Consulting “as a force for good”

Consulting is an industry which is uniquely placed in its exposure to different industries and being at the forefront of all the changes that the industry is going through. In this instance, it’s also uniquely placed to be a vehicle for change, as it’s a central collection of all the best industry practices.  Many industries are working on allocating some aspect of their business to effect change, and while there are some firms in the industry that do solely Social Impact Consulting, the industry can be transformed to be a change agent and a “force for good” with a few operational changes.

To create tangible goals in terms of effecting change for the consulting firms can be difficult. Instead – more beneficial would be to design goals that allow them to realize their advantage and integrate social impact within the vision of the firm, rather than making it a side business that allows them to create good advertising material.  Realizing that they are at the core of best practices that they pass on to for profit business and have the responsibility to use this wealth of knowledge to move forward is the key realization. On how to work within this realm so that social impact is integrated within the vision of the firm there are a few tangible goals that they can work with:

• Allocate that a certain percentage of each consultant’s time should be dedicated to working on projects of a social impact nature
• Select causes that are important to them and create measurable KPIs on what difference they’ve made in that area throughout the year
• Environmental footprint – set concrete goals on how to decrease the or at least make the company aware of the environmental effects of the business
• Measure the health of the company employees as a result of engaging in these projects

Currently, as mentioned before there are certain consulting firms that realize the responsibility that they have towards social and environmental sustainability. In effect, their jobs are ones to solve the problems those who come to them have rather than search for these. Some firms have social impact arms such as Bain with BridgeSpan and Accenture with Accenture Development Partnerships however there is still huge opportunity do to more.

What these companies have in place to work with social and environmental responsibilities is very limited. As consultants, working on social impact consulting results in a significant pay cut. The environmental footprint is printed every decision you make regarding traveling and how you decide to solve questions with the consumer. They also share their findings with certain NGOs that they work with and their findings on the overall market that many people can take advantage of.

Before moving into what could be the possible solution for the consulting industry narrowing down the factors that are prohibiting the consulting firms from achieving the goals is most important.  The main issue in this arena is the incentives that consultants to have to choose projects of this manner.  If taking a pay cut is what it takes to move to these projects, you are in a sense disincentivizing the talent to work on social impact projects.  The other aspect is that the consulting firm may not seem to believe that any further value can be derived from this offering other than positive PR.

How do we fix this? We need to ensure that the compensation package does not penalize an employee for using their skills to effect change. Arguably, the non-profit projects are a larger cost to the firm than their corporate clients – but if they charged their current clients a small fee higher they can cover these non-profit clients. The corporate clients are able to use this small fee to promote their charitable spending, as well as have a small financial gain in the form of a tax deduction – rather than blanket donating to other NGOs. In its initial stages, consulting firms that attempt this might face difficulty charging these higher prices, but as this becomes industry norm it will become easier to move forward.  To support the business model, adding working on projects with sustainable firms as a performance measure for employees will further incentivized the workforce to help growing industries.  On the flip side, the firms must realize that in the face of limited resources and support the socially and environmentally responsible firms have innovations of their own that can be implemented elsewhere, allowing them to become the bridging point between these two sectors.

The improvement in the social perception can of “evil” corporations can not be ignored. This change in business model not only allows them to help the “rich get richer” – but also address and solve issues for the good of humanity. In addition, this transferal of knowledge encourages efficiency so that each new organization and solution is not reinventing the wheel.  For example, a solution developed on improving success in working in climate conditions in rural India may be beneficial for a social impact organization as well as a multinational corporation.  The aim for this innovation is that we provide the organizations that are doing business as a cause for good a fighting chance and a level playing field against large conglomerates who have resources to make mistakes and operate inefficiently. Lastly, if doing business in an environmentally friendly manner becomes a common practice – they are in the position to expose these findings to their clients broadening the impact.

As with any new business model, the hope is that the impact will gain traction and system will create a circle which can correct itself.  Social impact and financial sustainability in this area provides a feedback loop in various ways:

1. As consulting firms take on more projects on this manner, more best practices are learnt and disseminated creating credibility in this arena – leading to new organizations approaching them for help
2. Leading by example means that the larger the impact consulting firms have, the more other industries and businesses view this as a possibility and hopefully an eventuality in their industry as they figure how to mold their business model surrounding these different goals.
3. Lastly, as you create and develop more efficient ways of doing business, you also develop a more efficient and resourceful community – and as a result this could lead to a more environmental and social friendly economy

While, this business model innovation seems to be very abstract and somewhat unachievable (how do you convince corporations to pay more for already expensive consulting services and how do you convince consulting firms that this innovation provides benefits in the form of knowledge and first mover advantages to best practices) there are various upsides that haven’t been considered. On the demand side, new entrants will begin to realize that starting a social impact organization is not as daunting of a task as it used to be.  They now have the support and help of qualified professionals who have worked in this arena in the past. Such changes in the playing field could promote more of these organizations to pop up. In addition, the social impact firms will gain the first movers advantage, as the competitive landscape transforms to be saturated with businesses filled where the norm becomes businesses working in social impacts.  From the supply point of view, the change in a business model means that every organization may be forced to reconsider their priorities, noticing that as the practice of social and environmental practices become widespread, they must also solicit advice on how to bring them up to par with competitors.  The distinct upside of access to all best practices may even encourage firms to offer more money or grants to work in this sector to their own benefit, and allow the innovations from the social sector not to go unnoticed.

On a softer side, this innovation can have an effect on employee morale. Talent attrition is a general cause for concern for consulting organizations, with the usual tenure of an employees being around 2-3 years. Many consultants quote burnout and the feeling that they aren’t able to achieve tangible results as a reason to leave this fast paced industry.  In many studies, it shows that engaging employees in social and environmental projects can alleviate the stresses on employees and improve their morale. Therefore, this practice can lead to higher attrition for the consulting firms and improve the health of the workforce that in this day and age is engaged in jobs and careers that revolves around sitting at their desks.

With every new idea, or innovation there are challenges and costs that can make you question how achievable this way forward really is. First, there is the risk that the clients refuse to pay the extra fee to begin with which means that this idea never takes off in the first place. One way to defuse this is to make this extra payment optional in the beginning and tie the donation to a specific project that the client is able to tangibly see the direct results of their donation.  Related to this – there might be an overflow of employees who choose to work on projects in the sustainability area which the firm can not afford. The hope is that the firms in the future are able to balance this demand with their KPIs for their employees, one way to curb this demand is to put into place a system which allows employees to earn their way to these projects – if they work on a certain percentage of corporate enough to pay for the social impact then only are they are able to move forward with this new engagement.

Aside from these growing pains on the side of the companies you risk too many of the innovations becoming common practice which decreases the competitive advantage of firms.  Furthermore, as social and environmental impact becomes more mainstream, it might just become another corporate venture rather than a will to provide advantageous services for the sector. As a result, it may result in organizations cutting corners and cause the same problems that they ventured out to fix in the first place. Managing these problems can become a little difficult as managing the outflow of information can be difficult once you’ve opened the gates to full transparency.

It’s not all doom and gloom however, we’re not starting fresh with these ideas.  The business model innovation of allowing the corporate clients to pay a premium to cover those less fortunate is much similar to hospitals who charge a premium for their private customers to fund those who cannot afford healthcare. ADVP, Bridgespan, Dalberg are all for profit firms working in the social impact sector and have had quite a few successes. A large part of the challenge for growing these is to attract the right talent.  Development Solutions Organization, a not for profit organization uses current students and volunteers to work on issues that NGOs are facing in achieving their goals. Their business model uses these projects both as a vehicle to achieve a difference in the lives of others, and to attract talent, a platform for students to learn from working professionals how consulting projects work completely free of cost. This could be something that a lot of these firms consider – allowing them to streamline their own goals of training new hires as well as “doing good”.

In summary, this business model innovation engages an industry that can be viewed as a hub for information into using this power as a vehicle for change, not only in the corporate world but also to use business as a change for good.

 

For more information on the Social Impact Organizations mentioned above:

https://www.accenture.com/us-en/insight-corporate-disruptors-business-turning-global-challenges

http://www.dalberg.com/

https://www.bridgespan.org/

http://www.dsoglobal.org/