Social “Intrapreneurs” inside of multinational companies are often looking to explore new paths toward improving the lives of those living in emerging economies. But they struggle to determine how to structure social business strategies in ways that are effective inside and outside of the corporate structure. Who should lead social business efforts? How should these initiatives be funded?
As an international network connecting multinational corporations and innovative health entrepreneurs operating in 48 different countries, the International Partnership for Innovative Healthcare Delivery has a unique perspective on how health care innovations take hold in emerging economies. In our newest report “Emerging Market Strategies: How to Design Business Initiatives that Drive Long-term Growth and Improve Health Outcomes” we’ve documented ways major companies organize leadership and funding for new social business strategies and offer up case studies on how four specific companies – Novartis, GE, Medtronic, and GSK – have structured their efforts.
How do you structure social business strategies in ways that are effective inside and outside of the corporate structure?
We identified two main approaches: a “platform approach” and “dedicated unit approach.”
In the platform approach, a team at the corporate level is accountable for the organization’s social business efforts, but does not directly manage their implementation. The corporate team works with business units across the company, creating a platform for social business innovation and catalyzing new initiatives. Although platform teams may face resistance from business unit managers, constrained by short-term business and revenue pressures, this approach can be very effective in empowering existing business units to do what they cannot readily do on their own.
If the organization is more interested in fostering radical innovation and rapid execution, a dedicated unit approach may be a better fit. This approach gives a division or business unit complete ownership and accountability for social business efforts, from conception to execution. This approach shields initiatives from existing business practices and provides a clear structure and pathway for projects that may fall outside of the scope of existing business units. Although the dedicated unit approach might limit engagement and cooperation with other business units and hinder spillover of learning throughout the organization, execution under this approach can happen faster than relying on advocacy and persuasion.
How should social business initiatives be funded?
The effectiveness of social business initiatives are also influenced by the way their resources (staff, space, funds) are secured. In the platform approach, if the team relies on other business units for resources, the company can make a limited initial financial commitment, but may be slower to see results given the need to convince business unit managers to “buy in” to new initiatives. However, over time, this approach may lead to more sustainable and large-scale resource commitment. If, on the other hand, the corporate platform team has dedicated resources to invest in social business proposals, it may be better positioned to overcome resistance from business units and to accelerate selected initiatives.
In the dedicated unit approach, the company can either establish a new business unit responsible for social business strategy or transform an existing business unit. Starting from scratch removes the hurdles associated with coordinating and integrating efforts into existing business practices. However, creating and staffing a new unit is resource-intensive. There is also potential for duplicative efforts and conflict with existing business units.
Integrating social business initiatives into an existing unit or division typically requires changing incentive structures and adding new staff with expertise in social business strategy. This model leverages existing company infrastructure and, as a result, can lead to more rapid and large-scale execution of initiatives. However, integrating into an existing unit may limit the degree of innovation as it relinquishes some of the advantages of insulating teams from existing business practices.
What are best practices in Social Business Strategies?
We identified a few key success factors of effective social business efforts:
- Align the strategy with the business: Successful social business strategies focus on the core competencies of the organization. They also involve commitment from senior leadership, a long-time horizon, an entrepreneurial mindset, and local market presence.
- Use appropriate incentive structures: In the social business context, non-financial metrics play an important role in managing the tensions between near-term profit pressure and long-term business and social value. Effective social business strategies create incentive structures for teams that reward progress on these different fronts.
- Build local partnerships: Local organizations play an important role in designing and executing successful social business initiatives. These organizations bring critical local market knowledge, distribution networks, and other key relationships.
To read more about these models and to read specific case studies from Novartis, GE, Medtronic, and GSK, click here.