SGE B2B Trek 2013: The Business of Change (Part 2)
by Linley Kirkwood, MBA ’14, MPA ‘14 (1/22/14)
The SGE club travels from Burlington, VA to Boston, MA to visit a diverse set of organizations working to address environmental and social needs. Part 2
Joining the second annual B2B Trek with Johnson’s Sustainable Global Enterprise (SGE) Club gave me the unique opportunity to visit and learn from C40, Clinton Health Access Initiative (CHAI), FSG, Third Sector Capital, and Root Capital. Although these nonprofit organizations have very different missions, each drew on a similar set of tactics to successfully create sustainable impact.
Developing Creative Partnerships
Each organization repeatedly mentioned the theme of collaboration, going far beyond the basic tenets of Public Private Partnerships (PPP) that one might expect. CHAI emphasized its efforts to work with governments to transform healthcare in countries where it has explicitly been invited. This model of government partnership, with local government leadership and buy-in, provides more effective and systemic solutions. Third Sector Capital manages complex stakeholder relations between local governments, service providers, investors, and evaluators to develop and implement pay-for-success and social innovation financing solutions. And while FSG works in partnership with corporate clients, collaboration is critical to the success of the organization’s Shared Value Institute (SVI), a global community of practitioners that have been trained to implement FSG’s shared value model around the world. FSG is sharing its model, and its profit potential, simply to scale the impact of its work. Each organization is creating cross-sector partnerships to develop innovative and lasting solutions.
Working at the Top
C40’s approach to climate change is based on the premise that “nations talk, cities act.” C40 works with mayors of 63 so-called “megacities” that represent 21 percent of the world’s GDP and 8 percent of the world’s population; who often have a significant power and influence. This is a “supergroup” that has the ability to initiate significant change and the publicity to inspire others to do the same. FSG, initially established as the Foundation Strategy Group, has shifted its focus from foundations to private sector businesses, particularly at the C-Suite level. This reflects a broader trend in CEO engagement and leadership around the private sector’s role in contributing to societal impact.
Leveraging Business Opportunities & Values
Root Capital, a social lender and impact investor that works with smallholder agriculture businesses around the world, saw a need and developed a business opportunity to bring capital to the “missing middle” that is beyond microfinance but too small for commercial loans, venture capital, or private equity. This has allowed the organization to disburse more than $55 million in loans and reach nearly 250,000 agriculture producers.
CHAI and Third Sector Capital draw on traditional business incentives and values to fully implement their work. Framing its work in public health as a management challenge, CHAI lowers prices on life-saving treatments by relying on traditional business incentives of competition, cost-savings, and efficiency, not by appealing to the big pharmaceutical companies’ philanthropic arms with emotional appeals. CHAI helps companies identify new suppliers for generic drugs, find cheaper inputs, and develop new, more efficient processes to lower costs. Reflecting the 1990s shift towards new public management, Third Sector Capital’s pay-for-success model depends on using private sector values of metrics, oversight, and accountability to scale the social sector’s service provision.
Although I learned about each of these concepts in theory, it was inspiring to see them applied effectively, and in different ways, by such impactful organizations. No matter your career path or organizational sector of choice, these three key tenets can help you drive sustainable change.