Good Works Are Good Business - Jason Saul
Corporate leaders are now discovering that good works can boost their corporations’ bottom lines, says Chicago-based consultant Jason Saul. Northwestern University professor and the author of Social Innovation, Inc., Saul urges businesses to compete in what he calls the “social capital market.” Instead of just donating money through foundations or urging employees to volunteer, corporations can engage in social change in ways that win new customers and increase market share.
“When corporations put their considerable weight behind driving causes, they can achieve business goals and boost profits at the same time,” says Saul, founder and CEO of Mission Measurement. His firm works with corporate giants like Starbucks and Walmart, as well as nonprofit organizations like the American Cancer Society and the American Red Cross. “Corporations are not just doing good works out of the goodness of their hearts, but because of their economic value.”
However, Saul says companies can be more effective and achieve more success if they don’t just ‘do good.’ Rather, they should pursue social innovation. “Companies should invest in business outcomes that matter, instead of wasting a lot of money on things that don’t matter, hoping that this will make people feel good,” says Saul. If companies merely set up foundations and give money to charities, it will do some good, but they can do more good for society and for their businesses if they truly drive social change.
Consumers didn’t buy products or services because the manufacturer, for example, donated shoes to the poor. Consumers made purchasing decisions because of the value of the products and services themselves. Social change, when it produces something consumers want, can have its own value, Saul says.
Under the new social capital market model, businesses can now analyze social strategies as investment opportunities. Stakeholders, including investors and boards of directors, want to know that these dollars will benefit the company’s business mission, not just its social obligation.
“In the social capital market, there needs to be an economic motivation to addressing social problems, directly impacting the bottom lines of companies,” says Saul. Corporations can seize opportunities to do good deeds – also known as corporate social responsibility – as ways to boost their business. “Our research is around what social outcomes have economic value. Now we have a market for social change. It’s not companies giving just out of the goodness of their hearts, but because of its economic value.”
The social capital market may be a great untapped opportunity, says Saul. If corporations get involved in addressing major social problems like reducing obesity, fighting disease, insuring those without coverage, or improving schools, they will create more viable markets and customer bases. A failing society rife with problems is not fertile ground for business growth, he says.
Leading by example, executives also can push social innovation agendas among employees and cut health care costs, Saul says. Insurance premiums and lost productivity due to lifestyle-related health problems have skyrocketed on corporate balance sheets in recent years. For example, company policy can discourage smoking. Businesses can encourage employees to lose excess weight by offering healthy food in their cafeterias or installing gyms at work. If chief executives encourage employees to participate, or incentivize them by offering discounts on insurance premium contributions, savings can be substantial. Such programs are a simple “win-win” scenario for CEOs, he says, because healthier employees cost less in the long run.
“The premise here is that social change is the enabler to business growth,” says Saul. Companies can drive positive social outcomes in their marketplaces and create more business for themselves. “Social outcomes now are not just an obligation or a responsibility for a company. Now they are an economic imperative for a company.”