For decades executives have been encouraged to view the world beyond their corporation as a field of competitors to be battled with, or consumers to be lured. If the 'outside' world of neighbourhoods, supply chains, or regions was to be considered, it was kept in the periphery of a corporate social responsibility function rather than seen as central to the strategy of the business.
This passive view is changing fast. If corporations are to be sufficiently robust and successful over the coming decades, they need to ensure the resilience of the neighbourhoods in which they reside and in the extended supply chains that serve them. There are a number of different organisations that have successfully balanced the need for their business to be robust and profitable with a desire to improve conditions in the communities around them.
Take the John Lewis Partnership, for example. For decades, it has bucked the corporate trends that discourage generosity. Instead of creating a way of working that squeezes out any nonproductive time that people have through a relentless focus on revenue-generating tasks, it follows its founder's vision to build resilient communities and neighbourhoods.
All John Lewis Partnership partners are encouraged to offer their time to support local, regional, and national initiatives that help to build more vibrant, economically sustainable neighbourhoods. In 2012, this amounted to over 28,000 hours (pdf) in voluntary community activities. Is it good for business? The partnership is not only one of the country's most successful companies, it is also Britain's largest and oldest example of worker co-ownership, with 85,000 partners owning the retailer's 38 department stores and 285 Waitrose supermarkets.
Interestingly, corporate altruism doesn't always have to be a question of simply giving – it can be a commercial exercise too. An example of this is the dairy and food producer Danone, which works with low-income areas to create community-led businesses based on a social business model. Launched by Danone CEO Franck Riboud and professor Muhummad Yunus, founder of microfinance organisation Grameen Bank, the projects are economically self-sustaining while creating wealth for customers, employees, and regions where the company operates.
The company's first yoghurt plant in Bogra, Bangladesh now employs 177 full-time employees, drawn from local communities in a region of extreme unemployment. It also employs over 800 Danone sales representatives who take yoghurt to be sold individually to people in the neighbouring towns and uses milk from over 370 microfarmers from around the region. Without a dairy plant, the milk these farmers produce typically goes no further than the village and is the victim of unpredictable demand. The plant helps ensure their milk is sold every day, and the fixed price encourages them to make future investments in cattle. This social business model has been extended to other regions across the world, including Senegal and Algeria.
This approach also works when applied to a corporation's target market. For Brazilian cosmetics firm Natura Cosméticos, investing in the community is a vital part of the company's business strategy. Since 2000, the company has worked with over 1,500 Amazon families that grow and harvest the tropical plants and fruits used in its products and has invested in research aimed at preserving local biodiversity. This has been a recipe for success: Natura group has a market share of 23% in Brazil, with revenues of $2.31 billion.
Corporations have an extraordinary opportunity to bring resilience to a fragile world by ensuring that the communities of which they are members are themselves resilient. This is already in progress. Global challenges such as climate change, poverty, inequality, and youth unemployment each have their own trajectory of corporate impact, and corporate leaders are beginning to realise that when neighbourhoods and communities flourish, corporations flourish too.
Lynda Gratton is professor of management practice at London Business School and author of The Key
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