We are at the end of practice of CSR again. It’s time to re-cast social responsibility for a systems world.
Houston, we have a problem.
Well problems plural actually. And I’m not talking about homelessness, sustainable energy, or literacy. We have bigger problems than all of those.
We have problems with the way we solve problems. More specifically we have problems with the way business and corporates engage in social problem-solving.
Let me explain…
A few recent global gatherings have captured my imagination on how business and corporates can re-cast problem-solving for the future. The World Economic Forum in Davos, the Paris #COP21 Talks, and the GLOBE Summit for Sustainable Business in Vancouver have all recently wrapped up with a focus on better understanding and acting on a range of global challenges including climate change, gender equality and food security. An important part of these gatherings included conversations around the role that business and corporates can play in social change.
I believe that business is a powerful engine for transformation. For corporates to continue being a thriving and driving force in the 21st century, we need more than a tune-up, we need a complete overhaul of the current corporate approach to solving problems.
There have been two significant evolutions in the way that corporates practice social responsibility and I believe we on the brink of a third. The first evolution, was the introduction of the practice of corporate social responsibility (CSR) as a response to fix human, social, cultural, and environmental problems. CSR was cast as giving back, largely through the creation of corporate foundations and private philanthropic entities with a legacy tie to a corporation. The primary way to give back was through grantmaking and donations. The second evolution, which has taken hold over the last 10 years or so, was a shift to the practice of do no harm. This saw the rise of social enterprise, internal corporate sustainability units, and B Corporations, among other things. Corporate philanthropic foundations, donations, and grant making as core offering didn’t evolve in a significant way through the second evolution but instead, became more entrenched and institutionalized.
A third evolution may be emerging by way of systems change responsibility. It is likely the most significant evolution since CSR was introduced. Systems change responsibility is about business and corporate foundations as open platforms for system-based change.
Why do systems matter? We live in systems — some natural, and others, we created over the past 100 years to make our lives simpler — democratic systems, judicial, financial, economic, social, health care, cultural, symbolic, among others. We live in, work in, receive from, connect to, and experience multiple systems simultaneously. They are all interdependent and they constantly evolve. However, our problem-solving practice hasn’t quite caught up to this systems world — which, incidentally has actually always been around. And these human-made systems exist in conditions that no longer define our present world. We chose to see the world in nice discrete boxes, convenient venn diagrams, and we problem-solve in a similar fashion.
In my mind, three principles form the bedrock of system-based problem-solving:
- multiple intervention points.No single silver-bullet intervention (tech, policy, enterprise, advocacy, among others) can solve a dynamic complex problem. Interdependencies, and second and third-order effects cannot be ignored.
- mindset reset.Shifting biases, power, social expectations, access, awareness, narrative, authority flows, and cultivating empathy, trust and social capital matter.
- institutional innovation.Recasting institutional cultures and structures so they’re fit for the 21st century, looking at governance, accountability, regulation, hierarchy, risk, liabilities, incentives, experimentation, metrics, leadership, interoperability, openness and sharing.
To use a rocket analogy (I am an engineer after all), think of each of these principles as stages of a three-stage rocket. All three stages must fire one after another and gain optimal altitude for the payload to successfully reach orbit (or for us, successfully shift the arc of a system). The way we currently problem-solve, not only do we not fire past the ‘interventions stage’ and thus never reach the ‘institutional innovation stage’, but most of the time only a single engine fires at a time (one intervention at a time). You can quickly see that this multi-stage “systems rocket” won’t reach orbit in this way — it will hobble along in stage 1 for a bit, but eventually fizzle out.
Social responsibility has evolved from “giving back alone can solve the problem” to “enterprise alone can solve the problem” but has failed to understand that single, siloed, silver bullet-type solutions don’t work long-term when problems are interconnected, ever-evolving, and cause and effect aren’t linear. Solutions can no longer be the responsibility or the capability of a single actor, organization, institution or domain. Social responsibility practices to date is analogous to saying, “you can build a well-functioning complicated structure (car) using a single tool (hammer).” I guess, perhaps, when all you have in your toolbox are a bunch of hammers, all the problems you encounter look like nails. This outlook and practice is laggard and is slowing down progress.
CSR for the 21st century requires a renewed outlook, a new way of organizing ourselves, and a responsibility toward systems change. So how can corporate foundations and corporate social responsibility units re-cast themselves for a systems world? Here are five ways that come to mind:
- Cultivate system awareness within your unit. We theoretically know that problems are interconnected and complex, but in practice, interdependencies are largely ignored and we solve for X in isolation, as if it exists in a glass jar, doesn’t evolve, and is disconnected from the rest of the world. Don’t carry the silver bullet syndrome. Awareness is powerful and is the first step. Awareness allows us to discover, ask questions, and most importantly — it reveals blind spots. Take the time to cultivate system consciousness within your unit, with your donors, with your stakeholders, and your grantees.
- Incorporate a 1:1 systems pledge that’s guided by a system change committee.The corporate world is filled with “1 for 1” so why not 1 for 1 to move system-based change forward? This discipline allows you to invest and divest financial, human, intellectual and social capital over time in order to balance the short and the long. It’s simple: For every dollar that goes into supporting a short-term need (Eg. food bank donations), invest a dollar into strengthening the food system in the neighbourhood. 1 for 1. It’s not enough to merely roll this out, form a system change committee within your unit or on your foundation Board and have them track and report regularly on investment into system change and divestment from short-term solutions.
- Enable a system rather than a single organization.Classic grantmaking is blackbox grantmaking. Charities apply for a grant, no one knows who else applied, few share that they’ve applied, applications go into a ‘blackbox’ of committees, reviews, and poof — out come winners. It’s like magic. In system-based change, the individual organization is no longer the unit of change nor do they have the program or enterprise or service than can solve something single-handedly. It’s not just about enabling a single housing co-op but about increasing the liveability of a neighbourhood. Units of change move from a single organization to a ‘mesh’ of actors across sectors — from front-line agencies and policy makers to citizens and intermediaries. This mesh of actors are contributing, capturing, and generating value for each other. There is no top (grantmaker) and bottom (recipient) like a value chain. In order to maximize lasting impact, empower and support the value mesh rather than the value chain.
- Maintain a system balance sheet.Risk in the 20th century largely was regarded and captured on an organization’s balance sheet as liabilities. The essence (and more) of this corporate accounting practice was ported over to the charitable sector. Without boring you with details of the types of liabilities and risk variances, risk in the systems world is assessed, captured, calculated, and experienced differently. Risk and liabilities in a system world don’t stop where an organization’s org chart ends. It’s no longer carried on a single organization’s balance sheet nor is it only cash based. Included in system risk is environmental risk, social capital risk, cultural risk, and economic risk, among other things. How can the risk of a neighbourhood food system deteriorating be captured across a system balance sheet that sits alongside the conventional balance sheets of multiple organization that operate in that neighbourhood?
- Act on non-linear cause and effect.Actors, actions, emotions, and reactions within systems are highly connected and interdependent — much of this may be invisible on the surface as cause and effect is not linear but oblique. It’s not discrete but relational. Treating cause and effect as if they were linear and discrete trivializes the problem, and we end up treating symptoms or worse — treating the wrong problems. The last thing we want is a terrific solution to the wrong problem — the world is filled with these already. Economic problems often don’t just have an economic solution. Educational problems often don’t just have an educational solution. Water problems often don’t just have a water solution. System change is about embracing the oblique nature of cause and effect. We must dig deeper and wider, and through multiple typologies to get a better sense of relationships, interactions, feedback, and of 2nd and 3rd order effects — all of which are constantly evolving.
The ideas above are prompts for corporate leaders, intrapreneurs, entrepreneurs, philanthropists, philanthropic sector leaders, and CSR practitioners to think about the little bets and exponential bets they can make to generate smarter and lasting impact. I believe that business is a tremendous force for good, and time and again has set the pace in advancing humanity. But here’s the thing. We don’t yet have a systems change responsibility “playbook” and the lack of meaningful experimentation in this area is slowing down progress. What if corporates lead the way in conducting R&D into system-based change questions like, How do we teach and learn system-based problem solving? What does system-based grantmaking look like? What would a system change Board committee do? How do we cultivate system awareness? What does a system balance sheet look like?