Recently, I came across a story about a collaborative initiative led by IBM that immediately caught my attention and made me want to know more. The scale, the points of connection to business problems and an important policy issue, and the pace of proposed implementation all impressed me as significantly different from how work around social issues tends to proceed.
This initiative so clearly reflects what we talk a lot about: strategy and alignment in our work. Alignment between business strategy and the interests of society can be difficult to execute. Companies cannot be all things to all stakeholders and there is much debate about where the primary obligation should lie. To realize corporate citizenship goals most successfully, companies must select the social interests most relevant to their stakeholders and the future well-being of their business.
IBM and five partner companies—AT&T, Bank of America, Citigroup, Pfizer, and UPS—who collectively award nearly $150 billion in contracts to small businesses each year, agreed to collaborate to standardize and simplify the application process required for qualified small- and mid-sized U.S. suppliers. For those of you with college-bound children, think of this as the “Common App” for small business.
To facilitate this, the participating companies are establishing a free, public website, www.supplier-connection.net, created and maintained by IBM through a grant of more than $10 million from the IBM International Foundation. Small vendors complete the single, streamlined electronic application form once to seek approval to become suppliers to any of the participating large companies. Once through the process, approved small businesses can connect more easily to these large businesses to sell goods and services.
This initiative struck me as noteworthy for several reasons. First, the unemployment rates in this country are hurting all of us. Of course people without jobs feel this most acutely, but businesses are facing the social expectation (and sometimes political or community pressure) to create jobs while continuing to preserve profits. This is extremely difficult for any business in a down economy. The scale of these large companies increases the expectations exponentially. In recent history, small businesses have historically been considered the engines of job creation, with the Small Business Administration and others estimating that as many as two-thirds of new jobs have been born in small businesses.
According to recent Gallup Polls, public confidence in big business is at historic lows. At the same time, small businesses are enjoying among the highest levels of positive perception they have seen and continue to be lauded as potential engines of job growth in our economic recovery. Despite the high confidence and trust enjoyed by small business, small business owners polled in the Wells Fargo/Gallup Small Business Index in the third quarter of this year showed record pessimism about their prospects over the next twelve months along all six dimensions measured. Experiencing related but different pressures, this group of big companies led by IBM is making a strategic decision to offer small business a boost. It is easy to imagine this solution being applied to different problems. It will be interesting to see the outcome of this initiative, but here are the key positive social impacts that we can identify in this strategy:
1. It is collaborative on many levels, bringing partners to the table that have a collective interest in solving the same problem. The partners know that the best environment for the conduct of their business, is one in which small business thrives.
2. The strategy aligns with a business function (purchasing) that is central to the companies’ success. As such, it can be a sustainable activity in the businesses that adds value to the communities in which they operate and to the companies themselves.
3. It addresses a significant social/economic issue that affects the operating environment AND the interests of all of us in society—job creation.
4. In terms of the reciprocal reputation benefit, the value to small businesses in getting approval and contract revenue from these big firms is a great “good housekeeping seal of approval,” and the big companies can legitimately claim and quantify their contributions to economic growth by tracking the progress of their smaller partners.
As a technology and services company, IBM has pulled together what appears to be a solid and smart strategy that amplifies its core business strengths. IBM has selected partners that can contribute to solutions, and it has committed significant resources. For all of these reasons, this is a strategy worth watching.
There are many other examples of companies that are collaborating to address important social issues. Feel free to share your story here.