Deep Dive: B2B is social impact
Can your company thrive with an integrated approach to business innovation and social responsibility?
Welcome to my third newsletter on innovating B2B. I believe business is where we all come together for our society’s most worthwhile goals—establishing a shared purpose, serving customers, creating wealth, and generating socioeconomic goods. In this edition, I share the inspiration I gained by investigating how B2B companies innovated for customers during the pandemic, creating social impact along the way. I also announce my newest research project. My goal is to connect the dots between business innovation and corporate social responsibility. This work is conducted in partnership with the Colorado Universities Innovation Council (CUIC), where I contribute as the B2B Markets Leader. I invite you to add your comments and help push our new project along.
Evidence of Business Innovation for Social Impact
I don’t know about you, but to me, calls for business leaders to embrace corporate social responsibility (CSR), stakeholder capitalism, conscious capitalism, or social impact sometimes seem a little outside-in and detached from the day-to-day challenges of running a business. It’s not that companies don’t have responsibility for acting as citizens in our society and economy. They do. And many companies, perhaps even most, intentionally make a difference in the way they run their business and serve their customers and communities. But the movement for “doing good while doing business” seldom seems to be an organic groundswell of nuts-and-bolts, real-world businesses.
In a very unexpected way, I found evidence to the contrary in my most recent work as a NAW Fellow investigating innovations by B2B companies during the pandemic. I asked distributor leaders two questions: How did your business innovate to survive the pandemic? And, what did you learn about the future of business? I found that once leaders secured their company’s cash flow, liquidity, supplier commitments, and customer relations, they got to work helping their (business) customers adapt to the pandemic and survive the lockdowns. One distributor leader put it this way, with sentiments and actions matched by every other leader I talked to:
Day zero. The pandemic hit. Like every distributor, we were just trying to figure out what to do. It was almost like starting a business from scratch. Will we have any customers? Will we be able to get products from suppliers? Will we have revenue? Will we have employees? Will they be able to show up for work? Will we be able to conduct business? The presence or absence of business was uncertain. It was like stepping off a cliff. We were all disoriented. And then we moved forward. (Emphasis added.)
Chief Executive Officer, Wholesaler-Distributor
The pandemic is a very human crisis, and distributors, as B2B companies, responded with very human innovations. They kept their people and their customers safe and at work. Distributors gathered COVID-19 guidelines and dictates, then leveraged their understanding of customer operations to help apply them to specific industry requirements. By helping to keep customer employees working, distributors provided opportunities to earn wages, supporting families and local economies. Distributors went even further, leveraging their digital capabilities to enable self-service, provide supply chain visibility, and enhance customer business processes and workflows. Distributors did all this selflessly because it was the right thing to do. This is social responsibility.
Connecting the Dots
I’ve launched a new project to help connect the dots between the innovations that every B2B company must create to remain viable in the digital age and the initiatives intended to make a difference in our society. I am inspired by B2B leaders that stepped up during the pandemic selflessly without boasting. I also want to provide perspective for advocates of the CSR movement: social responsibility is an inherent core value for B2B leaders, one that aligns with the B2B mission to help customers thrive in our modern world. My goal is to appeal to B2B leaders’ better nature while connecting social responsibility with every company’s ongoing innovation for thriving in the digital age. Through regulations, investor pressures, or shaming, movements that drive only from the outside will be less effective without connecting the dots between business and social results.
I am conducting this project in partnership with the Colorado Universities Innovation Council (CUIC.) CUIC’s mission includes providing innovation learning opportunities for students and advancing the cause of corporate social responsibility. Trevor McCall, a graduate student with the University of Denver’s Nonprofit Leadership program, works side-by-side with me. CUIC facilitated Trevor’s involvement and participation as an essential team member. Trevor provides energy, a next-generation perspective, and thought leadership, drawn from his focus on social enterprise, innovation, and entrepreneurship. We are up and running and making progress.
Toward a shared lexicon
In another project, Creating Innovations and Shaping the Future of Business, I found three requirements for starting a movement: a shared purpose, a common lexicon of words and phrases, and active groups of committed practitioners. In our current project, we have listened carefully to many B2B leaders and identified 10 words important on both sides of the equation—for companies pursuing business innovations and activists who are encouraging social responsibility. Below, we share these words and phrases, each with a brief description of the meaning for both sides:
Purpose. Traditionally, a company’s mission statement or value proposition codifies the company’s purpose, often articulated as a passion for serving customers and creating a productive and comfortable work environment. New-generation employees want work to have meaning and look for a purpose that transcends profits. By nurturing a well-crafted culture and perhaps enabling opportunities to lean in on social projects, business leaders move their company toward socially responsible contributions, whether or not doing so is a specific goal.
Community. As a business practice, community programs are designed to create collaboration among stakeholders, including developers, influencers, and users. Business goals include strengthening the company’s brand and developing code, business processes, innovation, and more. Some companies go further and work toward community betterment—helping the people who make up the community achieve their professional/personal goals, or extending core expertise and capabilities to social communities that might include marginalized citizens, veterans, small businesses, and more. Every society is a collection of communities, so community betterment adds up to social impact.
Wealth. Financial and economic outcomes traditionally define wealth, but many business leaders share that they have a more expansive view of the wealth created for employees and customers. An extended definition of wealth can include providing for families, earning a living wage, adding disposable income to a local economy, achieving a sense of self-worth and dignity through employment, professional advancement, encouraging entrepreneurial endeavors, and more.
Stewardship. In a business context, stewardship is about duties and obligations that go to managing financial affairs, utilizing resources, diligent pursuit of profits, safe working conditions, and more. Business stewardship is about sustainability, minimizing pollution, achieving carbon-neutral operations, and more in a social context. Stewardship is a core value held by those who view management as a profession or calling and captures expected outcomes of doing good while doing business.
Trust. As effectively communicated in the Netflix documentary The Social Dilemma, the business models of technology giants and emerging unicorns have evolved to create the “attention economy.” Keeping users online and eyeballs on screens is a top business priority, and the methods for doing so tend toward encouraging extreme points of view. The negative impact on society is dramatic. Real-world companies can fill the gap by building customer relationships around trust—trust that B2B companies will work to their customers’ advantage with commitment and innovation. In this way, they support business as a respected institution and help to glue our polarized society together.
Entrepreneurship. B2B companies have long realized that value-selling techniques are an effective tool for growing their business; these techniques help quantify the value their products and services create. At its center, however, value selling is still about selling. That is, the process works to convince customers to spend their cash and resources for the supplier’s advantage. Among leaders, the concept of “business entrepreneurship” is emerging—deploying a company’s resources to help customers pursue new opportunities and reinvent their business. By doing so, they are working with customers in the same way that social entrepreneurs work with communities.
Data partnerships. In my recent newsletter edition, Can new data collaborations revitalize the value chain and spark a B2B revolution? I apply principles practiced in public/private data collaborations for revitalizing partnerships in the B2B value chain. In the digital age, all businesses, value chains, communities, and our overall society run on data. Best practices around data collaborations across organizations that are not easy partners can help us leverage the new lifeblood of work and living—data—to achieve socioeconomic good.
Win/win. Creating favorable outcomes among partners, collaborators, social and business organizations, donors, and programs, and in many other situations, is a widely accepted framework for making progress at for-profit businesses and nonprofit organizations. Win/win formulations are most successful when both parties understand each other’s goals. Creating metrics that measure each party’s success factors, as well as mutual benefits, are essential.
Social investment. In business, anything worth doing is worth an investment. Companies seek investors through public markets, private equity, venture capitalists, and angel investors. If a company is committing time and resources to achieve social good, costs are incurred. The company might approach Impact Investors to fund the initiative. Even if a company can fund CSR initiatives through its cash flow, arranging for environmental, social, and governance (ESG) investors adds significance and meaning for participating employees. Moreover, by demonstrating a return for social investors, B2B companies will gain knowledge about demonstrating a social ROI.
Do the right thing. Humans naturally form communities for safety and progress. It’s in our genes and an element of every culture. Similarly, humans want to solve problems and create art. By solving problems, humans live better lives in better functioning societies. By creating art, humans express creativity, and they create beauty. Much of the human condition is aligned with doing the right thing for our families, employees, communities, and organizations. There is much common ground to be mined as businesses and activists work toward the common good. It’s simply about doing the right thing.
Ideas for innovating B2B
As our work proceeds, our project will build a business case that links business innovation and corporate social responsibility, along with processes, capabilities, and success measures. We will seek to gather and tell stories. Our goal is to provide ideas for innovating B2B, and while we have much work ahead, I can offer three ideas to help B2B leaders now:
Intentionally create and manage your culture. Culture is defined as values and behaviors. Values can be vague, but behaviors are concrete. Identify the behaviors you want to create at your company, with customers, and in your community, and work toward making them the core of your approach to doing business.
Partner with a social organization. Every competent business draws on the same talent, best practices, and thought leadership. By creating opportunities for your team to work with a social organization, and vice versa, you may pick up on new values and cultures that can lead to competitive differentiation.
Explore social ROI. Reach out to ESG/social investment experts and practitioners, and dig into how they define returns and investments and how they view acceptable rates of return and timing. Line up what you find with your financial modeling assumptions. Sooner or later, an ROI is mandatory in the business world—so understanding how you measure and pursue an ROI is a worthwhile initiative.
Join the journey
Thank you for reading my third newsletter on innovating B2B. Like the first, my goal is to introduce new ideas and look for a path forward. In this edition, I also ask for your help. If you would like to know more about our project or contribute to our progress, please add your comments below, or reach out at mark.dancer@n4bi.com.