The Roadmap Toward Effective Strategic Social Partnerships the Roadmap Toward Effective Strategic Social Partnerships

The roadmap toward effective strategic social partnerships The roadmap toward effective strategic social partnerships

About the authors

John Mennel is a director in the Emerging Markets practice with Monitor Deloitte. He works with companies, non-profits, and the public sector to develop market-based solutions to social and economic development challenges with a focus on emerging markets. He has worked in more than 20 countries across Europe, the Middle East, and Africa; his work includes a focus on partnerships that create social impact, known as “strategic social partnerships.” He is a frequent speaker on economic development and social impact at venues including the World Trade Promotion Organization, the London School of Economics, and the World Bank. In the early 1990s, he worked in Deloitte’s Moscow office and subsequently managed the Almaty office. He holds a Bachelor of Arts from Brown University and an MBA from Harvard Business School.

Tina Mendelson is a principal with Deloitte Consulting LLP in the Washington, DC office. She focuses on business transformation, sustainability, and financial and performance management solutions aimed at increasing country- and industry-level competitiveness in emerging markets. She has implemented projects for international donor agencies across Eastern Europe, Central Asia, and the Middle East that enabled economic policy reform and improved the performance of businesses, industries, and government agencies. She helps diverse stakeholders align their objectives and leverage each other’s resources through innovative public-private partnerships to achieve sustainable business and social impact results. Most recently, she is developing new partnerships to strengthen health systems in select African countries. She has master’s degrees from Georgetown University and Central European University.

ii Kellie A. McElhaney, PhD is the John C. Whitehead Faculty Fellow and founding faculty director of the Center for Responsible Business at the Haas School of Business. Her work focuses on three areas: Analyzing and developing companies’ corporate social responsibility (CSR) strategy and its alignment with corporate strategy, business objectives, core competencies, and business value; exploring the linkage between gender and CSR and using CSR as a tool to engage women as employees, consumers, and investors; and the business value and opportunities in branding, communication, and CSR, on which she has written a book entitled Just Good Business: The Strategic Guide to Aligning Corporate Responsibility and Brand. McElhaney consults at hundreds of Fortune 500 companies in all of these areas.

Bill Marquard is a director in the strategy consulting practice of Monitor Deloitte. He specializes in developing and delivering growth strategies for global corporations and has established and/or advised strategic social partnerships in the United States, Central America, and Cyprus. He served as a C-level executive for a Fortune 200 organization and is the author of Wal-Smart: What it Really Takes to Profit in a Wal-Mart World, selected as one of the top five business strategy books of the year. He has also served as an adjunct professor at Northwestern’s Kellogg School of Management, and has spoken at the White House on leadership issues. The roadmap toward effective strategic social partnerships

Contents

Executive summary | 5

The mainstreaming of social impact thinking | 6

Partnerships as a delivery model for shared value | 8

Strategic social partnerships | 10

Implementation challenges: Bumps in the road | 14

Charting a path to effective partnerships | 17

Looking forward: The road ahead | 18

Appendix | 19

Endnotes | 22

4 Executive summary

ince Michael Porter and Mark Kramer sector are inherently inefficient and hard to Sintroduced the term in 2011, the concept of work with. We see some companies developing “shared value” has quickly become accepted by deep competence in partnerships, and a new many forward-thinking companies and busi- model that we call strategic social partner- ness leaders. After all, improving the bottom ships (SSPs) emerging in those companies. line while creating positive social and environ- SSPs are often implemented jointly by the cor- mental impact is a classic win-win scenario. porate social responsibility (CSR) department, Also, when implemented well, shared value the philanthropy function, and the core busi- strategies can fundamentally change a com- ness functions; they are given high visibility in pany’s competitive positioning and the way it public reporting; they establish complementary relates to customers, employees, suppliers, and roles for each partner leveraging the skills, investors. What’s not to like? At Deloitte, we resources, and sense of mission of each; and have found that shared value is often not so they receive substantial investments of time easy to implement, though, especially within and money, including significant C-suite atten- large, complex, global corporations. Mark tion. While the importance of shared value as a Pfitzer, Valerie Bookstette, and Mike Stamp concept seems on its way to widespread accep- write about some of these implementation tance, implementation challenges have contin- challenges in the September 2013 issue of the ued to dog efforts to scale up, preventing many Harvard Business Review in “Innovating for efforts from achieving their full potential and shared value.” While the points made there resulting in some costly and public mistakes. are important, our work with clients and our Mastery of the skills needed to identify, create, research indicate that implementing shared and manage SSPs can make the difference, value often requires a complete reevaluation enabling companies already practicing shared of partnerships, one of the major implemen- value to scale up their efforts, and providing tation modalities for shared value. For many a way for those still sitting on the sidelines to companies, creating and managing truly get into the game. Getting SSPs right can also strategic relationships with partners outside help all sectors—corporate, non-profit, and the the business sector—with community groups, public sector—align social impact to busi- non-profits, and governments—is a new skill, ness opportunities, create distinct competitive and there is often a reluctance to really commit advantage, generate shareholder value, and because of organizational inertia, a fear of risk, apply innovative solutions to solve tough social and a sense that non-profits and the public and development problems.

5 The roadmap toward effective strategic social partnerships

The mainstreaming of social impact thinking

ost leading companies now recognize While the concept of social impact is not Mthe business benefits of investments new, the approach is changing. Previously, in social impact, including corporate social social investments were separated from the responsibility (CSR) programs, employee core line of business in CSR units or corpo- giving and volunteerism, community grants, rate foundations. While in some cases, social and joint programs with non-profits. Research impact programs were seen as part of polishing from leading business thinkers such as a company’s public image or earning “social Rosabeth Moss Kanter and Robert Eccles license to operate” in various communities, increasingly links long-term business per- contributions were considered purely phil- formance to corporate anthropic and discon- social impact, showing nected from a firm’s core that companies more business. In recent years, committed to social For many this view has shifted dra- performance ultimately matically. Now, forward- outperformed coun- companies, social thinking companies are terparts on return on taking a far more strate- assets and return on impact is how they gic approach, bringing equity.1 Companies are social impact squarely also proactively driving define themselves, in line with business transparency around objectives and opportu- their social impact differentiate from nities. These companies investments. This is clear seek to leverage invest- from trends in report- the competition, ments in social impact ing: The number of to increase their market companies publishing and excel in presence, build stronger sustainability reports and more efficient sup- skyrocketed from only the market. ply chains, develop new 44 in 2000 to more than products, and engage 2,000 in 2010.2 These a larger customer base. facts and the growing For many companies, body of literature show that companies should social impact has become a core part of how understand and proactively pursue social they define themselves, differentiate from the investment in order to achieve sustainable competition, and excel in the market. growth. Customers and employees demand it, Consider the exponential success of the market rewards it, and competitors look one-for-one companies that donate goods to out for it. people in need for every unit purchased by

6 a consumer. TOMS Shoes, for example, has Like TOMS Shoes and Warby Parker, other built a multimillion-dollar business giving companies are fundamentally redefining away millions of pairs of shoes in Africa, Asia, their role within the social sphere. Unilever, and Latin America. TOMS has begun to work the global consumer goods company, has set with non-profits like Africare, UNICEF, and aggressive social standards for itself, including Management Sciences for Health (MSH), bringing its health and hygiene projects to a which help TOMS identify worthy recipients billion people at the bottom of the economic in developing countries, distribute the dona- pyramid and sourcing all of its agricultural tions effectively, and combine them in “kits” inputs sustainably by 2020. Additionally, coffee with other products to improve the health giants such as Starbucks, Nestle, and Kraft have and livelihoods of recipients. Warby Parker, a publicly committed to high levels of sustain- new eyeglass company, has gained popularity able coffee sourcing, potentially doubling among young adults who are attracted to its demand for sustainable coffee by 2015. In model of giving away glasses to developing- many ways, this represents the mainstream- world micro-entrepreneurs who reach poor ing of the concepts that Michael Porter and consumers. In both cases, these companies Mark Kramer identified in their 2011 article have leveraged social impact to stake out new “Creating shared value.” By and large, directors market segments with customers willing to and executive leadership at many of the world’s exercise their buying power to support prod- largest companies have taken these concepts ucts with strong social impact attributes. on board at a conceptual and strategic level.

7 The roadmap toward effective strategic social partnerships

Partnerships as a delivery model for shared value

e believe that now is the critical time Partnerships have yielded early successes Wfor action in the implementation of and demonstrated tremendous business and these concepts. Companies are progressively social potential. For instance, Dole Food turning to partnerships with non-profits, Company has used partnerships with non- social enterprises, and the public sector as the profits to build its supply chain in Peru. Dole major method by which they achieve shared originally sought a large-scale, sustainable value. Partnerships are efficient and enable source of organic bananas that would meet risk-sharing by allowing its quality and food safety different entities to serve standards. The company complementary roles. decided to work with local Organizations are able Organizations smallholder farmers in to draw upon special- Peru’s Sullana Valley, but ized capabilities of each are able to draw the challenge was to access partner and access new sufficient supply at com- skills and resources that upon specialized petitive cost. To solve this were previously unavail- problem, the company cre- able when working alone. capabilities of ated the Organic Project, a For example, non-profits partnership with 11 local typically bring longer each partner producer organizations, time horizons, the abil- through which it provided ity to buy down startup and access technical assistance, cer- costs that would derail a tification, and technology fully commercial venture, new skills and to smallholder farmers specialized skills in their in Peru’s Sullana Valley. area of work (for example, resources that These helped the Sullana the environment or rural communities export nearly development), on-the- were previously 1.5 million banana boxes ground knowledge of the per year, easily meeting communities they work in, unavailable when Dole’s demand for sus- and credibility with groups tainable organic bananas. that are skeptical of corpo- working alone. The Sullana communities rate motives. Governments have also grossed more bring the capability to than $11 million per year reconcile competing interests, leverage public in income and created more than 1,900 jobs infrastructure, and develop policy frameworks (both directly and indirectly).3 Municipal that reduce risk and provide the ground rules governments helped organize classroom for investment. training and developed public lighting and

8 infrastructure projects with the new revenue. the economic value of social impact pro- Through this innovative partnership, Dole suc- grams and are using partnerships to achieve cessfully built a sustainable sourcing strategy bottom-line benefits in a number of ways, while supporting the local community—mar- such as promoting brand loyalty, reducing rying its business and social impact needs supply chain costs, or leveraging cost-effective and opportunities. distribution networks. Executives are enthusiastic about the ben- However, as more and more companies efits of social partnerships for both their own enter into new partnerships with the inten- bottom line and the benefit of the communities tion to unlock business and social value, they they serve. In a recent survey, 79 percent of must carefully navigate key issues around CEO respondents expected their investment in strategy, governance, organization, and mea- social sector partnerships to increase over the surement for successful implementation. Our next three years.4 Under the G8’s New Alliance research suggests the importance of a struc- for Food Security and Nutrition Commitment, tured approach to defining and implementing 45 companies have signed Letters of Intent partnerships in order to help corporations to invest over $3 billion in African countries, and non-profits alike manage the inherent while 60 companies have signed the Private issues and risks and realize the full potential of Sector Declaration of Support for African their partnerships. Agricultural Development. CEOs understand

9 The roadmap toward effective strategic social partnerships

Strategic social partnerships

ver the past two years, as part of into the partnership. Fourth, within the cor- Oresearch on the topic, Deloitte inter- poration, they were driven by a business unit viewed and worked with staff at multiple levels (and, rarely, by corporate affairs) rather than of more than 30 industry-leading companies the CSR department or the corporate founda- to better understand how these companies tion, and they had clearly defined business are implementing social impact partnerships. goals. Fifth, they were developed with signifi- We have also worked with and interviewed cant up-front thought toward governance, the government agencies and international donors number and roles of organizations involved including the United States in the partnership, impact Agency for International measurement procedures, Development (USAID), rules around communica- the Department of State, We found that tion, and the “exit strategy” the Department of for the partners. Defense, and the World SSPs address Because these partner- Bank, as well as non- ships were sufficiently profits like Conservation a broad range different than other, less International, CARE strategic partnerships we International, Africare, of business have seen, and because the and the Clinton Giustra executives driving them Enterprise Partnership. functions and often struggle to explain We found five charac- them both inside their teristics of the most effec- that companies company and to external tive partnerships. First, audiences, we believe a they were “multi-sectoral”: are using SSPs in new name is needed. We They included corporates, have called them strategic non-profit and social six specific areas. social partnerships (SSPs). sector organizations, and While not an exclusive sometimes governments feature, we also found SSPs and other public sector especially important in organizations. Second, the partnerships were business ventures launched by multinational often set up to resolve implementation chal- corporations (both “Western” and “Southern”) lenges that the company had tried and failed in emerging and frontier markets, where to solve on its own. Third, the social impact the importance of inclusive distribution and aspect of the partnership was sufficiently well supply chains, the need to develop workforce articulated and backed up with investment to health and capability, and the imperative to bring highly credible, mission-oriented non- manage social and political risk make them profits and other social sector organizations especially important.

10 What’s in a name? We found that interviewees often struggled to name what they are trying to do with social impact partnerships— often falling back on the term “public-private partnerships” with its infrastructure connotations or simply calling them “CSR efforts.” We use the term “strategic social partnerships” to highlight the involvement of multiple sectors, the focus on core business objectives, and the generally more strategic approach to governance. SSPs are different in five key ways in that they: 1. Provide complementary roles for partners in the private, social, and public sector 2. Address implementation challenges that the corporation could not solve alone 3. Contribute sufficient social impact to involve highly credible mission-oriented social sector players 4. Are driven by the business units 5. Have a proactive focus on governance to manage brand, financial, and political risk

SSPs are often designed to capture growing opportunities in emerging and frontier markets, although they are also useful in developed markets.

We found that SSPs address a broad range (such as tracking environmental degradation, of business functions and that companies are spread of viruses, or community mapping for using SSPs in six specific areas (see figure 1): public services) while receiving updated, more talent and workforce, product design and accurate information to feed back into the development, distribution, sourcing and supply mapping products. chain, regulatory affairs, and brand marketing. In the talent and workforce function, for SSPs: A win-win-win example, Walmart and CARE International have teamed up to provide leadership devel- Across these business functions, SSPs bring opment and life skills training to more than a distinct set of advantages to each partner: 60,000 women who work in factories that supply to Walmart. The initiative seeks to retain • Benefits to the corporate partner: Non- and promote talent within the factories, while profit partners can help corporations reap empowering the women to make financial and the benefits of local and community knowl- economic decisions within their communities. edge, lower programming and coordina- Under the distribution function, companies tion costs, and expertise in sustaining and and non-profits have teamed up to leverage managing the program. Sourcing is a key non-traditional means of distribution such as business function where SSPs have deliv- hawkers, cooperatives, and bicycle vendors to ered high value, as Starbucks has shown in distribute valuable consumer goods, including the coffee industry. The coffee giant initi- drinkable water packets and medical supplies. ated training and support for local coffee In the technology sector, Google is engaged in cooperatives in partnership with inter- a number of innovative partnerships to help national donors and non-profits through refine some of its best-known products, such as targeted programs in Costa Rica, Rwanda, Google Earth and Google Maps. Teaming up and Tanzania. As a result, Starbucks has with organizations that range from universi- been able to bring sustainably sourced and ties to the World Bank to local NGOs, Google distinct varieties of coffee beans to market makes its data and tools available to local map- and sell them to consumers with specialty makers and scientists to support their goals packaging and differentiated branding.

11 The roadmap toward effective strategic social partnerships

• Benefits to the non-profit or social country, the Enterprise Partnership has enterprise partner: SSPs offer non-profit worked with small, local suppliers to build organizations sustainable, secure, multi- capacity and quality of services and goods, year funding (often with fewer restrictions scaling up businesses to meet the hotels’ than traditional philanthropic funders), as needs. As a result of this project’s success, well as access to corporate partners’ buy- the Enterprise Partnership has now cata- ing power, trained staff, technologies, and lyzed a new for-profit “distribution enter- expertise. This helps the social enterprise prise” that will aggregate the goods of small link its beneficiaries to markets and deliver producers, handle logistics and distribution impact on a larger scale. For example, the for them, and develop new customers. The Clinton Giustra Enterprise Partnership Enterprise Partnership is replicating this has led and run a successful hotel supplier supply chain model with leading market development project in Colombia. Working buyers in multiple developing countries. with some of the largest hotel chains in the

Figure 1. SSP business functions

Talent and workforce Develop training and capacity-building programs, workforce volunteerism programs, etc.

Brand Product Boost brand awareness and Collaborate on new product marketing efforts through Private development, e.g. reverse corporate goods and services innovation opportunities sector

SSP Social Public sector sector

Regulatory Distribution environment Leverage a set of individuals or Establish industry-wide groups to serve as a broader standards or coalitions to distribution network bolster regulations

Sourcing Develop sustainable supply chains and sources of products and goods

12 • Benefits to the public sector partner: The health and creating jobs and investment). public sector plays a key role by establish- In the United States, the State Department’s ing partnership-friendly policy frameworks Global Partnership Initiative (GPI) forges that reduce risk and encourage investment, partnerships that strengthen develop- making public investments in infrastruc- ment and diplomacy outcomes, such as ture to support social value, leveraging the Global Alliance for Clean Cookstoves, convening power to bring parties to the while the Department of Defense has part- table, and reconciling competing interests. nered with cruise lines on anti-piracy and The public sector benefits from the eco- drug interdiction programs. Additionally, nomic power, technology, new thinking, USAID has leveraged over $9 billion in and skills of the private sector to overcome combined public and private resources for challenging societal problems (for example, its Global Development Alliances (GDA) improving basic services like education and program since 2001.

Table 1. Sample SSPs across industries

Extractives Technology Manufacturing Financial services Food value chain

Creating comprehensive Developing educational Developing sustainable Using broad-based Sourcing local, local community and workforce supply chains, including financial infrastructure sustainable agricultural engagement, from development programs local suppliers and (mobile banking, rural inputs, building health programs initiatives—for example, inputs, to support banks) to increase local capacity, and to developing local Microsoft’s support of manufacturers— access to finance increasing awareness suppliers—for example, the Boys & Girls Clubs for example, the for the poor and and adoption of Chevron’s partnership of America through Sustainable Apparel SMEs—for example, a improved inputs—for with the World Wildlife technology, expertise, Coalition and its collaboration between example, the World Fund to protect the and resources to many corporate the Citi and Calvert Cocoa Foundation has fragile rainforests of promote technology partners (Patagonia, Foundations to invest attracted key industry Papua New Guinea literacy and support Columbia, Nike, etc.) at least $20 million partners such as through an integrated workforce development to address social and in microfinance Hershey’s and Mars to conservation and environmental issues in institutions supporting promote sustainable development project the apparel supply chain woman-focused small cocoa farming businesses standards

13 The roadmap toward effective strategic social partnerships

Implementation challenges: Bumps in the road

Rewards and risks participants are invariably less invested in the hile the promise of SSPs is clear, suc- partnership. With insufficient funding and Wcessful implementation has proven attention, partnerships are more apt to produce more challenging. SSPs can be more difficult only marginal impact or fail entirely. to implement than philanthropic or CSR Poorly implemented SSPs can expose partnerships because they seek to create core organizations to unnecessary risk, public business value. They also require coordination reversals of commitments, and wasted time across multiple functions within a business and and resources. PepsiCo, for instance, launched among partners with a broad array of interests: a widely publicized healthy foods campaign the social mission of the non-profit; the social, in 2007 in partnership with a number of food market development, and financial goals of manufacturers to sustainably source ingre- the corporation; and the political priorities dients—with the involvement of non-profits of the government. Without proper align- and multi-lateral public sector bodies like the ment of motivations and objectives up front, World Health Organization. However, some

Successful SSPs: Enhancing Ferrero’s supply chain through smallholder farmers The Republic of Georgia is the third-largest producer of hazelnuts worldwide, but low quality and a fragmented production base consisting of smallholder farmers significantly reduce the competitiveness of the sector. It also creates barriers to reaching high-value markets, resulting in lower incomes for farmers. Facing an increasingly tight supply environment of sustainably harvested hazelnuts in Turkey, its primary market, the global confectionary company Ferrero began to look at investments in Georgia and at an SSP that would establish a new source of supply and increase incomes and quality standards for its small suppliers in Georgia.

An SSP was established among USAID, Ferrero, and Ferrero’s local subsidiary, AgriGeorgia, to create a scalable, competitive, and stable hazelnut supply chain. AgriGeorgia implemented a hazelnut training program at Ferrero’s 4,000 hectare plantation in Georgia, developing training and demo plots, and delivering tailored trainings to local agronomists and smallholder farmers on modern hazelnut production practices. As part of the SSP, the partners also facilitated the establishment of 16 farmer groups to improve smallholder farmer access to finance, inputs, and marketing scale.

As a result of the partnership, Ferrero has secured a new, sustainable source of high-quality hazelnuts for its products, while developing significant capacity for smallholder farmers in Georgia to connect to a high-value global supply chain for their hazelnuts. More than 2,100 hazelnut farmers have increased both the quantity and quality of their production, which has resulted in higher prices for their products and double-digit annual increases in their household incomes. Through this partnership, Georgia’s hazelnut industry can achieve efficiencies and better meet the global market’s quality and quantity needs.

14 parts of the company came to see the initiative because there were not strong enough commit- as too costly to the business, and the initiative ments from the government and the non-prof- was reined in before achieving commitments.5 its involved to assume on-going management While this experience will ultimately help of this health infrastructure, the company PepsiCo better align its sustainability program found itself operating the de facto health to core business needs in future iterations, the system for many years, siphoning off valuable initial lack of defined objectives led to some time and funding from its core business. uncomfortable public scrutiny. Similarly, an In our research and our work setting up international oil major working in an African SSPs, corporations and social enterprises have country sought to strengthen the health system cited four key challenge areas that are the for its local employees and the communities biggest sources of risk when implementing in which it worked by building clinics and SSPs: strategy, governance, organization, and hospitals in a local community. Unfortunately, measurement and reporting (see table 2).

Table 2. Challenges and risks in implementing SSPs

Challenge Corporate risk Non-profit/social enterprise risk

Aligning interests (marketing, Misalignment of social impact Potential conflict between SSP with procurement, talent) and programs to corporate strategy, a corporate entity and traditional implementing a clear strategy resulting in wasted resources and programming and interests of Strategy and approach to partnerships ineffective partnerships traditional funders; fear of “drifting within the organization and away from core mission;” difficulty with customers, supply chain, coordinating external messaging and other stakeholders

Establishing clear roles and Undefined governance structure Unclear funding and decision- responsibilities for each partner opening organizations to additional making rights putting the Governance and clear framework for risk, potential for negative publicity effectiveness of partnerships at risk; engagement (timing, dispute from the partnership, lack of clarity on lack of real corporate “skin in the resolution, etc.) “exit strategies” game” for long-term funding

Aligning internal organizational, Lack of clarity within the organization Lack of communication between financial, and performance about the goals and costs and transfer fundraising and program teams, management systems to pricing; lack of clear performance leading to poorly coordinated facilitate effective partnerships; incentives for managers; questions corporate engagement; lack of Organization incenting managers to drive about whether Corporate Affairs, CSR, coordination between HQ, field programs with goals other than or the business unit own the program staff, and local counterparts short-term sales, profits, or cost savings

Defining the right set of metrics, Poorly measured impact from Weak business case for corporate indicators, and communication programming resulting in inability partners, impacting funding and tools to measure and report to sustain momentum and justify sustainability; lack of data to Measurement financial and social impact continued investment to shareholders demonstrate social impact to justify and reporting and the C-suite; risk of push-back from value to mission activist shareholders unless business value can be justified

15 The roadmap toward effective strategic social partnerships

Innovative, locally managed partnerships at Cargill Cargill has developed an innovative approach to effectively address organizational challenges in developing SSPs. Leveraging its decentralized organizational structure of over 70 business units across 65 countries, the company sets an overarching corporate strategy that each business unit then adapts to unique market conditions. Each business unit controls partnership funding as part of its P&L. As a result, Cargill’s business units, in conjunction with the headquarters, have developed innovative partnerships that meet local business and social needs. For example, Cargill’s Middle East and North Africa business partnered with CARE International to support a “rice-to-soya” program in Egypt. This SSP has helped diversify agricultural products, lowered water demands in the region, and enabled farmers to earn premium prices that have been reinvested in community development projects.

16 Charting a path to effective partnerships

n order to achieve the full benefits of their strategic partnership and individual program ISSPs and overcome the risks, organizations level, from inception through implementa- should follow a roadmap to manage partner- tion and even sunsetting. Constantly revisiting ships. The SSP roadmap depicted in figure 2 some of these questions will help organizations helps both corporate and social sector organi- build and maintain successful SSPs. zations navigate the four common challenges, The SSP roadmap described in figure 2 speak the same language, and move from is a tailored approach that helps organiza- good ideas to successful projects implemented tions manage the inherent risks and costs of through strong partnerships. The development SSPs and achieve the full value they can help of partnerships is always an iterative process organizations to accomplish. The steps are and should follow five key steps at both the presented in detail in the appendix.

Figure 2. SSP roadmap

Identify Expand Describe Structure Report

Deﬁne the social Expand thinking to Articulate a story that Align organizational units Measure and report impact your organi- potential organizations resonates with partners and incentives to achieve on ﬁnancial and zation seeks to create to achieve stated social and stakeholders partnership goals social impact created impact goals

Challenge area addressed

Strategy

Governance

Organization

Measurement & Reporting

17 The roadmap toward effective strategic social partnerships

Looking forward: The road ahead

he question is: Where will things go it is time to think about your strategy for Tfrom here? We believe that in this decade, shared value; how can it deliver competitive leading companies in most industries will be advantage for your company and how will using “shared value” strategies and invest- you operationalize it within your organiza- ments to change the way they relate to their tion? It is also a good time to think through markets. Social impact will be a major part of the SSP roadmap to assess your current the way they reach new customers, recruit and portfolio of partnerships, determine how retain employees, develop products, enter new well they serve your strategy, and how well segments, manage their supply chains, work are they aligned to your organization and with regulators, differentiate their brands, and the needs of your customers, suppliers, report to investors. They will use SSPs with and investors. non-profits, governments, and others companies—skillfully and innovatively—as the • Market innovation. Second, it is impor- major way they operationalize shared value. tant to start thinking about your approach Companies will rely on the skills, capabilities, to shared value through the overall lens and perspectives of their social and public of innovation. We look for innovation sector partners to help them understand new in many areas: product, people, systems, countries and markets, develop distribution business models. Are there opportunities models for new consumers (including the to use shared value investments as a source billions of developing world consumers at the of innovation? Can your relationships with base of the pyramid), source new ideas for social and public sector partners be used products, and think differently. to help your people think differently about Whereas today, this way of doing busi- your business and market? ness can still be (just barely) dismissed as the province of “early adopters”—like TOMS • Talent and culture. Finally, in those com- Shoes, Unilever, and Starbucks—we believe it panies for which shared value thinking is will soon be solidly in the mainstream, used already a part of the strategy, it is impor- by the top 25 percent of performers in most tant to think about how it can be used to industries. Therefore, the approaches in this drive change in the company’s culture and article are something that should be consid- workforce. How can your investments in ered now—before your customers, employees, shared value and your SSPs provide oppor- and investors are asking about it, and more so, tunities to recruit, motivate, and retain the before your competitors are doing it. So what very best, most motivated, and passionate can be done now? We see three things. staff? This may well prove to be one of the major benefits to companies that lead in the • Shared value strategy. First, as we have dis- implementation of shared value strategies cussed in this paper, if you haven’t already, and development of robust SSPs.

18 Appendix SSP roadmap detail: Steps to an effective SSP

Identify. First, define the strategy and objectives. At the partnership level, the strategy issue is largely Identifyabout how partnerships support broader Expandorganizational strategy, while at the project Describelevel, the question Structure Report is around the objectives for each initiative (by country, sector, etc.). Challenge area addressed: Strategy.

Deﬁne the social Expand thinking to Articulate a story that Align organizational units Measure and report Partnershipimpact your development organi- for multiple projectspotential organizationsIndividual SSPs resonates with partners and incentives to achieve on ﬁnancial and zation seeks to create to achieve stated social and stakeholders partnership goals social impact created Define fit with corporate strategy and communicateimpact to goals Develop an impact agenda/theory of change stakeholders • How does your organization fit into the market? From the • Do the planned partnerships fit under a clear “shared value” perspective of the problem to be solved, what are your strategy and is the business case clearly defined? assets? Challenge• Do the areaplanned addressedpartnerships fit fully within a “shareholder • Are there organizations that have an adversarial relationship value maximization” paradigm? Have the underlying to your business or industry and what do they want? assumptions about responsibility to other stakeholders • What assets, capabilities, relationships do these (customers, employees, suppliers) been clearly discussed organizations bring that you do not? with management, board members,Strategy and shareholders? • Is there an executive sponsor (usually the CEO for a major Define program objectives partnership) with real buy-in? • What is the problem to be solved both in terms of the • Have the implications for ESG and financial reporting been business objective (for example, new market) and the social discussed with the CFO and audit committee? How will impact (for example, lifting farmers out of poverty)? the partnerships fit into reporting to the market if at all? • What Governancefactors prevent a market solution to the problem? What are the risks in terms of social, technical, economic, Define partnership objectives and political factors? • How will partnerships support strategic goals and vision? • What are the specific goals and timelines for this • What does your organization (including stakeholders, partnership? business units, and CSR) seek from the partnership? Organization • Can the partnership achieve significant scale as you define Conduct an assessment or pilot to test the design of the it and, if not, is it worth doing? program • Is the pilot achieving expected objectives and does it “prove Develop an understanding of the landscape out” the theory of change? Are the resources requirements • What does the “end consumer” want and what have we as expected and are there issues identified in re-assigning Measurement & Reporting done to really understand it? staff from their core roles to the SSP? • Who will we have to work with? • Are there adjustments suggested for the structure and • How will the program address the particular issue of governance to make scale-up more efficient (additional choice? What social impact will it make? partners, commercial model)? • What specific assets, funding, and people does each partner need to provide to achieve success?

19 The roadmap toward effective strategic social partnerships

Appendix: SSP roadmap detail: Steps to an effective SSP

Expand. In the expand phase, organizations begin to develop the governance Identify Expandframework for the partnership, engaging Describethe right set of partners and establishing roles Structure Report and responsibilities. Challenge areas addressed: Strategy and governance.

Deﬁne the social Expand thinking to Articulate a story that Align organizational units Measure and report impact your organi- Partnershippotential developmentorganizations for multiple projectsresonates with partnersIndividual SSPs and incentives to achieve on ﬁnancial and zation seeks to create to achieve stated social and stakeholders partnership goals social impact created Identifyimpact the rightgoals partners Ensure the coalition of partners is balanced • Which partners have the reach and capabilities to • Are all the right partners at the table? complement your organization? • Are any additional partners needed for the particular • Are other corporate partners needed? Suppliers for project? Challenge area addressed effective supply chain coordination? Competitors for pre- • Are the right skills needed to solve the problem present? competitive issues around supply and regulation? • Are non-profit partners needed for skills and knowledge, Establish roles and responsibilities credibility around the specific social impact mission, and • Will the project be bilateral or multilateral in its reach? Will Strategy implementation reach? Are public sector partners needed it be a global or regional partnership? to develop policy frameworks, convene stakeholders, • Are memoranda of understanding in place between reconcile competing interests, and leverage public partners? Do they define roles and responsibilities, funding infrastructure? mechanisms, etc.? • Whom would you want to co-brand with? • Which partner will interface with local governments, if • How do you engage each partner?Governance What are specific points needed? of entries and opportunities? • Does the governance structure appropriately address all concerns? What are the risk mitigation and conflict Establish governance framework resolution mechanisms? • What are the roles and responsibilities for each partner? • What are the entry and exit points from the partnership? Organization • What are the rules around communication? • Who is the convening partner and what is their role? (Often a single organization will act as the “backbone.”) Measurement & Reporting

Describe. After convening the right partners, organizations need to articulate the value of the partnership to Identify Expand Describestakeholders and with one another, an oftenStructure challenging task. A successful SSP relies on Reportthe ability to demonstrate value in a way that resonates with all stakeholders. Challenge areas addressed: Governance and organization. Deﬁne the social Expand thinking to Articulate a story that Align organizational units Measure and report impact your organi- potential organizations Partnershipresonates development with partners for multiple projectsand incentivesI ndividualto achieve SSPs on ﬁnancial and zation seeks to create to achieve stated social and stakeholders partnership goals social impact created impact goals Develop the stakeholder narrative Develop a program charter • Who are the decision-makers whose buy-in will be critical • What are the perceived qualitative and quantitative benefits for successful partnerships? Who are the stakeholders who of the partnership? What is the end goal of the partnership? will need to stay informed and engaged throughout the • What are the milestones? Challenge area addressed process? • What are the short-term and long-term expectations? • What value will be achieved and how will it resonate with each set of stakeholders and the general public? Create line of sight for stakeholders • What are the issues that would cause the potential partner • Based on stakeholder needs, how will the program show Strategy not to engage? For example, are there business case issues? progress toward overall strategic and financial goals? What investments would be required in the product and • How will the program communicate incremental successes what would be the price point implications? What are the to maintain buy-in and support? brand and reputation issues? Will there be push-back from advocacy and “pressure” groups and regulatory issues? Governance• What can be done to anticipate and respond to these objections?

Organization 20

Measurement & Reporting Appendix: SSP roadmap detail: Steps to an effective SSP

Structure. Aligning the right organizational units and incentives at the SSP and project Identify Expand Describe Structurelevel will help facilitate the desired outcomesReport by reducing potential organizational friction and barriers. Challenge area addressed: Organization.

Deﬁne the social Expand thinking to Articulate a story that Align organizational units Measure and report impact your organi- potential organizations resonates with partners Partnershipand incentives development to achieve for multipleon projects ﬁnancial and Individual SSPs zation seeks to create to achieve stated social and stakeholders partnership goals social impact created impact goals Define organizational structure Define collaboration structure • Have the goals developed by the C-suite been adequately • Have the reporting structures and communication communicated? Are there clear reporting structures and guidelines for the program been defined and agreed upon points of contacts in place to support partnerships? by all partners? Challenge area addressed • Does the organizational structure facilitate collaboration • Are there proper points of contact depending on the across the partnership, from business unit to CSR to particular issue type—either reaching the necessary CSR or C-suite? business unit? • Have you engaged the business units? Do managers • Are the right financial management systems in place? How Strategy understand the strategic importance of the partnerships? will the funding be tracked and reported by partners?? • Are the right performance mechanisms and incentives in place to engage broad-based support from key units?

Governance Report. Beyond doing good work, organizations must consider how they will measure Identify Expand Describe Structure Reportthe financial and social impact and report internally and externally on achievements. This is especially important for public companies and other large organizations where the SSP might be part of public reporting. Challenge areas addressed: Measurement & Reporting. Deﬁne the social Expand thinking to Articulate a story that Align organizational unitsOrganization Measure and report impact your organi- potential organizations resonates with partners and incentives to achieve Partnershipon ﬁnancial development and for multiple projects Individual SSPs zation seeks to create to achieve stated social and stakeholders partnership goals social impact created impact goals Define strategic indicators of financial and social impact Define project-level performance metrics and indicators • What does a successful SSP lookMeasurement like to each partner and& Reporting• What is the anticipated social and financial impact from the their stakeholders? What performance measures can be program level? established to capture the outcome of the SSP? • What types of data (qualitative vs. quantitative) and Challenge area addressed • Is there a comprehensive impact framework in place for measures (industry vs. community impact) will be used? performance measures? Will they be at the project level, partnership level, organizational level, or a mix? Develop the right reporting mechanisms • What is the frequency and format for collecting and Strategy Develop the right reporting mechanisms reporting data? • How will corporations report to the general public? What is • How will program-level metrics roll into the partnership the frequency and format? level of measurement and reporting? • Should social impact be captured in a separate sustainability report, in the environmental, social, and Governance governance ESG section of the annual report or should a combined “One Report” be created??

Organization

Measurement & Reporting

21 The roadmap toward effective strategic social partnerships

Endnotes

1. Rosabeth Moss Kanter, “How great companies 3. Dole, “Peru: Small organic banana think differently,” Harvard Business Review, farmers,” accessed July 22, 2013, http:// November 2011; Eccles, R. G., Ioannis Ioan- dolecrs.com/explore/case-studies/ nou, and George Serafeim, “The impact of a small-organic-banana-farmers-peru/. corporate culture of sustainability on corporate 4. C&E, Corporate-NGO Barom- behavior and performance,” November 2011. eter Survey 2011, 2011, http://www. 2. Ioannis Ioannou and George Serafeim, candeadvisory.com/projects/report. “The consequences of mandatory 5. Dan Charles, “How one man tried to slim corporate sustainability reporting.” down big soda from the inside,” NPR, January 28, 2013, http://www.npr.org/blogs/ thesalt/2013/01/28/169733003/how-one-man- tried-to-slim-down-big-soda-from-the-inside.

22 Acknowledgements

The authors would like to thank for their contributions to this article Shannon Roe, a senior consultant with Deloitte Consulting LLP; Maria Li, formerly a senior consultant with Deloitte Consulting LLP and now an MBA candidate at the Wharton School of the University of Pennsylvania; George Roche, a consultant with Deloitte Consulting LLP; and Simon Morfit, who was at the time of writ- ing a PhD candidate at UC Berkeley.

Contacts

John Mennel Kellie A. McElhaney, PhD Director, Emerging Markets Faculty Director of the Center for Deloitte Consulting LLP Responsible Business +1 571 814 6054 Haas School of Business, UC Berkeley [email protected] [email protected]

Tina Mendelson Bill Marquard Principal, Emerging Markets Director, Strategy & Operations Deloitte Consulting LLP Deloitte Consulting LLP +1 571 882 5823 +1 312 486 4958 [email protected] [email protected]

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