Community investment, shared value and corporate responsibility may be rising in popularity, yet Australian organisations could be spending up to $280 million a year[1] on initiatives whose impact they can’t – or simply don’t – measure, according to recent research conducted by Karrikins Group. Click on the image below to download the whitepaper now.

The research found that while 94% of those surveyed – across marketing, sustainability/CSR, corporate affairs and HR –  agreed that measurement was important;

  • Only 33% of companies measure the effect CI has on customers (either retention or acquisition)
  • Nearly 70% hardly think about brand factors, such as the extent to which a community investment could be leveraged for PR purposes, when choosing investments
  • Roughly 1/4 of companies do not measure the reach of their community investment activities
  • Over 1/3 companies barely consider their ability to measure impact when choosing investments

“Unless 67% of companies don’t have customer acquisition or retention on their strategy; or unless only 30% of companies are serious about brand building; or unless 25% of companies aren’t concerned about reliably measuring impact … community investment is currently nowhere near as ‘strategic’ as we like to think it is,” said Dom Thurbon, Chief Creative Officer of Karrikins Group.

“Too many community strategies, despite real and genuine effort, still do not align with and address the major business challenges that their organisations face,” Thurbon continued. “When they do purport to align, they are not adequately measured. This limits their strategic value.”

The research findings have inspired the publication of the perspective paper “Strategy and Measurement – Towards Lead-Practice in Community Investment”, being launched by Karrikins Group at a series of events around Australia and New Zealand in November.

The paper incorporates findings from the research survey conducted by Karrikins Group in 2015, engaging 39 corporate responsibility leaders from companies in Australia and New Zealand across a range of sectors, conversations with select senior leaders from both the commercial and community space, Karrikins Group’s first-hand experiences working on the design, development, execution and measurement of large-scale, innovative community investment programs around the world as well as a review of others’ literature and research.

Part research report, part case study and part strategy workbook, Thurbon hopes the paper starts conversations about how community investment can grow business and change the world at the same time.

“We believe that business can be a real force for positive change,” said Thurbon. “We hope this paper helps practitioners to increase the business value and social impact of community investments.”

View the paper on Slideshare: Strategy & Measurement – Towards Lead-Practice in Community Investment

[1] According to Philanthropy Australia, businesses in Australia spent $850 million on corporate philanthropy in 2013.

To quote Goldman Sach’s new head of Environmental and Social Governance (ESG) investing, Hugh Lawson “…cumulatively, one nudge here and one there start to add up”. 

He refers to the growing momentum of “socially responsible investment” – the space where businesses line-up financial returns with social progress – where money meets meaning. The movement has emerged under many guises – ‘conscious capitalism’, ‘ESG investing’, ‘impact investing’ and ‘Shared Value’. At Karrikins Group, we share an excitement for this expanding circuit of social capital – and for the new opportunities it presents to accelerate business growth and elevate social impact.

The social capital movement emerged in response to an investor problem, and a challenge of traditional markets. Co-founder and convener of the Social Capital Markets (SOCAP) conference, Kevin Doyle Jones, aptly describes the dilemma:

“…people said this ground between giving and investing could not exist. There is a market in the intersection between money and meaning.”

Jones and his contemporaries have argued that “markets don’t solve everything”, and that the traditional ‘hero’ model of philanthropy is now dated – we must now solve problems through community, and community investment. This new vision – of socially responsible investing, of investment solutions that don’t just attempt to minimise harm but fully embody social and environmental values – is a new model for doing social good. It harnesses the versatile and powerful tools of modern finances business innovation to achieve social change. Mark Kramer Founder and Managing Director of FSG, argues that the most valuable organisations of today and tomorrow, are those who: “recognise the business value in addressing [all] societal needs”. 

And as more and more businesses come to appreciate the power of this perspective, more and more tools become available to effectively bridge the gap between public good and premium returns.

Two elementary instruments of social capital are Divestment and Impact Investment. Impact public equities, impact fixed income (bonds), impact alternative assets and impact venture capital, constitute part of a growing assortment of products available to investors who seek a measurable social impact on top of their financial returns. The ‘impact’ model, Jones argues

“is so complex and disruptive of current systems that it should be seen as an ‘evolution’.” 

Divestment, on the other hand, represents a more rudimentary solution to re-align business positioning with social interests. Again, the momentum behind this novel idea is growing: “Wall Street’s banks are starting to realise it’s possible to drop oil without dropping returns.” 

Navigating this new world of social capital and impact investment “takes work”, says Paul Brest, emeritus dean and professor at Stanford Law School. Vetting potential organisations for “both the philanthropic causes and the potential financial returns” they support, requires a ‘double-up’ on due diligence. Thorough research, an openness to embrace government, as well as private sector, projects, and a focus on bringing accountability to non-profits, are key according to Brest. Further, Kiely, Mendonca and Westly point-out that to appeal to this new wave of investors:

“Companies must do a better job of compiling non-financial data on their environmental and social performance and report it to investors and other stakeholders” [NB: you can subscribe for 99c to read the full article].

Social capital has emerged, as an exciting and hopeful new space for business and society. Kiely et al. summarise that “Smart sustainability investments allow companies to attract better employees, improve their brands to sell more or sustain a price premium.”. Kramer argues that Shared Value is “how companies can help to solve social problems in ways that improve their bottom line performance.”.

To conclude with a quote from Kevin Doyle Jones, who shares our vision for community and business investment solutions in the future:

“…I want to invest in businesses that accrue wealth in the communities they work.”

How questions are great, and they have their time and place. But when you are in the strategic phase, when you are trying to establish a perspective on the desired future state, and to develop insights to support going there, how questions get in the way.  Think about it.  If you ask “how will we convert all of our legacy data onto a new platform without disrupting business as usual”, you will get all of the reasons why moving is not practical. If you ask “why should we convert all of our legacy data onto a new platform, and risk disrupting business as usual”, you will start thinking strategically about the problem.

At that point, you will do one of three things that are critical for setting a strategic goal: you will identify and articulate a burning platform, you will identify and articulate a burning desire, or you will identify and articulate a clear reason to do nothing.

Any of those three outcomes is perfect for what you need to set strategy.  Too often, strategy work gets mired in the ‘how’ questions, and there is not clear articulation of either a burning platform or a burning desire….. or clarity that no action is needed or wanted. If you want to be effective with your strategy work, focus on the why, not the how, and discipline yourself and your team to stay on the ‘why’ until you have one of those three outcomes.  And once you have a compelling ‘why’, the ‘how’ questions are that much easier to get sorted.

If you’ve set a clear strategy, you have your ‘why’ questions answered.  Why pursue a new market? Why disrupt a factory process? Why divest a business, or acquire something new? But, once you’ve set that, you can’t just sit around and wait for the future to come your way.

You have to tackle the ‘how’ at some point, and that’s often what we call the ‘ice age’ of strategy – the dreaded implementation phase. ‘How’ questions become about investment of dollars, time, and other finite resources – they are where the rubber meets the road. Unfortunately, too often the rubber doesn’t meet the road, and no progress is made against a well defined strategy.

Here’s the problem with that.  As you’ve no doubt seen in your own organization, the future inevitably arrives. And when it does, it often has all of the problems, opportunities, and challenges you thought about when you were building your ‘why’ answers. But, if you haven’t executed on the ‘how’, you will potentially move from a burning desire to a burning need, or from a burning need to a burned down opportunity, neither of which are places you want to be.

Having a clear ‘why’ should help make the ‘how’ more approachable, but it doesn’t create the organizational fortitude to take on really big challenges. For that, you often need to build broad coalitions of support for your strategy, where the ‘why’ is well understood. This can include shareholders, market watchers, employees, customers, and others. Guess what? The only way to get that coalition on board with taking on the tough ‘how’ details is to share with them the big ‘why’ answers. If you can’t overcome organizational obstacles to make progress against your strategy, you likely haven’t grounded enough people in the strategy for them to care enough to support it.  You have to be ready to inspire people to action, to bring them together to deliver on a common goal. Are you ready to do that?  Or are you keeping your strategy under wraps, hoping that the forces of good will conspire to deliver on it?  If you are, you will still likely struggle when it comes to answering ‘how’ as in ‘how are we going to get that done’? Share why you are doing something broadly to create the support you need to power through the tough details of how you do it.

As the 1990s got underway, we started to see major change ‘events’ happening in business. In particular, Enterprise Resource Planning software (ERPs) began to infiltrate all areas of the business, and new technology and process implementations required something new and different to deliver on their business cases. That ‘something’ became known as Change Management, and the growth in the discipline of change in the 1990s and the first decade of the 2000s was phenomenal – today it is a billion dollar industry by some estimates, with professional associations, career paths, and plenty of consultants / consulting companies running after a share of that market.

At the same time, change is accelerating in every area of business, and we have arrived at a point where ‘change’ is simply business as usual for most companies. If you aren’t continually adapting, flexing, and accommodating new pressures on your business, you aren’t keeping up. And if you aren’t keeping up you are falling behind – and you risk losing your competitive edge, your ability to be the obvious choice.

We think ‘change management’ has come and gone as an exclusive discipline.  These days, any project manager worth his or her chops should be able to build change activities into a project plan. Perhaps a change resource or a communications resource is needed to build and support the activities, but doing “change” outside of the program plan no longer makes sense. The two need to be completely coupled, in order for the project to be delivered.

Instead, there is a pressing need for individual people, teams, and companies to develop ‘change muscle’. They need to learn to work, deliver, and find satisfaction in an environment where change is happening every day. They need the tools, resources, and structures to help them succeed within change, rather than surviving it.  One challenge we have raised for ourselves is to stop seeing change as ‘event driven’ and instead focusing more on how to help our clients (and ourselves) to re-engineer the workplace to make it more conducive to change as being a normal part of every project, and indeed of every day.   Think for yourself – what if you stopped worrying about ‘change management’ and started focusing on ‘change muscle’?  How would that shift your attention? What would you do differently? And how would you use consultants differently to help build muscle instead of delivering on an event of change? We’d love to hear from you.

Below is a 1957 mind map of Walt Disney’s vision for his company.

Today it seems obvious, because most of what is there has come to pass (and then some). But pause for a moment to consider that Disney himself had no template for the market he was building. He created it out of his own mind, in collaboration with trusted partners. Then he went and made it happen, he brought it to life. It is a beautifully complex and yet simple rendering of what he intended to build.

If only we could all be so eloquent in our renderings of our visions! Maybe your drawings are a little messier, and they don’t have iconic mice running through them. Maybe you can’t even draw a mouse. But get over your artistic limitations and take a piece of paper. Draw what you’d love to build in your market – or in a new, as yet unrealized market. Use arrows and circles and square – whatever works for you. But use the Disney map as a model – consider the core, what matters most to you. Then move out to the edges – what other industries, products, lines of business could you explore? Remember that “Disneyland” didn’t mean anything to people when Disney drew this map – what’s your Disneyland?  What inspires you to build? What do you have a burning desire to create? What is a burning platform from which you’d love to jump, and to where?

Getting clear and articulate on that will clear up a tremendous amount of noise for you and for your team. It takes hard work, intention, and commitment to build the capacity to think in this way – you have to practice, and you have to share your thinking with others to get reactions, input, and critique. And then you have to try again. Keep pushing through until you have a picture you can hang on your wall and refer back to over and over again.  And then share it some more.  Disney succeeded because he took his drawing and he showed it to people, and he convinced them to care about it as much as he did, even though they likely didn’t ‘get it’ at first. Imagine trying to explain Disneyland to someone who’d never heard of a ‘theme park’!  I’m confident whatever your vision is, it can’t be harder than that to explain to someone. If you can get there, you will be at the intersection of old and new, bringing what works well to bear on what will be, and you will be driving value no one else has considered.

Try it. It’s hard, we know. But we’d love to see you go for it and win.

Everyone is talking about strategic alignment… but alignment to what?

In my experience, people are a little lazy in throwing around a term like ‘strategic alignment’. I think we need to see strategic alignment in our community portfolios in a couple of ways:

Mission alignment: making sure our efforts in the community directly connect to the vision, mission and purpose of the core business.

Thematic alignment: making sure our community investments line up to the space in which the business operates. (EG. Banks getting involved in financial literacy; it ‘makes sense’ to the community)

Segment alignment: making sure our core community investments are related to, or work with, the segments more relevant to our business strategy (eg. If we have a youth-focused customer strategy, making sure our core community investments logically relate to this)

Operational alignment: making sure our community investments fit with, make sense to, and are leveragable by the core operations teams inside the business – sales, marketing, ops etc.

There is huge value is seeing ‘strategic alignment’ more broadly than we currently do, especially if we’re serious about making sure companies get more value out of what they do.

The trend towards strategically aligning community investment with business strategy is a great one. Everyone wins: community investment becomes more core to the business, increasing the likelihood that companies invest; community partners are finally not at the whim of random strategy, but rather benefit from being seen as valuable partners around the table, not sponsors taking cash.

The most common lens for this conversation is ‘shared value’. This is a good, but incomplete one.

Shared value is great because it means that both the company and community benefit. However we suggest that ‘high value’ is an equally important lens – because different investments produce different amounts of value. CSR managers and senior leaders need to think not only about whether value is created on both business and community side, but also how much value is created on both.

‘Good value’ is another very important lens to apply. If an initiative creates a bit of social impact and returns a bit of value back to the brand, but costs an arm on a leg, the fact that the value is ‘shared’ is little solace for the CSR manager when they walk into the CFO’s office to justify the spend.

And ‘right value’ is probably most important. If a company has a massive strength in brand perception, but is weak in customer acquisition, is a community program that focuses on brand perception really the right option? Sure that would be ‘shared value’, but just not the ‘right value’?

In short, shared value: brilliantly important concept, and something we should care deeply about… it’s just not the only question we need to be asking when we sit down to design strategic community investment.  

“Chequebook philanthropy” is everyone’s favourite whipping dog, right about now. And in some ways, we at Karrikins are drivers of that particular bandwagon, as vocal proponents of strategically aligned, shared value creating community investment. But it’s worth putting a little bit of nuance into that position.

Philanthropy has a key role to play in our community portfolio; it just can’t be the only game in town. According to LBG data, about 25% of dollars currently spent in CSR/CI are classed as philanthropy. To me, ‘success’ is not making that number smaller – it’s just about making that number smarter.

Some causes and issues lend themselves to strategic investment – it’s not surprise, for example, that most companies’ portfolios include or focus on education, health, disability and employment. They are four big causes in the popular zeitgeist. But other causes – or smaller, more niche organisations focusing on ‘less famous’ parts of hose four causes – don’t lend themselves to huge, strategic partnerships. They live and die by the smaller, more philanthropic, more targeted funding. And no one is likely to ‘get famous’ supporting them.

It would be a massive shame to see some of these brilliant organisations be starved of support just because there is a shift towards more strategic, aligned and signature partnerships. It’s about companies having a balance in their portfolio, and never forgetting that some causes are good and right to support, simply because they are a good and right to support. …just don’t make them your only thing!

There is a wonderful step-by-step walkthrough to some case studies, models and approaches to strategic community investment that is particularly relevant to anyone who has operations or supply chain in developing countries. Or anyone who has a business model that relies on high-levels of local community engagement (eg. resources companies).
It’s created by the World Bank, and you can find it here.

I’m always stunned how few organisations are able to quantify the business and social impact of their community investment. Billions of corporate dollars flow into the community every year, and yet understanding what got done, and who benefited, is often challenging.
We suggest that two important philosophies need to underpin measurement.
One is ‘theory-based evaluation’ – all programs need a model for how they work. No money should be spent on anything until people can adequately answer the question ‘what change are we trying to create and how do we think this program will create it?’. The answers don’t need to be perfect to begin with, but they certainly need to exist.
Two is ‘utilisation-focused evaluation’ – we need to remember that the answer to ‘did it work’ is different depending on who is asking. When the CFO asks that, they mean ‘did it create value?’. When the CSR manager asks it, they mean ‘did it create impact?’. When the marketing manager asks it, they mean ‘did it change the way people think about the brand?’. And on and on it goes. We need to figure out what questions key stakeholders will be asking in advance, and then design our measurement to make sure we can answer those questions.
Sounds basic? Sure – but do you do it? And if you do it – how well do you do it?
I think we have a right to ask for more when it comes to impact measurement. For the amount of time, money and energy we spend, I think we could expect more from our partners and networks in measuring and articulating the impact (both social and business) that they have.

I came from a meeting with the CSR manager at a major national company today and it blew my mind. The NFP partner they’ve been working with (this is a huge national charity you’d all know) turned up to the annual review and basically asked, “So how much more money are you going to give us this coming year?” When asked about what additional value the charity would create, there was kind of an awkward silence and a blank stare.
I’ve had the pleasure of working with some phenomenal NFPs in my work in community investment, but I must stay that’s not a stunning example of one!! BUT – I think we owe it to our community partners to really bring them on the journey of shared value and strategic alignment.
Especially when we’re talking about corporations with long history of chequebook philanthropy and non-strategic, cash-only sponsorships, I don’t think it’s fair to presume the NFP partners will get discipline around the whole strategic alignment thing even before we ourselves in corporations do. As we evolve our approach, I think we have to help bring our trusted, long-term partners on the journey with us, rather than just assume they’ll ‘get it’.