Sep 172012
 

by Fenglin (Flynn) Yan (MBA ’13)

Note: Each of the participants in the Spring 2012 SVC Smith Experience was asked to blog about a session that piqued their interest at this year’s Social Enterprise Symposium.

Before 2000, corporate social responsibility was basically equal to corporate philanthropy.  Corporations fulfilled their social commitment through donation to some non-government organizations. But in the 21st century, corporations can contribute to the social welfare in a more direct way. Nowadays, corporate social responsibility has become an important part of a firm’s business model.

Smarter Cities (taken from IBM.com)

The keynote speaker Mr. Stan Litow from IBM gave a great lecture on the corporate social responsibility for a Fortune 500 company. The goal of a business is certainly to pursue profitability. Corporate social responsibility events seem to waste a firm’s limited capital, but in fact, they usually bring more opportunities to the firm. I was particular impressed by two examples.

IBM sent out 500 students each year to different cities across the world to help local governments solve business or technical challenges. IBM has been spent over 300 million dollars on this program, but did not get any revenue from it. However, I believe that IBM gained a lot of new opportunities. First, those projects can serve as successful demos and attract cities which have similar problems to purchase IBM’s services. Second, those projects can help IBM build a great relationship with local governments, which will facilitate IBM’s business growth in those cities. This corporate citizenship initiative will benefit IBM from both profitability side and social responsibility side. This reminds me another example. Google recently selected Kansas City, MO to offer its internet-based television service and began construction of an ultra-high-speed network in the area. Google must spend a fortune on this project, but what Google can get from it? The success of this project will encourage other cities to do similar projects, and the increase in internet speed will eventually help Google’s core business – after all, Google is an internet company. Google integrates the social responsibility into its business model, which will achieve a win-win outcome.

The second example I found insightful was that IBM funds NYC public high school startup P-TECH, which underlines IBM and other technology firms into education reform. Many technology firms complain that they cannot find qualified employees among the unemployed. But P-TECH, which offers education from 9th to 14th grades, provides training that matches IBM’s required skill sets. Recruiting usually is very expensive. But through this program, even through IBM spent a lot upfront to start the school, it will save probably even more in future recruiting. In the meantime, it is an example of a company preventing unemployment for the next generation.

Apparently, based on Mr. Stan Litow’s experience, corporate social responsibility is not necessarily an obstacle for a company to pursue profitability. On the contrast, in many cases, corporate social responsibility will help a company on the bottom line. More and more companies have realized this point and therefore more and more companies have imbedded corporate social responsibility into their business operations.

I am currently working on a social value consulting project for the clean water technology investment in India. Based on my research, it seems that basically only startup companies or nonprofit organizations are actually working on clean technology development. However, big companies usually have strong research and development teams and sufficient capital, but why only a few of them are willing to contribute to these ventures. Probably that is because they are too risky and too expensive. Even these ventures can be part of their social responsibility; they worry more about their profitability in the short term. In fact, I think the increase in capability should lead to the increase in responsibility.

In the symposium, I heard an example that grocery stores actually can put solar panels on top of their stores’ roof to generate electricity. This is definitely a brilliant idea. In the long term, companies can cut their utility bills, new technology will be promoted, and carbon emission will be reduced. This kind of strategy is the right model that today’s companies should follow.

In summary, the key takeaway from the keynote speech is that profitability and corporate social responsibility are not mutually exclusive. In today’s business world, profitability and corporate social responsibility will support a company’s sustainable growth together.

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