Moving Ahead Together:Implications of Blended Value

For the Future of Our Work

Jed Emerson, Copyright 2004

Parts of a Common Journey…

Social Enterprise

Sustainable Development

Philanthropy(Venture Philanthropy,

Strategic Philanthropy, etc.)

Social Investing

Corporate Social ResponsibilityValue Maximization

Traditional For-Profit Companies

+1

-1

+1-1

FinancialInvestments &

Numeric Returns

Social CapitalInvestments

& Social Returns

A Zero-Sum Dissonance:The Traditional Value Proposition

Quad A Quad B

Quad DQuad C

Economic Value

Social Value

Social

Environmental

Values & Systems

Economic

Externaldrivingforces

Internaldrivingforces

A strong commitment to Business Principles and SD

RenewableBusiness$0.5b

Carboncosting

H2Business

Texaco

Wind

Malampaya

DJSI

Financialroadmap

Solargrowth

ShellReport

GHGtargets

BrentSparRe-used

Child LabourAward

Shell Foundation$250m

ISO Cert.

K11

Community development in Nigeria

C.ChairDiversity Target

VentingTarget

Diversitytarget

FlaringTarget

1995 2010 +2000 2005

Implications For How We Think About:

The Nature of The Firm Capital Investment

(Market-rate, Concessionary, Philanthropic) Tracking Performance Development and Dissemination of IC How We Organize Our Work and “Field(s)”

The Nature of The Firm

From Value Creation perspective, there is no difference between FP + NP.

Currently, NPs under-perform economically; FPs under-perform socially/environmentally.

Focus must be upon form, function and leveraged relationships that maximize total value—not issues of corporate structure.

Capital Investment (Market-rate, Concessionary, Philanthropic)

“Objective” economic capital market process viewed as lodged within social and environmental context.

Capital Markets will seek “highest and best use” of capital…

But in pursuit of full, blended value. Diverse Investors take complimentary

positions in pursuit of multiple returns and generation of full, blended value.

Core Elements of Foundation Asset Management

1. Asset Alignment 2. Strategic Grantmaking Practice3. Engagement, Transparency,

Accountability to Relevant Stakeholders4. Development/Dissemination of IC5. Active Education, Policy Development

and Advocacy6. Leverage of Environmental Value

Unified Investment Strategy Capital Allocation

Grant(Program)

AvailableCapital

Grant(Infrastructure) Grant

(Research andDevelopment, Seed Funding)

RecoverableGrants +

PRIs

FROI Risk Boundary

RiskFree Rate

TreasuryNote

6% FROI

TraditionalDiversifiedInvestmentportfolio

EquityLinked

ZeroCouponBond

With SRIIndex

Options

VC FundOr AngelInvesting

PrivateEquityInvesting

SociallyResponsibleAngel andSocialVentureCapitalFundInvesting

SROI Risk Boundary

A Unified Investment Portfolio

Tracking Performance

Financial return analysis, “evaluation” of nonprofit social impacts, and double/triple bottom-line frameworks are all needed to explore various components of capital performance and value creation—

but there is one bottom-line, a bottom-line reflecting a single, non-divisible blended value proposition.

Tracking Performance

Documentation of non-financial performance will migrate from “external reporting” to internal, integrated MIS.

Organizations (whether firms or investor groups) that are “built to last” view New Metrics as critical to firm management and maximizing value of both the venture itself and strategic partnerships.

Development and Dissemination of IC

Future Knowledge will emerge from between the silos and not within.

Knowledge will develop based out of practice informed by reflection and history.

Academic institutions will increasingly cultivate Intellectual Capital driven by a commitment to intellectual curiosity and academic inquiry—

not donor development.

How We Organize Our Work and “Field(s)”

The emergence of Value Networks will drive the organization of our work and structure our fields of practice.

These Networks will be both spontaneous and facilitated—but they will be driven by mutual pursuit of common challenges in structuring capital, advancing New Metrics and leveraging diverse resources to assure maximum impact.

Blended Value ProcessOverview of Blended Value Map

Practitioners (CEO’s,

Managers, Social Entrepreneurs,)Corporate Social

Responsibility (CSR)Social

Enterprise

Investors

Strategic/Effective

PhilanthropySocial Investing –

Socially Responsible

Investing (SRI)

Social Investing – Community &

Double Bottom Line Investing

Topics

Resource Organization

s

Initiatives

Leadership Examples

Areas to Explore

Organizational

Capacity

Capital Question

s

Sustainable Development

Regulatory, Policy and Tax Code

Resources (Books, Articles,

Websites)

Issues Under

Discussion

Cross-Cutting Issues

Measurement and Metrics (Non-

profits & CSR)

Implications

Infrastructure

Creation of Value Networks to

Leverage Cross-Silo

Collaboration

Blended Value ProcessTheory of Change Overview

Value networkingacross the silos of:•Corporate Social Responsibility• Social Enterprise• Social Investing• Strategic/Effective Philanthropy• Sustainable Development

Around the cross-cutting issues of:• Capital• Metrics• Leadership & Organizational Capacity• Government Policy/Regulation/Tax Code

Increased economic return and social/ environmental impacts far beyond the potential of incremental efforts of existing organizations.

Emerging Blended Value Practices Lead to:

Supporting Government Policy/Regulation/Tax

Code

Improved Leadership and Organization al

Development

Increased Capital into Blended Value Organizations

and

Increased Effectiveness of that Capital

Evolution and Application of More Effective New Metrics

More Efficient Social Capital Markets

Interim Points Toward the Future…

An Expanded Vision Grounded in Pursuit of Total, Blended Value for Both Individual Investor and Shared Community Benefit

A Commitment to Working Together Through Value Networks That Build Connections and Leverage Total Assets

A Dynamic Platform of Support for the Development of “The Field” as a Whole

A Final Thought…

"Every company has a diagram of the universe in which they're the center. That's never true. We're all a node in a mesh."  

Douglas Busch, CIO of Intel Corp

And Two Final Perspectives on The Way Ahead…

For more information…

Please see “The Blended Value Map: Tracking the Intersects and Opportunities of Economic, Social and Environmental

Value Creation,” as well as the supporting annotated bibliography and other

documents available at www.blendedvalue.org

Graphic credits

The graphic of a fractal is taken from a web site maintained by Uwe Krueger: http://i30www.ira.uka.de/~ukrueger/fractals/html/b5a.html and I would like to thank him for posting it for public use.

Fractals may be thought of as graphic representations of mathematical formulas which have “high degrees of self-similarity.” They are “finite areas bounded by infinite lines”…For more on this, please see: http://www.jracademy.com/~jtucek/math/fractals.html

The graphic of a photo taken from the Hubble Space Telescope is from the NASA web site.

Other graphics in this presentation are from reports, articles and presentations made by Jed Emerson and the staff of the Blended Value Map Process.