McKinsey & Company

McKinsey on Society

 

Voices Social entrepreneurs

Teaching the world to change

Dan ViedermanVerité

Dan Viederman has lived in Bangkok, Beijing, Chongqing, Hong Kong, Macau, and Nanjing , as well as Massachusetts and New York City, while serving as an educator and an NGO leader. He has been pleased to serve several world-class institutions in addition to Verité, including the World Wildlife Fund (WWF), where he founded the China office, and Catholic Relief Services. He is a graduate of Yale University, the Columbia University School of International and Public Affairs, and Nanjing Teacher’s University. In 2007, he was awarded the Skoll Foundation Award for Social Entrepreneurship for his work with Verité.

An estimated 200 million children work in developing countries. Another 25 million people are enslaved in factories, farms, mines, and homes. Hundreds of millions more are cheated out of wages that are rightfully theirs and have no choice but to work in conditions that put them at risk of injury and even death.

It is easy to be numbed by these figures. So let’s consider the story of Rani, a girl we met in India in late 2009. Rani is now 14 and has worked at a spinning mill in Tirupur, a textile city located in the southern part of the country, since she was 11, bleaching cloth and using chemicals to wash garments. Her family sent her to the factory, which produces clothes for export, under the sumangali scheme, in which underage girls work far from home for three years, in return for a lump sum payment of around $750. Rani’s family had no other way to make enough money to pay her dowry. But after repeatedly burning herself with chemicals and suffering under the risk of sexual abuse from her employers, Rani ran away—returning home injured, poorer, and in conflict with her parents because she had forfeited the payment due to her.

Verite can resolve the specific problems Rani faces by intervening at that factory in India to improve its management, and by ensuring that Rani has the support she needs to stand up for herself. But our only chance of reaching the tens of millions of vulnerable people around the world—to achieve large-scale change—is to change the practices of others. Our primary approach to scaled change is to ensure that businesses around the world integrate the interests and needs of their most vulnerable participants. Our best chance to improve the rights and livelihoods of the many is if others replicate our intervention.

Here’s an example. One of our initial innovations was finding a way to elevate workers to the status of full stakeholders in the factories and farms where they work. We make sure that workers’ knowledge about the places that employ them becomes part of the picture we develop about working conditions. We do this in a deceptively simple way—by talking to them. But this conversation can be difficult to come by. On a recent assessment visit to a farm in the western United States we were told by the owners that work started at 10am, and that we should arrive at the field then. Instead of taking the owner at his word, our auditors showed up at 6:45am, to find two buses of migrant workers just arriving for work. We spent the next two hours hearing their stories, learning about their experiences and discussing their problems. Our findings from workers then become part of the facts we present to factory or farm management, and to the companies that buy their goods.

Too often this sort of investigation ignores the perspectives of workers. We set out to change this. After a year of multi-stakeholder conversations around the world we promulgated a standard for the conduct of social audits. This standard has now been adopted by a coalition of the world’s largest companies. We have simultaneously begun to train others outside Verite to conduct social audits according to this standard. As a result, our approach will be implemented by thousands of people around the world undertaking investigations at the behest of those companies. We leverage the information they provide to guide change in standards and management. Last year, our approach was formally adopted as an emerging standard by a coalition of the world’s largest companies. It will be implemented by thousands of people around the world undertaking investigations at the behest of those companies into the daily operations of factories and farms.

It’s important to note that this replication-oriented approach to entrepreneurial innovation may present some challenges. Sometimes investigators will undertake worker engagement effectively, but sometimes they will fail to follow the standards that we have promulgated. Some companies may decide to adopt and apply the standard completely, while others may choose portions of it or implement it halfheartedly in certain circumstances. In scaling this innovation, our recruitment of implementation partners necessitates that we give up control. The result may be some “implementations” that we don’t entirely endorse. But when companies take a first step towards responsibility, they have at least started walking forward.

This approach to scaling implies two challenges to the typical understanding of social entrepreneurship. First, entrepreneurship is often seen as a solitary pursuit, one that glorifies the individual (or her institution). At Verité, however, we believe that collaboration is an essential part of scaling social impact; our efforts require partners—both businesses and governments—at every step of the way. As with any partnership, we may in some cases lose control over the intervention. But we embrace the trade-off between control and expansion, believing that the problems we’re trying to address are so dire that it is imperative to reach as many people as possible, as quickly as possible. Our work with the world’s largest companies leverages billions of dollars of spending, vast but intangible corporate reputations, and thousands of daily business transactions into better working conditions for millions of people. At the same time, we recognize the limits of business “responsibility.” Social entrepreneurship can often overemphasize the role of private-sector frameworks. However, we believe that market mechanisms can make the achievement of human rights less costly. They can ensure, for example, ensure that Rani is more likely to prosper than face danger and disgrace in the workplace——but they can’t guarantee rights.

Only governments can guarantee rights for individuals and only governments can ensure that rights are respected wherever people are at risk. As social entrepreneurs we have to be clear on the limits of our own models—in particular, that markets are neither more nor less effective for delivering social goods than they are for delivering private goods. Our work with business, then, aims to create an environment that is conducive rather than hostile to government action. Over the past ten years, for example, multinational businesses have opened space in China for an explicit conversation about labor rights that the Chinese government may not have begun. Our work with international business lays the groundwork for changes in the acceptance of social regulation.

The question of scale for Verité is how we can reach tens of millions of people whose rights are constrained. We ourselves are about fifty people worldwide, a number small enough to be quite at odds with our aspirations. Like Archimedes, we seek a lever long enough to move the world. For us, this is the business world, which we hope to inspire with the feasibility of doing things better.

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