Social Impact via the ‘Short Head’ of Consumerism

I’ve found one of the most striking aspects of the aftermarth of the UK Riots to be the ongoing debate on the ‘consumerist’ nature of it all. It wasn’t riots, it was looting. And the looting wasn’t for food and the basic essentials that would neatly fit the ‘these are the people the state can’t provide for’ narrative. The looting of plasma screens and designer trainers suggests the most powerful influencing factor here – 2 years after the publishing of The Spirit Level – is inequality.

Reading The Spirit Level left me quite convinced that inequality is the fundamental driver to many of society’s problems. The question is how to fix it. Most of the suggestions, coming from the wealthy, white, well-educated academics are for the wealthier amongst us to earn less, consume less, flaunt less. Yes, there is a huge environmental problem of over-consumption that needs tackling. But as solutions to social problems, I just find these proposals too divorced from reality. In short, businesses need to sell more stuff. And marketing departments have become very good at convincing us we need it. In amongst all the self-flagulation that somehow consumption is inherently evil, how about a radical idea: that we use consumerism as a force for good to get us out of this mess?

I’m reading Jason Saul’s ‘Social Innovation Inc’ at the moment. A good read – encouraging corporates to focus their social efforts on generating core business value and leveraging core business competency – and to focus on outcomes not efforts (key line: ‘philanthropic strategies get funded out of leftover profits; business strategies get funded out of operating budgets’). Yet it’s a slightly frustrating book that you feel would have been a great article that somehow has been stretched into a very repetitive 12 chapters.  Many of the examples given seem to me as classic CSR (Pampers giving cash to third world mothers) and reemphasise that real genuine shared value is rare and tough for companies to deliver.

That said, there’s some interesting bits – much centring around businesses creating new markets for themselves amongst disadvantaged consumers.

My interpretation of his message goes like this: Once businesses have reached saturation point, the currently accepted route to growth is to find ever-more elaborate ways to convince existing customers they need to upgrade to a new model. This leads to the kinds of mindless product ‘innovation’ that in reality is simply an exercise in marketing BS of the ‘toothbrush that cleans the tongue’ variety. Nobody wins here: marketers tell lies, consumers get affluenza, the planet fills up with junk. This is most famously summarised in Tim Jackson’s damning assessment.

But there’s an alternative. The businesses could develop new markets for their perfectly good existing products: specifically mass market access to basic mass production goods

Saul terms this ‘short-tail economics’ in direct contrast to Chris Anderson’s Long Tail theory. Ironically enough, given I spent 3 years working in online media, eulogising I think the short-tail is more interesting than the long-tail (but argue that surely it should be the ‘short-head’?).  By servicing the basic needs of the vast numbers of disadvantaged individuals, companies can take these people out of poverty and social exclusion: making the products affordable in the short-term whilst improving the health and wealth of the consumers in the process. In doing so they’re creating huge future markets for themselves, something that seems to me the most sensible (and most selfish) thing a company could do. (Especially when you consider the alternative – currently considered ‘the norm’ – providing this demographic with products and services which actively harm them, financially or socially, thus decreasing their future spending power).

Much is made of this in the Bottom of the Pyramid: Grameen Bank and Grameen Danone in the developing world but Saul talks about Tonik, a US health insurance product for the twenty-something ‘young invincibles’ previously thought of as not a serious business proposition and Tesco’s remarkable entry into the US Market – through Fresh & Easy stores in Food Deserts.  But there are examples in the UK too. Look at The People’s Supermarket, London Rebuilding Society’s Shimmer or Fair Finance, tackling food poverty, fuel poverty and financial exclusion, respectively.  Note these aren’t huge corporates, however, but early stage social ventures.

But these are necessarily low margin businesses and social ventures simply don’t have the scale to sell the volumes needed to make these things profitable. The thing about the ‘short head’ is that the volumes need to be huge. This is the reason why Saul and others focus on large corporates when extolling the virtues of this strategy. But he too references the impact on the ‘nonprofit’ sector, as he calls it: ‘…need to figure out how to sell their impact as a business proposition’. Big businesses, on the other hand need to work with partners who genuinely understand the needs of these new consumers: their motivations, their social needs, their consumption habits, their purchasing power.

So far on this blog I’ve looked at two ways in which big businesses and social businesses can work together:  

• Firstly those big businesses contracted to deliver public services: increasingly as they are commissioned and/or paid on the basis of outcomes they will look to subcontract to the social ventures that can most reliably and most cost effectively deliver these outcomes.
• Secondly those big businesses that are looking to achieve CSR outcomes directly through the organisations they sub-contract to in their daily operations. My colleague, Steve Leach, calls this ‘hydro-electric’ social value. The social value (electricity) is created as a nice side effect of the process and the people using the service (water) downstream either don’t know or don’t care about it.

My hunch is that the social value created through ‘short-head consumerism’ offers even more interesting potential for social businesses and big businesses to work together. It’s certainly not restricted to traditional definitions of supply chains.  Rather it creates a market for social businesses to touch at every stage of the value chain: market research, design, production, white-labelling of products and services, routes to markets and customer services.