01 Oct 1998
A Community Investment
Social Enterprise and the Class of 1973Topics:
Whether through career choice, board membership, volunteerism, or philanthropic support, HBS graduates traditionally have shown a strong interest in giving something back to their communities. Taking this commitment a step further, the Class of 1973 has designated its 25th Reunion gift to support the HBS Initiative on Social Enterprise, which focuses its teaching, research, and collaborative efforts on nonprofit organizations, other private social-purpose enterprises, and the role of business leadership in the social sector.
In the pages that follow, six members of the Class of 1973 - a class that entered the business world at a time when, as one classmate puts it, "we certainly heard more praise for socialism than capitalism" - respond to questions about their personal and professional involvement in social enterprise efforts. Their comments illuminate a growing synergy between business and social-sector organizations that offers hope for innovative solutions to some of society's most pressing challenges.
Your class has chosen to focus its gift on the School's Initiative on Social Enterprise. What is it about your life and times that makes this an appropriate gift?
Carl Behnke: Our class has lived and worked in a prolonged period of unprecedented economic growth, resulting in great wealth for our nation and opportunities for individual prosperity. Our gift affords us a modest, yet critical role in providing stewardship skills and an understanding of philanthropy to future HBS and community leaders.
Fred Clark: The Class of 1973 lived through and learned from the civil rights movement and the promise of an open, fair, and vibrant society as articulated by Dr. Martin Luther King, Jr. After seeing some of the excesses of the early seventies, many in our class have been inspired to address inconsistencies in society by working from within the system rather than pursuing more radical approaches.
Joseph Schell: As we turn fifty, many of us finally have time to reflect on our life's ambitions. It's a great time to get started or to expand our interests and devote our energies to worthwhile causes beyond our jobs and our families. That is what's driving a lot of us to branch out into social and community activities beyond our business life.
Jerry Ostrov: My impression is that there is a widely shared belief among us that significant positive change can and will happen and that people like us must help lead such change.
What does your company do regarding social enterprise, philanthropy, public service, and community involvement?
Davey Scoon: At Colonial, we have an Outstanding Volunteer Program, which includes a volunteer recognition program, quarterly group volunteer projects, a school partnership program that allows employees to take off up to eight hours per month to volunteer, and frequent food and clothing collection drives.
John Ince: One World, my company, is a nonprofit devoted to protecting the earth's environment. It has a community-oriented, socially responsible mission. There is tremendous inefficiency in the environmental community, and one of our goals is to facilitate the formation of strategic alliances between and amongst environmentalists and other sectors of society to reduce some of this overlap of services.
Ostrov: Johnson & Johnson is guided in all of its business practices by a deceptively simple, four-paragraph credo. One tenet reads: "We are responsible to the communities in which we live and work and to the world community as well." We are also a leader in encouraging other corporations to recognize that well-run philanthropy is not only good social policy but also good business.
Do you agree that while 25 years ago most companies dismissed social enterprise as irrelevant to their mandate, many now view it as integral to their operations?
Schell: Yes, clearly the pendulum has swung toward social responsibility. Corporate America today realizes it has broader responsibilities that go beyond concerns for its shareholders, its employees, and its customers. It has an additional responsibility to the community.
Ince: While companies are increasingly becoming aware of their social responsibilities, I am afraid that most managers still see environmentalists as adversaries. This is a fundamental problem. Too few managers appreciate the integral relationship between the economy and the natural environment. I believe the time is coming soon when events will force us to realize that environmentalists and businesspeople must see each other as allies in the process of pursuing the common good.
Have you observed ways in which social enterprise activity has positively affected company operations and employee morale?
Behnke: Employees take pride in knowing that their company supports a variety of social service agencies. Employees who volunteer individually and through organized company programs bring renewed enthusiasm to the workplace.
Scoon: Our company has benefited in three ways from social enterprise activity. First, we take pride in being known as a generous and public-spirited organization. Second, departments that have done projects as a group achieve a certain camaraderie. Third, dealing with social enterprise organizations automatically requires us to interact with and learn from people who have different backgrounds and attitudes.
Are there areas where business has stepped into issues that should be left to government?
Ince: One of the profound changes over the last 25 years has been the gradual shift of power from the public to the private sector. The assumption has been that the private sector can do it better, and the market mechanism is a more efficient distributor of resources than government. The enthusiasm of private parties for various approaches to solving social problems needs to be tempered by an overall concern for the interests of society.
Schell: I think that in almost every case the free enterprise system develops a quicker and less expensive answer than government. For example, we need to figure out how to improve the quality of education in this country. Our public educational system is failing, and true to form, entrepreneurs are rising to the challenge. At NationsBanc Montgomery Securities, we are great believers in companies that are taking advantage of this overlap between the need for better education and the instincts of a business community to fill that market need.
Clark: Public education has declined, so I think there needs to be some new way of providing quality learning. Business can help with scholarships for alternative schools, tutoring, mentoring, or demanding rigor from the curriculum. Because business has a real interest in an educational pool that is skilled and well-versed in the basics, business leaders should take an active role in their communities to try to affect the quality of schooling.
Why is it important for HBS to recognize social enterprise as a field of study?
Clark: As government shrinks, a greater role will have to be played by the private sector. As the world becomes more complex, community-based organizations will need the leadership and management skills that HBS can provide. In today's world, business and its leaders can no longer afford to be one-dimensional and narrow in focus. Business executives need to broaden the definition of their fiduciary duties in their business practices and ask themselves how their products and services enhance or lower the quality of society in general.
Scoon: While social enterprises are different in many profound ways in terms of mission and style, to run effectively they rely on many of the analytical skills with which we are familiar. Clearly, the School and its graduates can add value to the community.
Behnke: The Initiative on Social Enterprise introduces some of our nation's brightest individuals to a variety of social enterprise organizations. This exposure will motivate them to invest with time and dollars.
Ostrov: The field of social enterprise has tremendous potential to help address key issues of our society. It requires goals, structure, and discipline. This is true regarding the management of philanthropy within corporate America and in the area of developing alliances between the private and nonprofit sectors. HBS could become a major force in making that happen.
After a long and successful career with Alpac Corporation, the second-largest independent Pepsi-Cola franchise in the country, four years ago Carl G. Behnke became president of REB Enterprises, a private family investment company. Since agreeing to chair the board of the local Boys and Girls Club when his children were young, over the years Behnke has contributed his support, advice, and energy to a seemingly endless list of Seattle-area organizations, including the University of Puget Sound, the Sports Council of Seattle, the Seattle Rotary Club, the Pacific Northwest Ballet, the Fred Hutchinson Cancer Research Center, and the Northwest AIDS Foundation,to name just a few. "The more I volunteered," Behnke notes simply, "the more I became aware of the need for business leaders in the nonprofit sector." Photo by Chad Brown
The son of Mexican immigrants, Frederic H. Clark worked at Goldman, Sachs & Co. before starting his own California-based investment management firm in 1978. Since his retirement in1995, Clark has added more hands-on involvement to his longtime financial support of nonprofits. His efforts have included teaching a course titled "Life 101" to inner-city students, extensive involvement with a San Diego-based organization that develops aid programs for the poor in Mexico, and the establishment of a family foundation that gives grants in the areas of poverty, education, and religion. "There came a point where I knew I wanted to do more than just write checks," says Clark, who is a cancer survivor. "I enjoy contributing my management experience, and more important, I have grown to appreciate the struggles of poor people."
Photo by Jamie Tanaka
John F. Ince is the founder and president of One World, Inc., a nonprofit California-based corporation that focuses on environmental education and produces special fundraising events. From 1983 until 1986 he served as president of the Renewable Energy Development Corporation, which wrote fundraising, marketing, and business plans for technology and renewable energy companies. Ince was a contributor to the best-selling 1979 book Energy Future: Report of the Energy Project at the Harvard Business School and worked as a casewriter at HBS and at Harvard's John F. Kennedy School of Govern-ment and as a reporter at Fortune magazine. His environmental work has convinced him of "the need for longer-term thinking, not only about energy needs but also about our entire ecological situation." Photo by Jamie Tanaka
A company group chairman of Johnson & Johnson and a member of its Consumer and Personal Care Operating Committee, Gerald M. Ostrov is responsible for J&J's North American consumer products business. In addition, Ostrov is a member of the Corporate Contributions Committee at J&J, where social enterprise is one of four "building blocks" of the company's credo. Outside the company, he serves in leadership roles in the local Jewish community and in social service organizations. He is also a trustee of Middlesex (NJ) County College. His payback? "It is a thrill to harness the power of volunteers and help them realize just how much they can accomplish when they articulate their goals and execute their plans in a disciplined way," Ostrov explains. Photo by Steve Boljonis
Joseph M. Schell is a senior managing director, a codirector of investment banking, and a mem-ber of the executive committee at NationsBanc Montgomery Securities. Based in San Francisco, Schell is an active supporter of the California Shakespeare Festival, the San Francisco Opera, the San Francisco Symphony, and various Republican causes. He is also heavily involved in development efforts for a number of educational institutions beyond HBS, including Amherst College, MIT, and Duke University. "If you show concern and dedication to your community through your commitment of time and financial support," notes Schell, "it sets a wonderful example for your children, your employees, and for your self image as well." Photo by Jamie Tanaka
Davey S. Scoon is executive vice president and COO of Colonial Management Associates, Inc., a Boston-based money management firm. Active in social enterprise pursuits for the past twenty years, Scoon is the lead director of the Tufts Health Plan and has served in key positions in town government and in his church. "Being part of the Tufts Health Plan has been a great opportunity to see a first-rate organization positively transforming the delivery of health care," he notes. "And my work with our local government and church has helped me feel much more rooted in the community. In all these activities, I have enjoyed using my skills where they can make a real difference." Photo by Webb Chappell