NEWSCORPORATE SOCIAL RESPONSIBILITY

I try not to consume much, but when I do, I like to buy products that make me feel morally superior. Chances are, you do too. Right? My point is not that we're better than everyone else and therefore have the right to be smug (even if we do); my point is that there is an obvious niche market for consumers who pay close attention to where their goods come from and where they can go when they're done with them. But do these companies have--either an externally imposed or internally genuine--moral obligation to the greater good?

Mark Dwight, Founder and CEO of Rickshaw Bagworks says yes. He left his last company when he told the Board that they had a moral imperative to stop using PVC. They disagreed. So he started a competing company that doesn't compromise on that value and leads by example in many other ways such as manufacturing quality products in the USA. They meet their bottom line through innovation and embrace their-self imposed limitations as part of their business culture. I recently met Dwight and other environmental leaders at the Opportunity Green Conference and Dwight's comments were a springboard for others in the field.

If there is a moral obligation to innovate, is there also a moral obligation to be philanthropic? Rick Ridgeway of Patagonia used similar language as Dwight: "We have a moral obligation to do our penance as a company...business is harmful to the environment; we are morally obligated to mitigate that harm." As a member of 1% for the Planet, Patagonia has donated over $40M to environmental nonprofits and has become an icon among sustainable companies.

The next question: is it more important to be sustainably innovative or philanthropic? In 1993, New Belgium Brewing Company was giving away$1 for every barrel of beer sold. They asked themselves, as Jennifer Orgolini recalls, "Should we give that much? Should we keep more for greening our own operations?" The company decided that their dollars could be effectively used in both ways. Some environmental progress is better done by nonprofits and the world needs both innovative companies and funding for grassroots environmental efforts.

It's an important distinction that companies do need to be both leading by example and giving to organizations that can do other things better than they can. A coal mine giving away money to a land trust is different than a sustainably-minded company supporting causes that extend their values. Of course, it is in these company's best interests to support environmental nonprofits: Patagonia's customers won't have anywhere to use their gear if their favorite mountain trail becomes a housing subdivision and New Belgium acknowledges that "no fresh water means no great beer." There's nothing wrong with a symbiotic relationship.

The fact that environmentalists are using words like "penance" and "moral" is fascinating. I emerged from an evangelical Christian background. In that culture, the prevailing view--not held by everyone of course--is basically that God created the Earth and then created humans to dominate it; we're going to die and go to heaven so why should we care what happens on this planet after that? That's God's problem to save us from. I don't like that the Religious Right has commandeered certain words and concepts. I like being reminded that morals are not just about personal choices like not having sex before marriage; they are about choices to do the right thing for the greater good. (And on a sarcastic note, it gives me a broader platform from which my smugness can emanate.)

Photo Credit: Kerri Feazell

I recently spent two days at the Opportunity Green Conference in LA where I was immersed in conversations about sustainable business. One panel, Accelerating Green Product Innovation, provided interesting examples of innovation in businesses from entrepreneurs in various stages: from pre-launch (Replenish), to firmly-footed (Rickshaw Bagworks) to household name (Coca-Cola).

Innovation Principle #1: Limitation Inspires Innovation
Jason Foster, founder and CEO of Replenish had a crazy idea: "Let's build products that are designed for re-use." In a consumer society where items are purposely manufactured for a short life-span, this is an innovation. (Side note, if you haven't seen The Story of Stuff, it's well-worth 20 minutes of your time.) Foster's innovative design for cleaning products reduces plastic by 90% and costs 50% less than competitors. They knew they could reach that goal but in designing their product, they encountered some challenges to their ideals. Making their product in PET (easily recycled material), proved a challenge within the existing manufacturing infrastructure. But they stuck to their principles and in the end, Foster was grateful for the limited options that gave some direction to their design--the limitations actually inspired greater innovation.

Innovation Principle #2: Good Ideas Spread
Panelist Mark Dwight, Founder and CEO of Rickshaw Bagworks, started the company with old-fashioned values that made the now-moguls what they are decades ago: pay attention to form, function, and footprint. As a small business, Rickshaw's innovations have even attracted mega companies to adopt some of their practices. For example, Rickshaw's practice of shipping their products to customers in bags that can be re-used for returns if needed caught the attention of ebay. It's encouraging to see larger companies asking start-ups how to innovate and to see start-ups sharing those ideas for the greater good.

Innovation Principle #3: Maybe Recycling is Better than Re-Creation
When big companies do take the lead with innovation, their investment in research can have immense impact. Panelist Gopal Kishnan, Senior Director of Global Marketing Innovation and New Categories for The Coca-Cola Company talked about Coke's new PlantBottle. It's made with up to 30% plant-based material (sugar cane) and can be recycled just like any PET material.  I would like to see more research on this, but Gopal explained that they created the PlantBottle as a material that can be recycled rather than composted because the energy required to create a new bottle is less than is required to recycle the bottle in to new material. I want to see a PlantBottle that could go either way but in the meantime, this is challenging me to rethink some of my assumptions.

The idealist in me was reminded of an important underlying idea key to innovation. During the Q and A, a participant asked, “Do you wait until the design is perfect?” and Dwight answered, “Iteration is the key to innovation, and perfection is the enemy of progress. Sustainability is a journey. Don’t wait for perfection. There is no 'perfect' product.”

Photo credit: opportunitygreen

Entrepreneurs are best at finding innovative solutions to serious problems. Environmental problems are arguably the root of all social ills and it's exciting to see social entrepreneurs take on the challenge. The 2nd annual OG25 Green Business Startup Competition included 25 finalists ranging from a company redefining the off-shore energy market (wind farms!), to smart sprinkler systems, and a social network for the eco-mom.

The winner of the competition was Zimride, a "rideshare service [that] helps organizations establish easy to use, private, social networks for ridesharing." One of the company's unique angles is to use networks like college campuses and companies to arrange rideshares in "trusted communities," allowing members to search and post ride options including personal cars, shuttles, vanpool, and zipcar. It's also marketed for events (so perhaps the line to get in to Burning Man next year will be 7 hours and not 8 if enough people try it?) Already in use at UCLA, Stanford, University of Michigan, and USC, Zimride has proven to engage 10-20% of student populations and integrates with facebook and Twitter. Since I don't have a car and I'm not part of a campus or corporate network, I'm planning to test out their free public rideshare option, which is (probably) safer than hitchhiking and faster than the bus.

These finalists also caught my eye:

• Airbnb is an upgraded version of couch surfing that matches private residences with travelers. A friend of mine recently used the service to stay in a mountain-top vineyard cottage with an ocean view. I intend to advertise my less exotic, but just as friendly, couch and air mattress in my living room if you ever need a place to stay in LA.
• ecoATM is an "automated eCycling station." In my experience, most ewaste recycling centers do not currently have the capacity to provide convenient drop offs. This solves the problem: how should I dispose of my broken phone charger after 5 p.m. (that was intentionally built to last no longer than 5 years so I'll buy another one) and get money for it?
• GoodGuide, Inc. rates over 65,000 non-toxic and environmentally-friendly products and helped me determine that there is a better toothpaste than the one I'm currently using (but mine is second best). Also, the company is a B Corporation.
• Soleo Organics makes the highest rated sunscreen by the Environmental Working Group. I tried it this weekend for several hours in the intense LA sun and I was well-protected.
• ThinkEco makes a product they've coined the "modlet" for "modern electrical outlet". Plug your electronics into the modlet and "then use your web browser to wirelessly monitor and manage your power consumption." It should save you 10-20% on your electricity bill.

The conference also hosted a Green Product Design Competition. All 50 companies/products are worth a review for inspiration to all you social entrepreneurs out there. I'll say it again: You are the best at finding solutions where others see problems. You thrive on it. So go, create, and introduce yourself to me at next year's OG25.

Photo Credit: opportunitygreen

There is a perception out there that there is a tradeoff between social responsibility and financial responsibility. You can't do both, people say. You can't have your cake and eat it too. Well, very fortunately the data just doesn't support that perception.

Can you actually be more socially responsible and increase shareholder value at the same time?

The Only Social Responsibility of a Company Is To Increase Profits for Shareholders

In 1970, Chicago-school economist Milton Friedman proclaimed in an article for New York Times Magazine that a company's only social responsibility is to increase profits for its shareholders. In the 1980s Ronald Reagan, Margaret Thatcher, George Bush, and the Ayn Rand star-pupil Alan Greenspan turned this credo into de facto policy gospel.

There is passionate and meaty debate whether externalizing environmental damage and exploiting a work force is okay if there is no law or regulation against it. There is another debate whether these practices actually maximize long-term profits or the present value of future cash flows.

For a moment, let's take this 1970 proclamation at face value and assume that an executive's responsibility is to increase returns for company shareholders. Let's agree that executives and board members do have a fiduciary responsibility to seek to gain a return on the capital invested in their organization, particularly if they work for a publicly-owned company or a company that is not a wholly-owned private corporation.

So this begs the question, can you do both--increase social return and increase financial return?

By way of a social responsibility case study that I've been close to, let me share our experience at iContact over the last year...

Wanting to Experience More Meaning at Work

In October 2009, I went through some challenging experiences that caused me to realize that life can be very short. Out of these experiences, I came to the conclusion that I wanted to align my values with my work at iContact to the extent possible. I wanted to see a direct connection between the work that iContact was doing and making a positive impact in our community and the world.

As Chip Conley writes in "Peak", I wanted to be able to experience and see "meaning" at work and in my work. The humanity within me was dissatisfied with the comm only-held belief that the sole purpose of business is to maximize short-term profits, regardless of the impact on the world as long as one stays within the law.

I saw the purpose of business as creating value for humanity and profits a result of successfully pursuing this purpose but not the purpose itself. This extreme dissatisfaction with the Milton Friedmanesque view of the world could be a Gen-Y or Millennial phenomenon as our generation has grown up learning we cannot build a prosperous, stable, and secure world by externalizing environmental costs and exploiting other parts of the world.

While our generation may be particularly attuned to social and environmental issues, I think seeking meaning at work is a higher-order, but universal need. It is simply reality for the large majority of workers (particularly the smartest and most driven talent) that they want to be able to be part of something meaningful--in their contribution to the company, in what the company achieves with its business, as well as the ways in which their business goes about creating that value for society.

Banks ripe for disruption, better startup pitching, Wall Street Journal makes boring critiques of CSR (big surprise), and the potential for mobile technology to change justice systems around the world. All this and more in this week's weekend entrepreneur links.

In Hard Times, One New Bank (Double-Wide): The US consumer banking industry is waaaaaay up there on my "ripe for disruption" list. This article shows just how little space there has been for new actors to come in and change anything, recently. It profiles the only new bank to get new approval to operate in 2010. While there are interesting opportunities in creating entirely new banks, I actually think the first steps to changing the industry are going to be through companies that simplify and optimize certain parts of the banking experience, for example, Banksimple.net. Their whole value proposition is that they keep as many parts of the consumer banking experience free, only making money from two key revenue streams, which means a better overall experience.

5 Lessons from 150 Startup Pitches: I've watched a lot of pitches this summer, and performed a few myself, and one thing I can say for sure: no entrepreneur has the perfect pitch, and most of us (particularly in the social space) could use some work. This set of posts have been around for a while, but I've recently been re-engaging with these tips from Jason Cohen of Smart Bear Software. The lessons are definitely more directly relevant for web entrepreneurs, but have lots of great insight for social ventures, as well.

"Bah! Humbug!" in the Wall Street Journal: Matthew Bishop and Michael Green use their Philanthrocapitalism blog to combat a set of recents pieces appearing in the WSJ. The first piece they sought to refute argued that the "Giving Pledge" was causing billionaires to focus on the wrong things when there would be more value if they just continued to make money. The second argued (poorly, in their estimation), that CSR was always going to distract companies and they should just give up, try to make profits as deviously as necessary, and have the government regulate. Not surprisingly, Bishop and Green have a few thoughts on both matters.

On the Potential of Mobile Justice: Stories about the potential of mobile technology to change health outcomes and improve economies in the developing world abound. Where there are fewer stories -- and as yet, fewer models -- is in how mobile technology can be used to help change the systems of justice that underpin free societies everywhere. This piece shares a few of the ideas and strategies that a working group convened by the State Department came up with this summer, particularly in the context of providing justice for rape survivors in eastern Congo.

Photo credit: The Consumerist

Arguably the hottest segment of the consumer web market is "flash sales," or email and web services that offer significantly discounted deals on local services, restaurants, getaways, and more. The market leader, Groupon, is estimated to do more than $500 million in revenue this year, which is no small feat for a two-year old company. But while many companies are rushing to the space to cash in on the trend, a new set are springing up to use group buying power for good.

At their core, most of these new companies share a similar model. They get companies to offer deep discounts on their products and services if a certain number of the item in question are sold. The value to the business is not necessarily primarily the profit they make, but their exposure to new customers.

Blissmo, a new San Francisco-based company, has a different idea. In their model of group buying for good, their goal is to make it easier and eventually, cheaper, for consumers to discover and buy from sustainable, ethical, environmentally-friendly businesses. The site is brand new, but early deals have included things like 50% discounts for a wine tasting at a certified green vineyard in Napa Valley.

According to Blissmo founder, Sundeep Ahuja, the goal is less about maximizing any individual transaction to maximize profit, and more about using the deals to connect healthy, sustainable consumers with the companies and brands whose ethos match their own. Ahuja, who was an early advisor to Kiva and Change.org among other social companies, tends to think that there are a lot more people who would be buying sustainably than those who are now, if it was easier and if they had good ways to learn about products that actually lived up to their values. For them, the deals are just a gateway into that longer-term relationship between consumers and producers.

Blissmo is not the only company that thinks there is an opportunity to use the group buying/daily deal model to mainstream sustainable consumption. While their focus is a holistic approach to integrating sustainable consumption, others are trying out different variations.

Portland, Oregon-based CauseOn just launched today with a promise of 20% of deals going to charity. Deals for Deeds collects Washington D.C. based deals - many of them with healthy lifestyle companies - and donates 5% to a one of a few charities. Bloomspot, focused on deals in SF, LA, and NYC, allows nonprofits to create community "circles." When members of a nonprofit's community circle buy one of the deals, Bloomspot donates a portion to the nonprofit. Groupon remains mindful of how to use its distribution network and "tipping point" model for good, recently announcing the launch of "G Team" to help leverage their community for good.

If the larger group buying market is any indication, there may be space for a lot of players. If the goal is -- as Ahuja put it -- to make sustainable consumption the rule rather than the exception, having a bunch of options with different types of deals for different locations might be the best way to regularize the behavior.

Even if none of them are going to make $500 million this year, companies like Blissmo are bound to push new ideas into the sustainable buying space, and that's a great deal at any price.

Photo credit: macinate

Recently it seems there has been a proliferation of social enterprises. Indeed, just last week a good friend of mine enthusiastically told me about a new venture an associate of his is working on. After listening patiently to my friend, then checking out this agency’s website, I asked him “so, what makes this a social enterprise?”

To my chagrin, I have found myself asking this question a lot lately.

Grammatically, the word social modifies entrepreneur, indicating a social entrepreneur is one whose entrepreneurial activity is social in nature. I think about the word social as referring to social welfare, be it poverty alleviation, environmental protection, or any type of intervention that benefits humanity in what has traditionally been thought of as a charitable way.

With so many new ventures founded every day, it is becoming increasingly more difficult for me to decipher what the social purposes of some initiatives are. This is a significant problem for the social enterprise movement.

There is tremendous good will associated with an agency identifying itself as a social enterprise, as well there should be. At its best, social enterprise is the harmonious marriage of free market principles and charitable values. But as social entrepreneurship grows in popularity it is imperative that the concept of social entrepreneurship not get oversaturated and rendered meaningless.

Corporate Social Responsibility (CSR) is great for profit-seeking organizations that choose to augment their profit-based mission with a goal of marginal social impact, or at least a commitment to doing less harm. I have no problem with CSR. But it seems some of these new so-called social enterprises are really just companies like any other with a CSR scheme baked in from the get-go. In my book, a CSR policy does not make a venture a social enterprise.

My approach to social enterprise is heavy on the societal impact. Social entrepreneurship is a strategy to do more good on a large scale on an ongoing basis. It is the social that modifies the entrepreneur, not the other way around.

I am not arguing that social entrepreneurs should not aim to profit from their work. Indeed, profits can be a positive externality of a social enterprise. But for social entrepreneurship to truly be a world changing platform, it is essential that the social enterprise community insist new social ventures provide a clearly discernable public value.

Just as for-profits focus on profit first, a social enterprise must primarily focus on social value. A social enterprise that is profitable but provides dubious social impact is simply a for-profit corporation.

The sustainability and growth potential of free-market corporate financial structures can scale effective social interventions in a way traditional charity models have failed. But as social entrepreneurship continues to grow in popularity, the social enterprise community needs to be wary of the small “s” big “E” companies polluting the social enterprise space, risking sullying the long-term viability of the social enterprise concept and the good will associated with it.

Photo credit: claudiogennari

Google. Please. Don't. Do. This.

In a piece that is being disputed by Google, the New York Times broke the news last night that Google and Verizon are poised to announce a deal and a proposal that would effectively allow service providers such a Verizon to create online pay tiers, in which certain content providers who were willing to pay more would receive prioritization and faster speeds.

Since a court decision in April that said that the Federal Communications Commission did not have the authority to determine whether broadband providers could speed up or slow down different types of content for different types of users, consumer advocates have been scrambling to figure out ways to preserve the open, free internet, while telecom lobbyists have been pushing aggressively to undermine net neutrality and create pay tiers that allow content providers who pay more to have an easier time getting their content in front of users.

What this would mean is that incubants in any space such as online video could pay to put any new competitors at a disadvantage in terms of the actual speed and convenience with which someone else could access their content. Practically speaking, it means that a company like Youtube would have a major advantage over any new company like Vimeo, not because their product or user experience was better, but simply because they had paid to be in the fast lane.

This is completely different than the entirely open infrastructure that has characterized the growth of the web thus far. The internet's disruptive power has largely been in the fact that the barriers to entry looked nothing like the old world of television media. On television, there were clear gatekeepers and no one could just produce a show and get it seen by millions of people. On the internet, anyone can create the next big thing because the gatekeepers have fallen by the way side and meritocracy rules. If you have the funniest show, the most interesting blog, eventually people discover it.

It's more than entertainment, however. The lack of global gatekeepers on the internet means that there is more space for opinions and perspectives outside of the mainstream to actually become part of the cultural conversation. Creating a tiered internet in which certain content providers could pay to move their content more quickly dramatically upsets that dynamic.

It also flies in the face of just about everything Google has ever said abou

While the last few decades have seen an approach to copyright law that is more about protecting the dying business models of big industries than protecting small artists and creators, an update from the US Copyright Office released yesterday actually constitutes good news for those who think that copyright has gone off the rails.

Copyright is an interesting thing. It arose as a way to ensure that creators could derive value from their work that would allow them to continue to focus on their creation as their primary pursuit. The goal was not just to support the rights of a particular class of individuals, but a recognition of the fact that those individuals had a significant role in creating a vibrant artistic, scientific culture and civil society. The earliest copyright law in England had to do with the growing number of books being printed for broad consumption.

The internet has put immense stress on copyright. Simply put, the digitization of all media has lowered the cost of creating a copy of any movie, book, or song to zero. What's more, it has disrupted the role of the intermediaries who used to be charged with discovering, creating, and disseminating that media. Without the natural friction of either the cost of production or the cost of discovery of talent, the internet has created a Wild West in which anything can be shared and exchanged freely with just a few clicks.

Some see this as an amazing opportunity for opportunity to flourish and for the old monopolies of the publishing companies and record labels to be broken. Companies who have been intermediating value from the work of creators obviously see it as an existential threat.