Stephanie Schmidt

Danone’s Social Innovation Lab: The Business-Social Congruence

I was part of the 50 citizen sector* representatives in Danone’s annual Social Innovation Lab (SIL) last week in Saint-Denis, a suburb of Paris. This vibrant gathering focused on lessons for scaling up social business initiatives. After business school (during which I coincidentally interned at Danone), when I decided to join the citizen sector to focus on social change, I had not imagined having this kind of conversation with a corporation. Nowadays, however, many factors are contributing to the growing congruence between the business and the citizen sectors, like an increasing number of MBAs choosing to work with Citizen Sector Organizations every year, increased competition, saturated markets and scarcity of resources both financial and human. Last week’s forum was a clear example of this trend, which represents an unprecedented opportunity to make a difference in the lives of many around the world.

SIL gathered over 150 Danone executives from around the world to learn about the social business projects fostered by various company business units, inspire new ones and brainstorm on transversal issues such as people mobilization, social impact measurement, co-creation and accelerating social innovation. To date countries like Ukraine, Mexico, France and Indonesia have started to develop dual economic and social models in waste collection to benefit thousands of waste pickers, proximity distribution to create employment and improve nutrition, as well as sourcing milk from small farmers among others.

The decision to establish social business initiatives raises a number of questions for a corporation. “Will Danone become an NGO?” financial analysts asked Frank Riboud, Chairman and CEO of Groupe Danone when they announced a joint-venture with the Grameen Bank in May 2006 to respond to the nutritional needs of Bangladeshi children through the distribution of a low-cost fortified yogurt. While Riboud does not challenge the fact that a company needs to generate value for its shareholders, he also states in his distinct non-assuming style that no company can thrive in an economic and social desert. A company’s best interest is to take care of its “ecosystem” meaning its suppliers, employees, customers and distributers in the places where it operates, particularly in times of economic crisis.

My work at Ashoka is largely focused on supporting the creation of social business models that leverage the insights and assets of the business and citizen sectors. In Mexico, for instance, the complementary approaches and strengths as well as the “constructive tensions” that occurred between Danone and its citizen sector partner Cauce Ciudadano led by Ashoka Fellow Carlos Cruz were critical to design and implement the Semilla program, a door-to-door sales channel that employs women from the informal sector and has increased the consumption of yogurt in low-income households. From my experience to date though, few companies walk the talk like Danone does.

From recently setting up three funds to support emerging projects (Ecosystem, Nature and Danone Communities that were respectively launched with Euro 100 million, Euro 50 million and Euro 1 million) to indexing one third of managers’ bonuses based on social impact and providing direct recognition from the top management to the corporate intrapreneurs that are behind these new business social models, Danone seems to have the most critical incentives in place to mobilize its people and foster social innovation.

No doubt, generating large-scale businesses with social impact still remains a challenging and long-term venture but the ambitious vision, the humble attitude and the openness to learn from citizen sector are all key ingredients for success. As Muriel Penicaud, Executive VP of Human Resources says, the critical mass within the company is not yet achieved but Danone is aiming to grow the number of employees actively involved in business-social projects from 150 to over 1,000 in a year. I can only wish that many more companies develop this kind of ambition.

* Ashoka and a growing number of sister organizations have sworn off the “non-” words. Instead of “non governmental organizations” or “non-profits” we use “citizen sector organization.”