A Good Foundation and Great

Potential
Interview with Mr. Sun Yongfu of
the Ministry of Commerce, China
The Ethical Economy
Doing Good in an Era of
Value Crisis
The New Chinese-German Tax Treaty
Good News for German Investors
in China
03 | 2014 June July Business Journal of the German Chamber of Commerce in China www.china.ahk.de
Available on the
BUSINESS AND SOCIAL
RESPONSIBILITY
Thinking Beyond Charity
Ticker
erman Chamber
BUSINESS |
28 June - July 2014
Social Innovation
The Newest Face of CSR
Economic growth in China is no longer sustainable. There is a desperate
need to address widening wealth gaps, social divides, environmental
pollution, inequitable access to health care and more. Cooperate social
responsibility plays a more and more important role in China. Many
companies believe that it empowers businesses to run better and more
sustainably while improving peoples lives. It helps to create a continuous
positive impact on the community and expands NGO capacity with
knowledge through mentorship and employee volunteering program. For
example, donation to Communications University of Chinas solution for
NGOs improves governance and establishes trust in Chinas social sector
research on use of IT in Chinas non-profit sector to enhance operational
efficiency.
Social Innovations are novel solutions to a social problem, which are more
efficient, effective and sustainable. It can be ideas, strategies, philosophies
or organizations that meet unmet social needs. The innovation initiative
was also launched in China, As Hu Jintao, the former President of China,
noted in July 2011:
"To ensure that people live in peace, social harmony and stability, we
need to enhance and innovate in our public administration, improve the
partys leadership and the governments responsibility, and foster public
participation in the management of society.
Inclusive growth and innovation in the management of society is fast
becoming the governments mantra. As Hu Jintao has also noted, there
is a need for innovation and a vibrant non-profit sector to ensure social
harmony and political stability.
The Four Trends in Social Innovation
According to FSG, a nonprofit consulting firm, there are four trends in
social innovations. First is the strategic evaluation, designing systems of
collecting and sharing data which lead to actionable change, improved
organizational effectiveness, and ultimately, social impact.Typically,
strategic evaluations attempt to see past the obvious factors that
influence short-term plans, and seek a more dynamic study of the trends
that will dictate the future success or failure of the company. Like a
chess match, strategic evaluation succeeds when companies are able to
accurately analyze and predict several moves ahead into the future, in
order to best tailor their present policies.
The second trend is collective impact, which brings diverse organizations
together in a highly-structured manner with a common goal of making a
true impact on a complex social problem. Collective impact is a significant
shift from the social sectors current paradigm of "isolated impact,"
because the underlying premise of collective impact is that no single
organization can create large-scale, lasting social change by itself. There is
no "silver bullet" solution to systemic social problems, and these problems
cannot be solved by simply scaling or replicating one organization or
program. Strong organizations are necessary but not sufficient for large-
scale social change.
Third is catalytic philanthropy, which is to use multiple tools beyond
check-writing and work with multiple partners to take an active role in
bringing about transformative change. It could include activities such as
taking responsibility for achieving results going beyond thinking about
which organizations to support and instead thinking about how to
solve a social problem; mobilizing a campaign for change, empowering
stakeholders and creating the conditions for collaboration and innovation;
using all available tools to create change, including unconventional ones
from outside the nonprofit sector, and creating actionable knowledge to
improve their own effectiveness and to influence the behavior of others.
The fourth trend is the shared value. Shared value is an approach to
meeting business objectives that creates a competitive advantage for
corporations through innovations that address societys needs and
challenges. It is not social responsibility, philanthropy, or sustainability,
but a new way to achieve economic success. A companys opportunity
to create shared value is unique to its business model and the social
conditions that surround its operations. Shared value creation starts
with a deep understanding of social problems and their connection to a
companys business.
Challenges for Global Companies Today
Finding tomorrows leaders is one of the biggest challenges facing global
CEOs today. According to a recent survey, 93% of CEOs acknowledge
that they need to change their strategies to attract and retain new talent
(previous surveys have indicated the same realization), but less than a third
have acted on these plans. Moreover, CEOs are concerned about finding
employees who can adapt to new, fast-developing markets in Africa and
Asia. Over the next year, 74% of CEOs expect to pursue opportunities in
Africa.
Meanwhile, another recent survey found that 84% of Millennials care
more about making a positive difference in the world than workplace
recognition. This has come a long way from earlier generations that often
prioritized career advancement.
Clearly, these trends indicate its time to fundamentally rethink the
established approach to talent strategies.
by ALEXANDRA VAN DER PLOEG and DEIRDRE WHITE
Cover Story
BUSINESS |
30 June - July 2014
Shared Value the New Face of Leadership
In an effort to meet these challenges, the technology and software
solutions company SAP started what it calls a Social Sabbatical program,
which sends high-performing employees into emerging economies. During
these pro bono assignments, employees support entrepreneurs, NGOs, and
government agencies, with the aim of positively impacting the regions
economically and socially. They also gain a better understanding of how
to effectively operate in these geographies. The program was launched
in 2012 and initially catered to three countries - Brazil, India and South
Africa with 30 employees. Beginning in 2013, the program has been
extended to cover entrepreneurs in China. The company, by investing
more than USD 2bn in the next couple of years, aims to create a broader
presence in the emerging economies like China, which are growing more
than 2% every year.
Developed in partnership with PYXERA Global, the program strives
to solve business challenges specifically for the education and
entrepreneurial sectors in emerging markets while strengthening the
participants leadership competencies, cross industry sector know-how,
and intercultural sensitivity. Employees leave the daily routine of their jobs
to spend a month with a host client. Weve seen this experiential learning
foster a cultural shift toward next-generation thinkingit infuses future
executives with the type of creativity they need to problem-solve in an
entrepreneurial setting. It also fortifies the capacity of organizations in
emerging markets, by introducing new skillsets and approachesto their
business and operational challenges.
The challenge is unique, and quite frankly something of an uphill battle
-to revitalize an entire district. But that is also the beauty of it. This was
said by Senta, one of Chinese employees who participated in the program.
A very tough challenge worth exploring, thinking, obsessing about with
the outcome that we were able to forge a path in which the district can
change from an abandoned location to a thriving one. In essence we are
helping stop the decline of a district and turn it into a place where the
resurgence and revitalization could lead to lots of opportunities for the
community as whole. Being able to change this perception, the perception
of decline and abandon into a galvanized, energetic and up and coming
community is something that is really inspiring.
From the survey, 100% of participants agreed or strongly agreed with the
following statement: After my Social Sabbatical experience, I am more
motivated to perform in my work at SAP. 93% of participants agreed or
strongly agreed with the following two statements: My Social Sabbatical
experience positively changed my perception of SAP as a corporate
citizen, and My Social Sabbatical experience made me more likely to tell
others about SAP.
Using the Lean Startup Method
Entrepreneur and author Mr. Eric Ries phrase, build, measure, learn
articulates a new approach to innovation in the start-up context, and his
Lean Startup method has proved useful to SAP and PYXERA Globals work
in emerging markets. The concept suggests that entrepreneurs build out an
idea, measure how customers respond, and from there, learn whether to
pivot or preserve. It has provided a roadmap to thousands of entrepreneurs
who operate in an environment of uncertainty.
This is not dissimilar to the design-thinking principals that SAP uses as
the foundation for an approach to innovation. Employees methods for
problem-solving includes failing early and working in small teams. The
sabbatical takes these approaches to innovationalong with employees
expertiseand puts them in a new context, where the rules of engagement
around business and culture are different.
A social sabbatical teams first week in-country is dedicated to
immersionobserving the business, social, and cultural climate of the
new organization. Despite months of preparation and pre-defined project
parameters and scope, the team may drop their initial ideas and change
direction based on their experiences during the first week. As they begin to
better understand in-country realtieswhich may include weak electrical
grids or limited infrastructure and transportation systems, or, conversely,
more-sophisticated capabilities than they originally envisionedemployees
learn to build, measure, and learn.
At Endeavor, for example, the SAP team quickly determined that the
project outcomes it originally set were unachievable within four weeks. In
the first few days, the team interviewed mentors and investors throughout
South Africa to better understand the situation, then redefined their
deliverables and focused on two critical needs.
This kind of experiential learning is critical to building a next generation
of business leaders who know how to operate across regions and cultures.
It also allows millennials to bring their values to work with them. Now
in its third year, the program has evolved and the company is focusing
its efforts on maximizing impact by sending new teams to the same host
clients repeatedly. By sending multiple teams to the same organizations,
individuals learn more about them from collective experience, and in turn,
have a deeper impact on those organizations.
Innovation Driver - Doing More with Less
To drive innovation, Mr. Ries emphasizes failing fast in order to gain
product and service insights, rather than fulfilling pre-determined
requirements. Local organizations are often run by just three or four
people, who each have three or four jobs and limited budgets. In the day-
to-day, these organizations must adopt an innovative frugal mentality
that is completely different from what is required to process information
and solve problems with large teams and multi-million dollar budgets.
Experiential learning teaches participants how to take risks with limited
resources and fewer established business processes. It also meets the
increasing expectation of the next generation that they will be able to
bring their values into the workplace. As the business landscape evolves at
an even faster pace, having a talent bench of future executives with this
type of experience is invaluable.
Alexandra van der Ploeg is interim head of global CSR at SAP.
At SAP since 1999, she was originally in charge of management
development at SAP Switzerland and later held various managerial
positions in human resources. For the past four years, she has
managed global corporate social responsibility (CSR) programs at
SAP, including the SAP Social Sabbatical initiative.
Deirdre White is CEO of PYXERA Global (@PYXERAGlobal) and
an internationally recognized leader in the field of economic
development. She spearheaded the growth of best practices in
Global Pro Bono to benefit global corporations, local governments,
and nonprofits worldwide, and guides companies such as IBM,
SAP, PepsiCo, and Pfizer as they provide pro bono expertise to
build the capacity of organizations in developing economies.
Cover Story