Woodside Enlists Kramer for Social Change Models

Social problems do matter to business, the co-founder of the progressive social change models Collective Impact and Shared Value, US-based Mark Kramer has told a public event hosted by oil and gas giant Woodside in Perth this week.

Woodside has enlisted the help of Kramer to establish the social change models for the company’s new $20 million development fund.

The Woodside Development Fund was established in February 2014, focused on supporting initiatives in early childhood development in Australia and overseas with $20 million to disperse over 10 years.

Instead of directing the funding to various organisations working in the sector, a model that Kramer says leads to ‘isolated impact’, Woodside is in the process of creating a Collective Impact model.

A Collective Impact model would bring together government, Not for Profits, foundations, corporations and communities that operate in the early childhood development space.

“So many of the problems that we are trying to address in the world today are complex. They are embedded in systems that don’t function,” Kramer said at the public speaking event in Perth.

Woodside has enlisted the help of Collective Impact and Shared Value co-founder Mark Kramer to establish the social change models for the company’s new $20 million development fund.

“Collective Impact is about imagining a different approach. An approach where many different organisations together create a system, begin to work as a system, where we actually get alignment across sectors, and where organisations actually coordinate and share and learn, and where they are actually working towards the same goal and measuring things the same way.

“We keep looking for the solution to a social problem. Where’s the program, the social entrepreneur, the intervention, that hero who is going to fix our education system, problems with poverty, the environment.

“That is the wrong way to think about this. All of these issues are a result of the interdependence and interplay of many different actors. It is only when we can create a system that is truly functional with these different actors working together with a common base of knowledge that we can really achieve significant change.”

Kramer outlines five imperative conditions for Collective Impact, including: a highly structured common agenda; a shared measurement system where partners are measuring impact with the same mechanisms; mutually reinforcing activities where each player in the system supports others; continuous communication about the process, data collection and outcomes; and a backbone organisation that performs the administrative function of the group to keep it on track.

The Collective Impact model begs the question: how do you get all these sectors to buy into working together? Kramer’s answer lies in another concept: Shared Value.

“With Shared Value there is no veil of altruism, no hint of social responsibility. With Shared Value, getting companies on board with a social change project is about getting them to understand the economic imperatives and benefits to their business,” he said.

“Social problems do matter to business. They matter in terms of their ability to get employees, they matter in terms of the safety of the environment in which they work, in terms of the vibrancy and culture of the city to attract employees.

“You need to find the issue that matters to the business and present it to them not as ‘we want you to be a part of this because you’re a good corporate citizen’, but as ‘we want you to be part of this because this issue affects your performance as a business’.

“You need to understand the interests of each party, and position this in a way that serves their interests.”

Kramer points to many examples of the Collective Impact and Shared Value models working across the world.

A health insurer in South Africa pays for its clients’ gym memberships and cancels them if people don’t go to the gym twice a week. The insurer reimburses 25 per cent of insurance members’ monthly fruit and vegetable bill; and the company electronically monitors members’ pill bottle lids to track and remind people to take their medication.

“This health insurance company actually is more profitable than any other health insurer in South Africa because their members get sick less often, when they are sick they recover more quickly and they live longer,” Kramer said.

“The entire competitive advantage of this company rests on making their population healthier. That is a wonderful example of creating shared value, benefitting people in a way that contributes to the competitive advantage of the company.

“Social Value can be about re-conceiving products and markets, making products and services that are beneficial to your customers, or entering markets that are under-served.”

Closer to home, Kramer pointed to Uncle Toby’s Cereals, which uses 30,000 tonnes of oats a year but at one point was importing all of its oats because Australian farmers had largely stopped producing due to the poor profitability and the non-drought resistant nature of oat crops.

“Uncle Toby’s had to import the oats which cost more money and created a bigger carbon footprint because of all the transportation,” Kramer said.

The company worked with the Australian Research Institute to create new drought resistant strains of oats that had added health benefits with cholesterol absorption qualities.

“They are now getting 50 per cent of their oats from farms within 100kms of their factory and paying a premium for them,” Kramer said. “Generating benefits to farmers, benefits to Uncle Toby’s, and rethinking productivity in the chain.”