunities with an eye on how they can address business goals is the first step. “Businesses can look at what social outcomes would be valued by their consumers, and by the gatekeepers and influencers” in their industries, he says.

Saul sees social change as a rich vein of business yet to be tapped. Social needs like hunger, lack of insurance, or struggling schools offer companies pools of new customers and profits. Corporations have a remarkable opportunity, through power, money, and creativity, to drive social change, he says. “Social innovation is a strategy for growth, and for getting into new markets. This is big-stakes stuff.”