Four symptoms of the social shift

Getting the edge in any business is tough, especially when the change going on around us is overwhelming in its speed and complexity. The flip side is that some of the greatest opportunities we've seen are on offer.

It was summed up neatly by Mark Kramer last week in a Harvard Business Review posting: "The greatest new business opportunities lie in the world's unmet social and environmental needs."

I will review some of the developments that are symptomatic of the changes afoot and then outline the essential ingredients needed to meet the challenge. Can you afford not to know?

It doesn't seem so long ago that the terms 'social' and 'environmental' were strictly the domain of the do-gooders in society. Company executives would humour the employee who valiantly tried to champion a cause; only to then routinely dismiss the idea because it lacked any form of commerciality.

In reality, both parties were ineffective: the employee 'champions' were not always adept at linking their cause with commercial outcomes; and executives tended to lack the vision to make any link themselves.

For many in business, the word 'social' carries connotations of socialism and an anti-business imperative – it's time to get over that because it is readily used as a proxy for the term 'societal'. Likewise, 'environmental' used to be associated with tree-hugging. Not any more.

These two areas have emerged from relative obscurity and will be the main arena for business competition in the coming decades. With this in mind, let's round up four key symptoms of the societal changes afflicting businesses today:

Customer relationships

These days customers are a feisty lot and are looking for authenticity and honesty in a brand. Online media and social media tools heighten brand risk. At the other end of the scale, companies like Intuit have figured out how to harness the skills of their experienced customers to enhance their own service, not to mention the cost advantages.

Government and regulators

Did anyone in business seriously think that the global financial crisis would pass on by and then leave corporations to their own crafty devices again? The GFC has given governments a clear mandate to regulate on behalf of citizens against adverse societal impacts. Business is inter-dependent with society, not independent.

Employee demands

Those who are lucky enough to be in the sought after 'knowledge worker' demographic have developed a preference for positive social purpose. A human resources executive in a financial services company recently told me that Gen Y applicants focus on community impact without fail. Employers are jostling to create their own distinctive employee branding to stand out from the crowd.

Supply chain management

The saying "what goes on tour stays on tour” no longer applies in business. If someone or something is being exploited in the supply chain, there's a good chance that management will hear about it in a most inconvenient way. Why? Because people care more than they used to and have better tools for telling the world about it.

As much as change is disruptive and can destroy traditional industry economics overnight, those with agility have an unprecedented opportunity to exploit new products, markets and sloppy competitors. We need to be pondering questions like: what is the future of the urban shopping mall?

Products that address social and environmental needs are usually complex, even if they look simple in their final form. They require real thought and application to get them right; as well as strategies that extend well beyond the current financial reporting cycle.

In response, businesses need to surround themselves with people who understand the shift in the way value is created and help translate that into ideas for strategic action. The basic checklist looks like this:

- Figure out what purpose you fulfil and where you fit into the world. Does the world really need you or do you need to re-think? Financial returns today are no guarantee of returns tomorrow.

- Play to your strengths. What is it that you can do better than anyone else? This might sound like 'Strategy 101′ class, but when things are shifting around you, you have to keep updating your terms of reference and understanding of where your talents lie.

- Leave no stone unturned. Are all of your assets working for you? It feels like every day is a grand final and, in grand finals, there's no room for passengers. You need to get the best out of everything you've got.

If you want to succeed in business, get with this program. There is ample opportunity to succeed – and more than 'enough rope' to fail.

Phil Preston is a social innovation expert who provides strategic insight into the rapidly changing business and social environment. He can be contacted on phil@philpreston.co