The ‘CVS Effect’ in Action: SAP, Starbucks, Tesla Show How to Lead by Sharing Information

Here’s my latest for Sustainable Brands.

Here are three new examples of the CVS Effect in action that show how brands can change how business operates — for the better (the “CVS Effect” is shorthand for recognizing brands that are doing the right thing, because it’s the right thing to do). In these cases, the “right thing” is choosing to share information and resources, even when there’s a risk of losing market dominance or taking a financial hit.

In the past few years, we’ve seen a surge in businesses coming together to work on sustainability issues that span entire supply chains, affect sectors as a whole and transcend location. It’s been called collaborative competition, co-opetition, and the Collaboration Economy.

A well-known example is the three-year-old Sustainable Apparel Coalition.

Another is what Sustainable Brands ’14 attendees experienced inside the conference’s Activation Hub tent. This convivial, shared physical space showed how collaborative conversations and sharing knowledge can work in the real world, in real time.

And just last week, the open innovation platform LAUNCH announced its newest System Challenge for breakthrough ideas in Green Chemistry.

But while these examples are important, they’re about strength in numbers. What I’d like to highlight in the examples below are these leaders’ willingness to stick their necks out beyond a short-term horizon to a possibility of radically transformed marketplaces

On June 12, Tesla’s CEO Elon Musk announced he’s making the electric car company’s secret, patented information available to everyone, in order to turbocharge the rollout of electric vehicles (EVs).

The potential risk, of course, is that competitors that have lagged in the EV space might now leapfrog ahead of Tesla in the marketplace. This could be a real-life Innovator’s Dilemma, if you will, where the person who initially creates a new product, service or market gets crushed by the ones who follow.

But as a long play, it’s a good bet. Tesla can’t roll out electric cars if there’s nowhere to charge them and no one interested in buying them. Giving away the company’s patents raises the floor for all players — it’s like the ultimate golf handicap — for faster, broader EV innovation and adoption that good for everyone (Only a week later, Nissan & BMW are reportedly discussing how to work together on charging networks).

Then on June 16, Starbucks CEO Howard Schultz announced that the coffee giant wants to help its 135,000 workers go to college — for free. The reasons he gave for this move are to help close the inequality gap and help more Americans graduate from college without debt.

My first thought about the potential risks is that Starbucks stands to lose trained workers once they have a college degree in hand and are better qualified for jobs outside of Starbucks.

But that’s not what’s likely to happen. PwC’s 2013 NextGen research shows that millennial workers want to work for companies that care about more than the bottom line. So this “goodwill” benefit may wind up making Starbucks’ people — now better educated, college-degree holding — even more loyal.

This move is also notable because it blows the traditional tuition reimbursement benefit out of the water in terms of breadth and scope. A partnership with digital learning giant ASU offers Starbucks more opportunities to more workers companywide than would be economically feasible with the old reimburse-money-for-grades model.

And finally, on June 17, SAP’s 6-week MOOC course “Sustainability and Business Innovation” ended, having attracted over 16,000 students (including me).

Course instructor and SAP CSO Dr. Peter Graf was a knowledgeable, personable guide to how SAP approaches sustainability innovation. His weekly videos made the course feel like a personal experience, even though I was one of thousands in a global virtual classroom.

The potential risks here are the same as Tesla’s, albeit at a much lower wattage. By pulling the curtain back on how SAP innovates for its clients, there’s the chance that others will do just that.

Obviously, the course brought the company good press. But I believe the real reason is about leadership. Since SAP is in the business of helping companies manage their resources more effectively, it has knowledge and experience to share that can help jump-start sustainability innovation and progress across industries and sectors.

When it comes to sustainable innovation and sustainable supply chains, I believe that a rising tide lifts all boats. And that it’s the leaders from forward-looking brands — such as Musk, Schultz and Graf — who are turning that tide and can be examples for others to follow.

As Schultz told host Jon Stewart, “We can’t wait for Washington. We’ve got to step up as we have done in the past and demonstrate true leadership.”

What Schultz is saying is backed up by strategist Alice Korngold’s compelling conclusion that corporations are the only thing that can save the world. But she’s not suggesting that companies go it alone. Her research shows that companies need to work with others, especially NGOs and other businesses, and “engage effectively with stakeholders; recognize that sustainability is a matter for board governance; and commit to accountability and transparency.”

By stepping up and proactively sharing their resources, these leaders will help us move us faster to the tipping points we need for adopting sustainable business practices everywhere.

My bet is that these moves will pay off in a stronger, more robust marketplace where there’s room for everyone to grow and thrive.

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