disruptive-innovation

Innovate for Impact: Disruptive Corporate Social Responsibility

ACT Foundation aims to forever change education and workforce development across the United States. Founded in 2013 by ACT Inc., one of America’s oldest and most prominent educational and career testing companies, ACT Foundation exists to drive the shift to a ‘National Learning Economy’ that recognizes and supports workers’ lifelong learning.

ACT Foundation’s multifaceted approach includes four initial investment areas. One of them, ‘Moving Mind to Market,’ convenes a group of ambitious, disruptive entrepreneurs and the companies they lead, and supports ACT Foundation’s strategy to “catalyze and advance innovative solutions.” Taken individually, each of the enterprises in the program has the opportunity to drastically change the specific industries they serve. Taken collectively, all of them could drive dramatic uptake of new approaches in policy, management and skills development.

ACT Foundation is committing significant support to these enterprises as they develop their markets and strive for ambitious goals. By convening them as a portfolio of projects, ACT Foundation has at once delivered a peer support mechanism for each individual entrepreneur, and spread their investment risk across a portfolio of promising ideas. And it’s all the more impressive in that ‘risk’ is still a dirty word in the not-for-profit sector.

Combining disruptive innovation and social innovation to accelerate CSR

ACT Foundation is an outstanding example of the collision of entrepreneurial innovation and social impact. Their strategy is drawing some of the best pages from the playbook of the venture accelerators that have proliferated across the tech sector, while ambitiously pursuing a clearly articulated agenda of social innovation.

Social innovation is a more complex and ambitious undertaking than technical or business model innovation, because it requires sector-wide collaborations and an understanding of the multifaceted complexity of social issues.

In social innovation, diverse organizations are united around a shared vision of a system that is inherently flawed and in need of redress. Given this larger purpose, individual leaders and organizations are generally more willing and able to turn their organization’s skills, assets and opportunities into shared skills, assets and opportunities. Collaboration across organizational boundaries is distinct from the cooperation within a tech sector accelerator in that the former implies the sharing of capacity, as opposed to the relatively simple sharing of advice. And this presents significant opportunities for corporate social responsibility teams.

In ACT Foundation’s case, because each of the enterprises aligns directly with ACT Foundation’s mission and goals, the success of any, many, or all of them will support ACT Foundation’s work, all of which supports the work of the parent company.

The second difference is perhaps more visceral: whereas tech accelerators tend to foster competition between enterprises and entrepreneurs, the social sector aims to foster empathy between them. Certainly, at its simplest level, this tends to bring like-minded professionals together and cultivate ‘tribes’ of friends and potential colleagues. But at a deeper level it fosters enduring relationships that themselves become the wellsprings of new ideas in a self-perpetuating ecosystem. Success begets success in an upward cycle of innovation and market building.

Of course, while this sounds promising, one key challenge remains: any of the enterprises enrolled in a social innovation program might fail.

How can a corporate social innovation program serve shareholder value?

By housing their disruptive innovation program in a corporate foundation and by carefully designing its governance model, ACT Foundation has established an arms length relationship from its parent company that gives ACT Foundation discretion to pursue a strategy that is distinct from and supportive of ACT Inc.’s goals and approach.

Taken one step further, truly ambitious corporate social innovation programs can be structured not simply as a convened portfolio of entrepreneurs, but as a holding company that owns part or all of standalone enterprises within the portfolio. This increases the upside for the company, ultimately contributing to shareholder value as well as to the social innovation the enterprises are founded to bring about.

Everyone wants to innovate, but true innovation comes with real risk. This has long been understood and accepted in corporate research and development. Today, most companies recognize their need to support the communities where they operate and to steward scarce environmental resources. This is neither simple nor easy to prioritize—unless these imperatives are viewed as opportunities for disruptive, high-reward innovation.

In service of social and sustainability approaches that drive goodwill and shareholder returns, disruptive social innovation can be an effective aspect of CSR, which in turn positions CSR as a vital aspect of corporate strategy.

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