Technology and Millennials Are Driving Business Strategy and Social Change
For today’s companies to maintain their license to operate, they need to take into account a range of elements in their decision making: managing their supply chains, applying new ways of measuring their business performance that include indicators for social as well as commercial returns, and controlling the full life cycle of their products’ usage as well as disposal. This new reality is demonstrated by the launch last September of the Sustainable Development Goals (SDGs), which call on businesses to address sustainability challenges such as poverty, gender equality, and climate change in new and creative ways. The new expectations for business also are at the heart of the Change the World list, launched by Fortune Magazine in August 2015, which is designed to identify and celebrate companies that have made significant progress in addressing major social problems as a part of their core business strategy.
Technology and millennials seem to be driving much of this change. Socially conscious customers and idealistic employees are applauding companies’ ability to do good as part of their profit-making strategy. With social media capable of reaching millions instantly, companies want to be on the right side of capitalism’s power. This is good news for society. Corporate venturing activities are emerging, and companies are increasingly leveraging people, ideas, technology, and business assets to achieve social and environmental priorities together with financial profit. These new venturing strategies are focusing more and more on areas where new partnerships and investments can lead to positive outcomes for all: the shareholders, the workers, the environment, and the local community.
Furthermore, this is especially true in the technology sector. More than 25% of the Change the World companies listed by Fortune are tech companies, and four are in the top ten—Vodafone, Google, Cisco Systems, and Facebook. Facebook’s billionaire co-founder and CEO, Mark Zuckerberg, and his wife have helped propel the technology sector into the spotlight as a shining beacon of how to do good and do well. Zuckerberg and Priscilla Chan pledged on December 1, 2015, to give 99 percent of their fortune to charity. Facebook shares are valued between $40 and $45 billion, which makes this a very large gift. The donations will initially be focused on personalized learning, curing disease, connecting people, and building strong communities.
While the pledge is striking, its structure is also notable. Zuckerberg and Chan have chosen to organize the new Chan Zuckerberg Initiative as a limited liability company, a structure that has grown popular due to the greater level of control and flexibility they retain in directing the funds’ use. What Zuckerberg and Chan are proposing is to harness the profit motive on behalf of their social goals. The companies in which the Initiative invests will have to show both a financial return in order to be sustainable, and a social one—for example, increased numbers of households with electricity or children finishing school—to access additional funding. Unlike traditional charities, companies that do not have measurable social and commercial returns would eventually go out of business.
Not be outdone by Zuckerberg’s announcement, in mid-December 2015, Microsoft launched its new organization, Microsoft Philanthropies, within the company. The tech giant claimed that it would contribute in new and more impactful ways to a societal ecosystem that connects the benefits of technology to those who need it most, and that it would work harder to drive the inclusive growth of the global economy. While the new organization’s blueprint is still under design, what is apparent is that over the next several years, Microsoft plans to donate significant resources—both cash and technology—to non-profit partners to achieve several goals. These are to provide access and connectivity to underserved populations, digital skills training to help people get jobs and start businesses, and education to the next generation of innovators, through greater access to computer science education for youth.
There are many other examples of how millennials and technology companies are driving social change in measurable and positive ways that are good for the corporate bottom line and good for society.
To accelerate this trend, bilateral and multilateral development organizations and banks need to work with companies to create a set of tools that will allow them to increase their corporate venturing activity. The question bilateral and multilateral organizations should be asking is, “How can we help companies channel their resources into high-impact innovation and investment programs?” The benefits for both the company and society are clear. Companies retain top talent, learn to navigate new markets, form new partnerships, and enhance their brand. Communities benefit though access to technology, capital, skills, know-how, supply chains, and partnerships. Development agencies and banks should crowd in by partnering with companies and leveraging this positive new trend. From the Multilateral Investment Fund Trends blog.