 everybody and welcome to the strategy at work session on social impact and purpose new pillars of transformation. I hope all of you and your families are safe and well and I'm delighted to welcome two distinguished guests to this discussion that is I believe incredibly important and timely. My first guest is Ifoso Ajo mo. He researches and writes about how innovation can transform organizations and create inclusive prosperity for many alongside business guru Clayton Christensen who co-authored the book the prosperity paradox how innovation can lead nations out of poverty. We're also joined from Brazil by Carolina de Costa who is a partner at Moa asset management for new and who looks at new business and funding models to support entrepreneurship ESG goals and business impact. She has over 20 years of experience in high growth non-profit and social impact projects and brings a wealth of experience in technology innovation and ecosystem thinking. Welcome to both of you. Thank you. It's good to be here. So let me just dive right in. I mean the global economic crises prevailing pandemics and climate change have really furthered the divide between the haves and have nots. You know and pre covid we've almost had 20 years of business agonizing over these issues of profit versus impact stakeholder versus shale shareholder man versus machine and what we've seen that covid has done is really created an acceleration of these long standing debates. So there are firms who have embraced this and maybe have some insight into how to bring this thinking into their organizations but today the necessity of doing so is becoming more visible to everyone so if I were to start today how would I think about really incorporating these ideas of social impact and purpose into my organization. Carolina let me start with you. I think beginning to look at social impact as part of the strategic agenda and not something that is isolated or treated as disruption. I know a fossa is very close to Clay Christensen and himself used to say that people use the word disruption much more often than actually it is indeed a disruption and I like to approach this agenda as an evolutionary agenda in the sense that it has to be seen as value added to the business so part of the strategy convergent with the mission and understood as something even more than ever visible to society. So consumers and investors so I'm from the side of investors nowadays are looking very closely to how material is the account accountability with the agenda. So in a nutshell and going very straightforward to your question I would say that it has to be for real because everybody's looking now and looking very attentively. Absolutely. Ifosa how do you think about this? Yeah I couldn't agree more with Carolina. I think when you look at sort of social impact initiatives social agendas of different organizations and corporations it often falls into what Harvard Business School Professor George Seraphim calls a box ticking culture. Let's design all these initiatives and let's tick the box but if we're really going to make change it has to move from a box ticking initiative to a strategic initiative which means the organization as it thinks about growth and sustainability it cannot not think about some of the social impact that it's trying to enforce or realize. The thing though that's troubling or difficult is that social impact is incredibly difficult to define and it's incredibly difficult to understand. So I think as we continue on the conversation it'd be great for us to try to talk about what do we mean right by social impact because so many different organizations would define that term differently and so it's important to have a common language to help us be on the same page. I think that absolutely is a huge issue across sectors and on the other hand it's really an opportunity for firms to differentiate themselves and to create unique strategies. If I look at just this week REI which was very much ahead on the sustainability agenda announced that they had completed a 14-year commitment that they had made on reducing and becoming carbon neutral excuse me and they have pledged now that by 2030 they want to reduce their carbon footprint by 50 percent and we see many of the other announcements so this is an interesting new paradigm because earlier a lot of companies said that having to satisfy the quarterly demands of markets was a huge impediment to them doing initiatives and starting projects that they believed could widen their impact and today you see kind of an interesting combination where people are understanding they have to deliver results but also pledging to do things that are more far-reaching with defined timetables but self-defined ones so how do we actually kind of understand impact and and how much influence do companies have to define and shape the agenda if also let me start with you. Yeah I mean I think as with many issues right it all starts with leadership leadership from the investor side of things which rolls on to the board of directors which influence the CEOs which ultimately would influence the employees in the organization so I think leadership is key as we think about sort of this paradigm shift that we're all calling for but before we even sort of dive into into the how I'd love to just provide some kind of framework for understanding what this notion of social impact is you know every human being every organization has a footprint whether it's an environmental footprint a financial footprint a social footprint by the things that we do when we wake up in the morning and go about our daily lives and so from an organization standpoint it's very easy to measure financial the financial footprint right how much are you spending and how much are you making which I think is why so many metrics exist to measure financials because it's relatively easy and that's how many leaders and employees get measured it's the financial metrics with the social it becomes tricky becomes funny because you've got the employees that are going to be impacted you've got customers that are impacted in some way you've got investors that are impacted you've got society and then when you begin to even unpack that you have the environment you have the government and in terms of taxes and then you just have the impact that the actual innovation is making on society at large right so if you think about the impact of social media on the younger generation some could argue that oh man that addiction to social media often falls in the it's in the negative impact and so organizations from a social standpoint are impacting so many different stakeholders and it's incredibly difficult to measure so I think the first would be understand how your innovation and organization is impacting each of those impacting your employees impacting your customers investors and society at large whether it's the environment taxes and just how your innovation impacts people and I think it's important to have an honest assessment so that if there are negative externalities of your innovation you can begin to rectify those and so an example would be how BHP and Shell and Scom major sort of energy companies are now tying executive compensation with sort of the the carbon footprint impact that these organizations are having you know historically it was just quarterly earnings financials for the most part but when you begin to tie compensation to these social impacts that you as an organization have defined that is is incredibly important then we can begin to see change happening you know a couple a couple more points here you know Microsoft is another example of a company that's thinking not about maybe carbon footprint as much as say Shell but they're thinking about diversity right if you think about the lack of diversity in tech Microsoft is saying we will now tie executive pay to diversity issues because that's the social impact that that organization at least in the in the short term is looking to make and so you know defining social social impact is key and important it's different for different organizations because they have different social footprints on society and those stakeholders but ensuring that whatever that footprint is you're able to tie realistic metrics that influence the way employees behave is critical if we don't do that it's going to be really difficult to make any any sort of change absolutely and I think that the point you brought up about putting actual structures in place to make sure that these agendas which are inherently long-term in many cases are followed through upon is a really a critical piece Carolina can we also get your thoughts on this issue I'd like to add on if I was a point that was very well done from the point of view of the responsibility of leadership and the self-assessment plus metrics I would like to add two components it's very hard only for companies to do self-assessment not because they are not committed with the with the agenda but there's a natural bias and you have seen for for like decades companies do their sustainability reports in a way that they try to convey the notion that of course I'm worried with my stakeholders while we know that is much more like a justification mindset than actually a transformation mindset and my thesis is that sometimes companies truly believe they're already doing an impact a social impact because they employ people so I'm generating jobs come on I'm I'm doing am I social impact so there's an education educational agenda for leaders to understanding the social impact go beyond employing people or generating short-term prosperity and and actually we have to show this is the good for business uh for example I'd like to give the example in Brazil that we are living right now and it's a huge polemic in the business sector that our one of our giant retailers called magazine louisa decided to make a trainee selection only for black people like only black people can apply and then they said I we wanted to really create a shock we wanted to correct years and years of giving much more space and opportunities to the white and what was interesting was the reaction of society many people saying this is racism on the reverse so when you see a company like magazine louisa taking the leadership of saying look social impact is much more than employing people I have to really be diverse in the way I select people and I'm going to take an statement and I'm going to make a position on the topic they are creating a new way of looking at social impact and this is very educating to the to the market to the to the other sectors and other companies are following magazine louisa so when I when I talk when a fossil talks about leadership I talk about I wanted to add the leadership is not only within company but between companies themselves can be can be leaders on actions that really produce a broader understanding what is the meaning of social impact and talking about metrics and self-assessment I see with good eyes although we have to follow closely because I'm a professor of critical thinking so that investor especially institutional investors are more and more charging companies for ESG disclosure social impact disclosure looking at lots of indicators that are not commonly captured in the traditional financial self-assessment so this is also a way to help companies understand what social impact can mean what a ESG can mean from a material perspective and at the same time we see some institutions across the world as SASB in the United States providing mechanisms to give a materiality on those variables so we can also help companies to understand and educate themselves on the meaning of social impact but I think the main message is that I wouldn't I would think that it's kind of a relevant to start by saying companies that social impact is much more than employing people which it seems obvious to us but many companies will look at will look at the topic and have a very genuine difficulty in assuming that they are far from the agenda while sometimes they are totally focused on what for us is a very it's very limited view of social impact I completely hear what you're saying and I also think that from the consumer point of view when companies make these statements however sincere and don't follow it up with action in terms of how their business really operates how they design how they communicate they're very quickly called out by you know larger society but this is an interesting question I think even pre-COVID there was really no shortage of capital and good intentions kind of dedicated to this idea of making a world a better place and we have 210 signatories to the giving pledge from 23 countries you know 1.3 trillion dollars in assets we have a lot of new structures like e-corps we have instruments like impact investing we have really really high rates of volunteerism in the united states and many other countries and now because of you know all the unrest in a few months we've seen even companies like city saying we're going to pledge you know a billion dollars to close the racial wealth gap for example and many others have outlined very specific initiatives but how does this idea of social impact and purpose how can it really shape the innovation agenda as well inside companies because that is I think when it becomes tangible and you know able to have an impact in society when people see a change that's that's very tangible that's when it becomes real to consumers and even investors so if osa can I hear some of your thoughts on that absolutely and I think the the way this notion of social impact can begin to shape the innovation agenda is sort of goes back to the initial point that carolina made it really has to be an intentional part of an organization's strategy it's not a it's not a um it would be nice if we did this now it would be stepping back and doing sort of a diagnostic on the activities of a firm the products we sell how we sell those products the impact it has on our customers on the environment and putting this notion of social impact right there smack dab in the middle uh and then and then you begin to make decisions uh that and and you see how those decisions impact the social impact so you know if I were a manager at a firm and I wanted to invest uh in a new uh technology or a product or an innovation I go to my manager and I say hey I think this would be great one of the questions they're about to ask me is okay how much is it going to cost us when are we going to realize the returns uh what kind of resources do we need um you know the the the conversation will focus primarily on the financial metrics until those conversations begin to focus on the social impact metrics it's going to be incredibly difficult now one example of a firm and that's doing this and doing this uh quite well is is Philips you know big multinational company and you know it one of the businesses Philips uh engages in is it's a very basic business it's lighting so it's you know I mean they're not making the lights that are allowing us to see each other today but you know it's it's very simple light how can you possibly make that even more sustainable I mean with the exception of making more um uh more uh energy efficient efficient lights uh one of the things they've done is uh fundamentally change that business model uh so they no longer would uh completely sell the assets to you but they would come in to your organization or your building they would provide the lights as energy efficient as possible you as the customer will pay for when the lights are on when they're used and when it's time to recycle when it's time to replace the lights they come in and they replace the lights now think about how that business model is fundamentally different from a business model where you come in you sell a bunch of lights and then when the lights you know go out they reach there in the life the company uh that's using them yeah you know essentially just replaces them and and and disposes of them now Philips is thinking about its business model differently it's no longer selling the asset it's now selling uh essentially use of the asset and so it's incentivized as an organization to make sure those lights last a lot longer it's incentivized as an organization to design the lights in such a way that they don't cost the company more money than they should because this is no longer a one-time transaction if you will right and so everything about its business model is different from the customer standpoint I'm happier because I don't have this significant outlay at the onset in terms of my light my my light purchases I'm also doing my part in making the environment a much better better place and you can see how it changes the way even you know not just Philips but the customers begin to think about the purchases they make I can imagine a customer going to other suppliers saying you know here's how we currently pay for light can you can you can you do this or what what can you do in in this regard so everybody sort of wins and so it's it's a process but if you know to your question if we don't develop innovations and not just product innovations business model innovations that have social impact at the core I think it's really going to be incredibly difficult for us to to make the switch right I mean this is you know and it will we may talk about you know governments and multi-party stakeholders but I think from a company standpoint it has to be at the center of the strategy absolutely and you know there's we'll get into some of the challenges and opportunities in doing that but first I would like to hear from Catalina about how you know impact and and purpose can really shape the innovation agenda I'll make a little joke with the world by making social the agenda what I mean by that we have a fabulous methodology called design thinking that unfortunately although the mental model is totally geared toward involving different stakeholders in conceiving new ways of thinking a business or thinking a product or so forth most of the times is directed to the very end of the solution design process so I think when you when you're talking about we were talking about leadership earlier on when you transform the leader in not the one who has the answer but as a designer of answers and this is a very disruptive way to see leadership because although we know the leaders have a huge responsibility on transformation that doesn't mean that they have to have the answers they have to be excellent designers and they have to build governance and this is like the g that we call it esg that bring the social within the design thinking of the company so not because I'm thinking of a product of our process or whatever but as as a father said when I'm conceiving the business model in which I'm going to operate as a company who am I going to bring to be part of this design process it has to be the whole social environment it has to be my clients my investors my possible clients that is not in my horizon right now but they can become my customers and so forth so there's no way to make social impact without having the social as part of the design agenda and there's no way of the design agenda to be powerful if the mindset of the leader is not of the designer more than the person who has the answers so I think the combination of the way that leadership operates more as a designer the way the governance is built thanks to the way the leader thinks governance and putting the social in the center of discussion in the design process I think the combination of these three elements is what really adds to what Fossa said to the really thinking in a more systemic fashion of how to reconceive business for social impact no I think what both of you have said is really important but it's also a huge challenge because I think previously leadership was judged on how well you shepherd your own organization how will you motivate people inside do you produce something of quality and I think a lot of the changing metrics of how we judge organizations are also mirroring how we're looking at countries itself we're not looking at GDP per capita as a static measure and a singular measure of how well countries are are doing right we're looking at gender equality at broadband access at entrepreneurial capability many many filters that we didn't have earlier and so it's become a much more complex task so how and I think we're also today looking to leaders to become kind of creators of common ground right and they're the ones who synthesize all these different tensions well if I'm a car designer I do need to take into account the views of environmentalists if I'm you know designing a meat product I still have to treat my animals ethically knowing that many people have you know views about vegetarianism for example so many of the issues that companies are trying to weigh in on today you know don't have set answers there they're changing values there's you know no singular understanding of what does equality mean what does you know gender parity look like so my question is how do organizations that now have to deliver on these wider social issues how do they go about a learning journey where do they start how do they find collaborators and how do they shepherd those relationships effectively if I'll let you start yeah I mean so the good thing is you know there's a plethora of information out there on this there's you know certainly the impact investing network there's a lot of research has been done on this particular topic in fact in the most recent edition of the Harvard Business Review I think September, October we had a Harvard Business School Professor George Serafim published an article titled Making Sustainability Count and in the article he discusses how we really do need to transition from a world that talks about sustainability in a way that is separate from the organization doing business to a world where sustainability is the business we have to inculcate that into our organization and he's done a ton of research on ESG metrics and models and collaborated with a lot of different professors and other other experts in the field and so the good thing is there is a lot of information out there that's one the second thing I will say is partnering is absolutely essential when it comes to this notion of improving your social impact footprint I would say and but partnering looks differently depending on what the goals are and so there's a book by Steve Schmidder of Resonance it's an advisory consulting group the book's title Partner with Purpose and he talks about the different ways you as an organization can partner with different stakeholders to fulfill a particular mission because again we have to remember if I were a company like Starbucks or even Pepsi sustainability and social impact to me means something very different than if I were Chevron or even IKEA right and so sustainability and thinking about this notion of social impact will force these organizations to engage and interface with different players in a more intimate way than they do now and so the farmers who are growing coffee in Kenya or Rwanda or Uganda are no longer just my simple suppliers I think about those individuals their lives when when I want to decide to offer a new brand of coffee right I think about my social impact on a much deeper level and so it will sort of force me to partner with other stakeholders in a way that I currently don't as an organization and so understanding how to partner is key and I think Steve does an excellent job in his book the last thing I would like to mention here is the notion of fair compensation I don't mean to be crude but if we don't figure out a way to compensate organizations or punish organizations and this sort of trickles down into the employees within these organizations then we're going to keep talking about social social impact social mission and so on I mean you look at the world today and look at from an environmental standpoint how many wildfires we're having on an annual basis I'm in California I know look at the flooding look at desertification in the Sahel region in Africa the locust issues we're having there I mean these issues are front and center for us today yet we many of us would argue we are slow to make progress the kind of progress we need to make I mean COVID-19 has shut down a lot of you know transportation in the world and so the environment gets a little bit of a breather right we needed a global pandemic for that to happen so so so if we see all these things happening we see rising inequality we see environmental damage and we're not doing enough what it means is there's a critical piece in the puzzle that's missing and we have to figure out a way to compensate organizations that do an excellent job and punish organizations that don't until we do that it's not impossible it's just going to be really really difficult to make the kind of progress we hope to make yeah I think that's a very important issue it was and it's an important question more so even now because I think we've operated then the assumption that firms are guardians of immense talent and immense capital and that somehow they would be the natural leaders in this process but if we look at what has happened inside many organizations even well respected ones you know you see the CEO who makes the line worker salary in a matter of days we see kind of a level of inequality that few governments have actually managed to create even in countries that we don't respect very much so this is a real challenge I mean I don't know that any of us has answers but it's an important issue to highlight and Paralena I would love to hear from you as well as how does a company really start on this learning journey of you know kind of understanding as a FOSA says it's different by industry but how do I come to understand what my sphere of influences where I can have impact where I can maximize it and how do I co-create many of these solutions I think that's critical in the success and sustainability of many of these projects I'd like to add the two actors that for me are key for this transformation and they are outside the company because company themselves they definitely can be important model changes but there's a limit that is due to my current repertoire or to the way I whether I've been punished or not for certain decisions I make so in that regard that is important to have an alignment system incentive system aligning incentive system that produces this change I think investors might have an important role the special institutional investors pension funds of countries in the way they're going to be charging companies and doing this punishment or this rewarding based on how companies position themselves in that agenda but there's a player we didn't mention that is very important to the equation that is the government so and for me it has everything to do with a moral agenda I don't want to talk about morality in a philosophical way but I like always to cite the Nobel Prize from economics Fogel won the Nobel Prize in 93 that presented an econometric study showing that by the time like the end of the 18th century that United Kingdom position as a country against its slavery its labor itself was a very profitable business so if it was due to profitability very difficult for companies to go against it even though employees within the companies could be against it but as a system the inertia was geared towards profitability so what made the change politicians women people were behind the scenes who said this is immoral we cannot afford to have a society based on slavery so from of course it was not something from day to night from night to day it was something that took decades and was either was led by Wilberforce they the government's position is something that we want to accept and immediately it becomes a passive they said that if you if your business is based on slavery you were wrong you have you're gonna you're not gonna operate anymore so I believe government can be a very strong force putting the price on things that produces that produces an agenda that is against environment and against the social and so regulation so legislation so politicians who really gonna put limiters and work as punishment or rewarding for business who are operating to produce more social and environmental prosperity so just I think it is important like talking about partners or like forces I would say the moral force behind the the government behind the consumers and investors who I see as a little bit of a skepticism uh because they also look for profitability for profitability but in a sense that they are for example I like to talk about pension funds because they have an intergenerational mandate so they cannot afford not looking at for example climate risks because this is a talking about fiduciary duty this is part of their fiduciary duty I cannot just look at her short term I'm taking care of her like several generations resources so I have to be very careful about climate risks and so forth so I see I see as a combination of these these other sources as very effective for for the agenda to to become real no I think that's a tremendously important point and we can see many cases where the impact has been amplified when governments and companies have worked together and they've really diluted one another's potential impact when they've been at cross purposes and you know I started out in economics and came to business my I think there's this you know if I were to summarize it say that you know economists really understand incentives and business really tries to understand aspirations if you unite those two you can have very powerful and very rapid change but I will not belabor this point before going to the next one but I think the challenge of metrics with multi-party systems is very real because a company is geared toward growth and you know they're kind of doing basketball scoring and a lot of social service organizations you know if you're giving prosthetic legs or you're just you know dealing with hunger or child trafficking you should be aiming to make the problem go away so you're not interested in saying you know I I've helped you know 50 you know percent more people I'm like you know you don't want to actually exacerbate the problem you need to gradually you know eliminate the the need for that service so that introduces um complications that are are very real um that need to be dealt with but let's switch to another topic simply because I know both of you have such a depth of experience in technology I know if you started out as a computer engineer and I know Carolina you've you have such a depth in STEM and in cognition what COVID has done um and what was being addressed even earlier is this whole digital divide issue there's tremendous opportunity because on one hand for the first time we have a global payments infrastructure we have five billion cell phones we have social media we have a lot of tools that could potentially accelerate change um but you know Microsoft this week released data saying that you know we know even in the United States there are 162 million people who are not accessing the internet at optimal broadband speeds 21 million people don't have um you know good internet access so we know that there is um a digital divide that's very real on a global basis because now that may be our only means to communicate for the foreseeable future so now that we have big data for rich and poor in some sense you know what are some of the ways we can leverage it how has technology helped and hurt us and and what can we do better broad question so I'm completely leaving it um up to both of you to share your thoughts I suppose I'll start with you yeah I mean I think uh what we're seeing uh in the world today is that if you were doing uh well before the pandemic if you had access before the pandemic uh you know the access you have uh has been uh amplified in some way or at the very least has remained the same um and so you know I had access uh to the internet uh to decent broadband transportation and so on and now I work from home primarily because I have that access and the resources I used to spend uh to go out to get to work to travel I have more of that and so I can spend more time with my family I can spend um more time with friends social distanced of course um but I have more time right uh at my hand so I have more access to the things that uh many of us in the world would would crave um saving more and so on now if you did not have access before the pandemic if you had two or three jobs where you had to go somewhere uh you couldn't simply work from home uh you can imagine now how uh some of those folks have lost jobs uh some of that access has been taken away and they might actually be spending a little bit more money uh in order to do the things that historically uh they used to do a lot easier and I'm talking about uh prosperous countries right um I'm not even talking about emerging economies where um the concept of of working from home or even schooling from home uh it's it's almost laughable uh you know and you have no access to electricity uh much less you know broadband you've got five six people living in in a one room uh one room uh building or home and so this is an opportunity for us to step back and think about ways we can leverage technology to provide access the key has to be how can we leverage technology in a way that can provide access to people who historically did not have access because technology is always going to it's going to have uh externalities is going to have positive and negative effects that's just a fact of of anything you introduce in life but we have to ask ourselves the question now leaders have to say how can I improve access to healthcare via technology in my country in my city how can I improve access to education uh you know digitally considering what the pandemic has done and that should then drive our strategy and the decisions that we make going forward I can talk about this for hours but let me pass it over to Carolina to to give her points as well but no it's important I would uh summarizing by saying that it was not it was not considered to be technology was always thought to be something that would give access uh would generate prosperity would generate it resources but in reality technology today is one of the biggest barriers to social impact I can talk from this from someone who lives in Brazil during the pandemics we had millions and millions of children without access to to internet and losing school not having access to school at all almost 250 days without school which is going to give a give us a huge huge challenge in really catch up with everything they lost we we see that workers from the urban areas um not having good internet access and needing to go to the office because it is where they can work so and I and I and I fear that most of the home office is going to end up being a very uh is is going to be another engineering remember the the the engineering of the 80s many companies will find out that they have employees that can just uh just they just execute tasks and they don't need to be like full-time employees they can just be hired to execute a particular task so I'm really afraid of um a strong impact on employment uh when companies realize that they can really cast like categories of employees the ones who I really need to have in the office and the others that is okay if they work at home uh so I think for all these to work uh in the direction we want to see technology as a means of prosperity to inclusion to access to resources um we have to look at the human side of it so we have to build a trust relationship so we I followed a study from a institution here in brazil academic institution in brazil that interviewed lots of employees who are very worried about here gonna how how they're gonna be measured by the bosses how my boss will know what I'm doing here if I'm in like working from home and this all reveals that if you trust relationships if I if a culture of trust if I if a human centric culture is not in place technology won't produce social impact it's gonna be the exact opposite it's gonna produce lack of access it's gonna produce lack of trust it's gonna produce different types of employees and not like generating like equality and it has nothing to do with diversity as well especially social social economic diversity because we know some people won't have the same type of uh access to to resources as others so so I think technology becomes more than ever a human agenda so how are we gonna treat technology to be geared towards humanity inclusion diversity merit otherwise is gonna really be one of the biggest barriers to social impact now thank you both so much um I think you've given us a lot to think about and I think that both of you really reinforced the point that social impact and purpose when they are embraced can drive innovation it can drive profits and it can actually help us step toward a lot of the larger goals we have as individual firms and as a society as well and it's just important to keep in mind at every stage the impact of our actions because it's becoming very clear that the things that we do and fail to do have generational consequences and I think that is something that should um force us to think very deeply about who we collaborate with who we're answerable to in the long term and I'd like to close with a a quote from Peter Drucker who famously said you know the bottom line for nonprofits is transformed lives and I think increasingly that is going to be the yardstick by which all organizations will be measured and thank you both so much for your contributions and I look forward to keeping in touch with both of you thank you very much was a pleasure thank you