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Ticker erman

Chamber

03 | 2014

June – July

Business Journal of the German Chamber of Commerce in China

www.china.ahk.de

of the German Chamber of Commerce in China www.china.ahk.de Business and social ResponsiBility Thinking Beyond Charity
of the German Chamber of Commerce in China www.china.ahk.de Business and social ResponsiBility Thinking Beyond Charity

Business and social ResponsiBility Thinking Beyond Charity

A Good Foundation and Great Potential Interview with Mr. Sun Yongfu of the Ministry of Commerce, China

The Ethical Economy Doing Good in an Era of Value Crisis

The New Chinese-German Tax Treaty Good News for German Investors in China

Good in an Era of Value Crisis The New Chinese-German Tax Treaty Good News for German
Available on the
Available on the

BUSINESS |

Cover Story

Social Innovation

The Newest Face of CSR

Economic growth in China is no longer sustainable. There is a desperate need to address widening wealth gaps, social divides, environmental pollution, inequitable access to health care and more. Cooperate social responsibility plays a more and more important role in China. Many companies believe that it empowers businesses to run better and more sustainably while improving people’s lives. It helps to create a continuous positive impact on the community and expands NGO capacity with knowledge through mentorship and employee volunteering program. For example, donation to Communications University of China’s solution for NGOs improves governance and establishes trust in China’s social sector research on use of IT in China’s non-profit sector to enhance operational efficiency.

Social Innovations are novel solutions to a social problem, which are more efficient, effective and sustainable. It can be ideas, strategies, philosophies or organizations that meet unmet social needs. The innovation initiative was also launched in China, As Hu Jintao, the former President of China, noted in July 2011:

"To ensure that people live in peace, social harmony and stability, we need to enhance and innovate in our public administration, improve the party’s leadership and the government’s responsibility, and foster public participation in the management of society.”

Inclusive growth and innovation in the management of society is fast becoming the government’s mantra. As Hu Jintao has also noted, there is a need for innovation and a vibrant non-profit sector to ensure social harmony and political stability.

The Four Trends in Social Innovation

According to FSG, a nonprofit consulting firm, there are four trends in social innovations. First is the strategic evaluation, designing systems of collecting and sharing data which lead to actionable change, improved organizational effectiveness, and ultimately, social impact.Typically, strategic evaluations attempt to see past the obvious factors that influence short-term plans, and seek a more dynamic study of the trends that will dictate the future success or failure of the company. Like a chess match, strategic evaluation succeeds when companies are able to accurately analyze and predict several moves ahead into the future, in order to best tailor their present policies.

The second trend is collective impact, which brings diverse organizations together in a highly-structured manner with a common goal of making a true impact on a complex social problem. Collective impact is a significant shift from the social sector’s current paradigm of "isolated impact,"

28 June - July 2014

by ALEXANDRA VAN DER PLOEG and DEIRDRE WHITE

because the underlying premise of collective impact is that no single organization can create large-scale, lasting social change by itself. There is no "silver bullet" solution to systemic social problems, and these problems cannot be solved by simply scaling or replicating one organization or program. Strong organizations are necessary but not sufficient for large- scale social change.

Third is catalytic philanthropy, which is to use multiple tools beyond check-writing and work with multiple partners to take an active role in bringing about transformative change. It could include activities such as taking responsibility for achieving results going beyond thinking about which organizations to support and instead thinking about how to solve a social problem; mobilizing a campaign for change, empowering stakeholders and creating the conditions for collaboration and innovation; using all available tools to create change, including unconventional ones from outside the nonprofit sector, and creating actionable knowledge to improve their own effectiveness and to influence the behavior of others.

The fourth trend is the shared value. Shared value is an approach to meeting business objectives that creates a competitive advantage for corporations through innovations that address society’s needs and challenges. It is not social responsibility, philanthropy, or sustainability, but a new way to achieve economic success. A company’s opportunity to create shared value is unique to its business model and the social conditions that surround its operations. Shared value creation starts with a deep understanding of social problems and their connection to a company’s business.

Challenges for Global Companies Today

Finding tomorrow’s leaders is one of the biggest challenges facing global CEOs today. According to a recent survey, 93% of CEOs acknowledge that they need to change their strategies to attract and retain new talent (previous surveys have indicated the same realization), but less than a third have acted on these plans. Moreover, CEOs are concerned about finding employees who can adapt to new, fast-developing markets in Africa and Asia. Over the next year, 74% of CEOs expect to pursue opportunities in Africa.

Meanwhile, another recent survey found that 84% of Millennials care more about making a positive difference in the world than workplace recognition. This has come a long way from earlier generations that often prioritized career advancement.

Clearly, these trends indicate it’s time to fundamentally rethink the established approach to talent strategies.

BUSINESS |

Cover Story

Shared Value – the New Face of Leadership

In an effort to meet these challenges, the technology and software solutions company SAP started what it calls a Social Sabbatical program,

Developed in partnership with PYXERA Global, the program strives

sabbatical takes these approaches to innovation—along with employees’ expertise—and puts them in a new context, where the rules of engagement around business and culture are different.

which sends high-performing employees into emerging economies. During

A

social sabbatical team’s first week in-country is dedicated to

these pro bono assignments, employees support entrepreneurs, NGOs, and government agencies, with the aim of positively impacting the regions economically and socially. They also gain a better understanding of how to effectively operate in these geographies. The program was launched in 2012 and initially catered to three countries - Brazil, India and South Africa – with 30 employees. Beginning in 2013, the program has been extended to cover entrepreneurs in China. The company, by investing more than USD 2bn in the next couple of years, aims to create a broader

immersion—observing the business, social, and cultural climate of the new organization. Despite months of preparation and pre-defined project parameters and scope, the team may drop their initial ideas and change direction based on their experiences during the first week. As they begin to better understand in-country realties—which may include weak electrical grids or limited infrastructure and transportation systems, or, conversely, more-sophisticated capabilities than they originally envisioned—employees learn to “build, measure, and learn.”

presence in the emerging economies like China, which are growing more than 2% every year.

to solve business challenges – specifically for the education and entrepreneurial sectors in emerging markets – while strengthening the participants’ leadership competencies, cross industry sector know-how, and intercultural sensitivity. Employees leave the daily routine of their jobs

At Endeavor, for example, the SAP team quickly determined that the project outcomes it originally set were unachievable within four weeks. In the first few days, the team interviewed mentors and investors throughout South Africa to better understand the situation, then redefined their deliverables and focused on two critical needs.

This kind of experiential learning is critical to building a next generation

to spend a month with a host client. We’ve seen this experiential learning

of

business leaders who know how to operate across regions and cultures.

foster a cultural shift toward next-generation thinking—it infuses future

It

also allows millennials to bring their values to work with them. Now

executives with the type of creativity they need to problem-solve in an

in

its third year, the program has evolved and the company is focusing

entrepreneurial setting. It also fortifies the capacity of organizations in

its

efforts on maximizing impact by sending new teams to the same host

emerging markets, by introducing new skillsets and approachesto their business and operational challenges.

clients repeatedly. By sending multiple teams to the same organizations, individuals learn more about them from collective experience, and in turn, have a deeper impact on those organizations.

“The challenge is unique, and quite frankly something of an uphill battle -to revitalize an entire district. But that is also the beauty of it.” This was said by Senta, one of Chinese employees who participated in the program. “A very tough challenge worth exploring, thinking, obsessing about – with the outcome that we were able to forge a path in which the district can change from an abandoned location to a thriving one. In essence we are helping stop the decline of a district and turn it into a place where the resurgence and revitalization could lead to lots of opportunities for the community as whole. Being able to change this perception, the perception of decline and abandon into a galvanized, energetic and ‘up and coming’ community is something that is really inspiring.”

From the survey, 100% of participants agreed or strongly agreed with the following statement: “After my Social Sabbatical experience, I am more motivated to perform in my work at SAP.” 93% of participants agreed or strongly agreed with the following two statements: “My Social Sabbatical experience positively changed my perception of SAP as a corporate citizen,” and “My Social Sabbatical experience made me more likely to tell others about SAP.”

Using the Lean Startup Method

Entrepreneur and author Mr. Eric Ries’ phrase, “build, measure, learn” articulates a new approach to innovation in the start-up context, and his Lean Startup method has proved useful to SAP and PYXERA Global’s work in emerging markets. The concept suggests that entrepreneurs build out an idea, measure how customers respond, and from there, learn whether to pivot or preserve. It has provided a roadmap to thousands of entrepreneurs who operate in an environment of uncertainty.

This is not dissimilar to the design-thinking principals that SAP uses as the foundation for an approach to innovation. Employees’ methods for problem-solving includes failing early and working in small teams. The

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Innovation Driver - Doing More with Less

To drive innovation, Mr. Ries emphasizes failing fast in order to gain product and service insights, rather than fulfilling pre-determined requirements. Local organizations are often run by just three or four people, who each have three or four jobs and limited budgets. In the day- to-day, these organizations must adopt an innovative frugal mentality that is completely different from what is required to process information and solve problems with large teams and multi-million dollar budgets.

Experiential learning teaches participants how to take risks with limited resources and fewer established business processes. It also meets the increasing expectation of the next generation that they will be able to bring their values into the workplace. As the business landscape evolves at an even faster pace, having a talent bench of future executives with this type of experience is invaluable.

Alexandra van der Ploeg is interim head of global CSR at SAP. At SAP since 1999, she was originally in charge of management development at SAP Switzerland and later held various managerial positions in human resources. For the past four years, she has managed global corporate social responsibility (CSR) programs at SAP, including the SAP Social Sabbatical initiative. Deirdre White is CEO of PYXERA Global (@PYXERAGlobal) and an internationally recognized leader in the field of economic development. She spearheaded the growth of best practices in Global Pro Bono to benefit global corporations, local governments, and nonprofits worldwide, and guides companies such as IBM, SAP, PepsiCo, and Pfizer as they provide pro bono expertise to build the capacity of organizations in developing economies.