For those unaware, KFC has recently launched a cause-marketing initiative with Susan G. Komen- to read more see here and here. My frequent co-author and friend, Amy O'Connor, and I have been tracking Susan G. Komen's activities for awhile for a forthcoming case study. We were attracted to SGK because of their large investment in their brand and their exclusivity agreements with companies in particular industries (SGK agrees to only do cause-marketing with a single company in several industries).
So, Amy called me happily on Friday night about her newest addition to our pink collection- a KFC bucket (our students have been bringing us things and pictures of items that are pink and for the cure for a couple of years now). Immediately I was speechless. Amy is an expert in corporate advocacy while I have specialized in nonprofits for about a decade. She thought this was a brilliant move and I saw trouble.
About a year ago we began to see pinkwashing backlash, so care was needed from SGK in choosing this partnership. Additionally, from most consumers' viewpoints, there is little difference between cause-marketing and nonprofit certification programs. In short, co-branding is seen as endorsement from both sides. While this could be GREAT for KFC, for SGK, the choice is puzzling. SGK notes on their website the link between the consumption of high caloric, fatty foods and breast cancer. Those who were already primed to lash out against SGK jumped on the opportunity to respond. SGK served it up, literally in a bucket. There are numerous news stories about the curious partnership, including ABC, PRWatch, and the NYDaily, not to mention the more direct blog criticism.
Our research suggests that the risks of such partnerships are due to various stakeholders not believing the implicit message that the combination of this nonprofit and business are better than their separate aims. Instead, stakeholders of the nonprofit may view them as opportunistic (see the critique by Breast Cancer Action). Activist groups already targeting a corporation may expand their criticism to the nonprofit, as vegan/animal rights groups have done. Stakeholders of the corporation may react negatively to nonprofits message (like health information at their favorite fast food restaurant).
So, what's KFC and SGK to do? Well, the franchisees have already purchased all of these pink buckets and the 50 cents a bucket is actually donated by them (read the fine print). They can't pull the promotion without angering their franchisees twice in a year (once already with the Oprah's free dinner at KFC coupon debacle). The only way out of this is to change the product offered in the bucket -- make it exclusively their grilled chicken. The message might be "This mother's day, KFC's largest day of the year, KFC and SGK want to help women eat healthier and continue the fight against breast cancer." Then, consumers might see the alignment of the product and the cause -- which our focus groups suggest they truly want from such partnerships.
Monday, April 26, 2010
Sunday, April 25, 2010
Thinking about social entrepreneurship
While I have been away from my blog for the last month, I have done a good deal of thinking about two topics, nonprofit capacity building and social entrepreneurship. While I am doing research on both topics for an academic audience, some of what I am thinking about has some wider importance.
In interviewing nonprofit founders and social entrepreneurs, one of the common strategies they identified for starting their organizations was to use a business model that they had seen work before, often copying directly from a similar organization in another location. While this is not necessarily a bad strategy, many times it shortcuts an important set of questions that need to be addressed. These include:
1. What are my short term and long term goals?
While this makes common sense, asking this question before choosing a business model may help entrepreneurs make better informed decisions. Both sets of goals ultimately should be measurable, meaning that you will know if you achieved them.
2. What are the business model choices I could make?
Before identifying what other programs are doing, get informed about the difference between a 501c3 and 501c6, learn about whether your state has a low-profit corporation option, and learn about various for-profit business models and social entrepreneurship models. Many organizations jump into a 501c3 status before thinking about the other options, simply because it is what others have done. While copying other organizations can reduce the time spent researching and keep your organization from making unnecessary mistakes, it can also lead you to make choices that are ill timed in the current market. What was right for their organization 20 years ago may not be right for your organization now. Some legal statuses, like the low-profit corporation, are only recently available.
3. Try out different business model statements.
What would your proposed business model statement look like under two or three different business models? Which business model would help you to meet your short term goals? Which ones would hinder or enable your long term goals?
4. Finally, consider the costs associated with each business model.
If your project is going to require significant general operating costs, consider if the 501c3 status is right. Many foundations and donors seem to prefer to fund program costs. If you offer a valuable service, maybe you could charge for it. If your project could use a social enterprise model, what sources of revenue are you rejecting? If you are in the health or education or environmental space, there are several partnerships with businesses that your organization could form as long as it has a nonprofit status.
Much of the research on starting small businesses suggest that successful ventures spend more time planning before they launch than ventures that end before the 2 year mark. While using other organizations' templates and plans may seem like a good way to save time, entrepreneurs should take the time to do scenario and strategic planning before launching their venture.
In interviewing nonprofit founders and social entrepreneurs, one of the common strategies they identified for starting their organizations was to use a business model that they had seen work before, often copying directly from a similar organization in another location. While this is not necessarily a bad strategy, many times it shortcuts an important set of questions that need to be addressed. These include:
1. What are my short term and long term goals?
While this makes common sense, asking this question before choosing a business model may help entrepreneurs make better informed decisions. Both sets of goals ultimately should be measurable, meaning that you will know if you achieved them.
2. What are the business model choices I could make?
Before identifying what other programs are doing, get informed about the difference between a 501c3 and 501c6, learn about whether your state has a low-profit corporation option, and learn about various for-profit business models and social entrepreneurship models. Many organizations jump into a 501c3 status before thinking about the other options, simply because it is what others have done. While copying other organizations can reduce the time spent researching and keep your organization from making unnecessary mistakes, it can also lead you to make choices that are ill timed in the current market. What was right for their organization 20 years ago may not be right for your organization now. Some legal statuses, like the low-profit corporation, are only recently available.
3. Try out different business model statements.
What would your proposed business model statement look like under two or three different business models? Which business model would help you to meet your short term goals? Which ones would hinder or enable your long term goals?
4. Finally, consider the costs associated with each business model.
If your project is going to require significant general operating costs, consider if the 501c3 status is right. Many foundations and donors seem to prefer to fund program costs. If you offer a valuable service, maybe you could charge for it. If your project could use a social enterprise model, what sources of revenue are you rejecting? If you are in the health or education or environmental space, there are several partnerships with businesses that your organization could form as long as it has a nonprofit status.
Much of the research on starting small businesses suggest that successful ventures spend more time planning before they launch than ventures that end before the 2 year mark. While using other organizations' templates and plans may seem like a good way to save time, entrepreneurs should take the time to do scenario and strategic planning before launching their venture.
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