Social Impact as Strategy Update! - Walmart example

What does it mean to talk about social impact “as strategy”? Social responsibility is often considered a corporate communications function, not a strategic function. Some would claim that social impact is strategic only for brands with a social image, such as Patagonia or Whole Foods. Our response is that social impact and shared value can be a critical part of strategy for any company, and I thought I’d illustrate it with an example from an infamously profit-focused, hard-nosed company: Walmart.

Not strategic: Philanthropy
Corporate social responsibility often includes philanthropy, such as Walmart giving $20K to a local Florida anti-hunger organization. These efforts have some return to Walmart in the form of improved reputation, but the fundamental goal is good community citizenship – not value creation and profit maximization.

Not strategic: Simple cost reductions
Often, when talking about social impact, people think of environmental sustainability.
Using fewer resources is of course ecologically responsible and it does improve the bottom line. For example, Walmart designed a new store prototype that uses 30% less energy, helping the planet and the bottom line at the same time. However, these types of easy wins are easily
replicable, aren’t core to Walmart’s strategy, nor do they involve the kind of hard choices that we’re trying to examine at the conference this year.

Strategic social impact and shared value:
So what counts as strategic? Porter’s framework points us at decisions that have societal benefits, but are also key to providing competitive advantage to the firm or ensuring a positive industry environment. For example, in 2009 Walmart lobbied for laws mandating employer-provided health insurance. In an environment where every retailer provides health insurance, Walmart’s employees and customers are better off (social impact), but Walmart is also better able to bear the increased cost, increasing its competitive advantage. As another example, in
2006 Walmart began a process of requiring all its seafood to be sustainably sourced, thus helping to ensure fish remain relatively abundant and thus available and affordable for its customers. In another case, Walmart worked with its vendors to recycle plastic and cardboard waste from stores into an exclusive line of pet products, thereby cutting disposal costs and creating unique, lower-cost products.

Learn about other ways companies can strategically share value at our panel at 2 PM this Thursday!
- Kaia Dekker, for the Social Impact as Strategy Panel