And it’s not what you think.

By Jason Saul and Cheryl Davenport

Marketers get it. Tylenol is not headache medicine, it’s a pain reliever. IBM doesn’t manufacturer computers, it provides solutions. Facebook doesn’t post pictures, it connects people. And Walmart no longer guarantees low prices, but rather promises a better life. These and many other companies give us what we want: It’s not about products, not services, not programs, or widgets. It’s about results. And chances are, if you are a corporate responsibility officer of any sort, that’s what your CEO, your investors, your customers, and your consumers want too.

A New Sense of Urgency
The demand for results is not new, but it is more palpable now than ever, and not just because of the economic downturn. The real exigency for results is not so much about accountability (most corporate investments in CR are relatively modest). Rather, the real driver is value creation. We aren’t just going through an economic downturn; we’re going through a social and environmental downturn. From resource depletion to healthcare to education to hunger, social issues are becoming business issues. The public is raising its expectations of corporations: not just to make things less worse, but to solve social problems. And therein lies an unprecedented business opportunity: to create social and economic value that translates into real, tangible shareholder value. Indeed, in a poll published in The McKinsely Quarterly in 2009, 56 percent of investment professionals and CFOs, when asked, said they believe that “CSR improves shareholder value.” Now here’s the shocker: 53 percent of CSR professionals answered a shoulder-shrugging “I don’t know.” That’s a problem.

In light of this heightened demand, many corporations are wildly chasing the elusive measurement rabbit around the track: “If only I could figure out the right metric. Maybe this web-based, software ROI calculator will be the answer. Or, maybe it’s in a workshop or maybe this new academic research project. . . .” There are an endless stream of new measurement methodologies and frameworks, but the answer isn’t out there. The answer lies within your organization. Here’s what we’ve learned from helping dozens of Fortune 500 companies measure their CR impact:

Measurement is Not a Noun
First, measurement is not a noun; it’s a verb. Corporations can’t just “do measurement,” they have to measure outcomes that are clearly defined and linked to strategies. Outcomes are changes in attitude, condition, behavior, status, reputation, or cost that result from some intervention or strategy. Too many companies end up just “doing measurement:” tracking a bunch of processes or activity indicator—like dollars donated, grants awarded, press mentions or volunteer hours. These metrics are not tied to any meaningful outcomes and therefore carry little currency and no explanatory value.

Engage Your “Real” Stakeholders
To define the right outcomes for your CR work—both social and business—you need to ask the people who matter. A stakeholder is someone who has a bone fide expectation of results from your work. Companies often get tangled in the web of stakeholder engagement, spending too much time soliciting input from third parties like distant NGOs and activists, rather than focusing on their direct stakeholders: employees, customers, leadership, investors, and the board. In order to focus on the right outcomes, ask these stakeholders three questions: 1) what social and business impacts do you value most from our CR work? 2) which metrics will you find most compelling? and 3) how will our company be different if and when we are successful?

Measurement is a Culture, Not a Project
High performing CR organizations don’t launch a “measurement pilot” to test and see if it makes sense or if their staff or grantees will like it. Rather, the most successful organizations commit to being results-driven and to making measurement a way of life. These organizations have clearly articulated outcomes and performance metrics; they carry their goalposts through to each and every organizational decision. The most sophisticated users of measurement tie their roles, titles, teams, budgeting, management, and communication to their desired outcomes and performance indicators.

Measurement Drives Strategy, Not the Other Way Around
Despite the growing interest in measuring results, measurement often fails. Or at least, that’s how it seems. While often the scapegoat, measurement is rarely the problem or the supreme solution. The fact is, when results are defined upfront and strategies are designed with specific results in mind, measuring these results is easy. Measurement—as described in the above lessons—is an input to strategy, not an add-on at the end of strategy execution. Measurement drives strategy, not the other way around.

Different Results Require Different Strategies
For CSR professionals, the last of these lessons is the most critical and the most likely to force a change in our normal way of operating. It all ties back to the ever-increasing demand for results. In the past, many corporations expected simple results from their responsibility, community relations or philanthropic departments: “give back” (dole out money or time), prevent the company from looking bad, and, in some cases, make us look good to our customers, employees, and partners. Today, that’s not enough. It’s still important, but it’s definitely not enough.

Today, our employers want real business value: market share, sales volume, cost savings, employee productivity, investor satisfaction, access to new markets, higher quality inputs and outputs, etc. We are tasked with measuring how our CSR functions contribute to these business value outcomes, and we often try to do it by simply stretching existing programs through conjured metrics and far-fetched logic. Guess what: measurement, no matter how fancy, isn’t going to cut it. If we are charged with creating business value, we must employ strategies that are designed to produce it. And chances are these strategies cannot thrive on the same resources and tactics that we’ve used in the past. Instead, our strategies must reach new ends:

• Innovate approaches to social and environmental change beyond charity, strategic philanthropy, and simple compliance
• Harness the core machinery of our business to maximize our impact: Make the engine of the business your source of social change and business value, rather than relying on the fumes
• Leverage the intersection of our social and environmental goals with business objectives
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The trick is figuring out what results are most meaningful for your company and designing the right strategies to produce them. In our research over the past four years measuring the CR programs of leading corporations, we have identified five effective models of “social innovation”—real business strategies that are designed to generate business value through social change.

Sub-market products and services
Open new markets by removing social barriers. For example, WellPoint has brought low-cost health insurance to the U.S.’s “young invincible” market, covering nearly one million uninsured people and creating a new revenue stream.

Back-door market entry
Create affordable products to address unmet market needs. Tesco has exemplified this innovation by opening healthy food outlets in multiple urban “food deserts” as an approach to penetrate the U.S. market.''

Emotive customer bonding
Transform customers into brand advocates. For example, OfficeMax’s high-profile “A Day Made Better” campaign donates supplies to more than 1000 schools in the U.S., Mexico, and Canada, creating a valuable emotional bond with key target segments, employees, and the general public, while aiming to eliminate teacher-funded classrooms.

Pipelining talent
Custom-educate your future workforce. Travelers Insurance has led several financial-services peers to establish High School, Inc., a Hartford, CT, academy offering students training in insurance and finance alongside traditional academic courses.

Reverse lobbying
Make government your business partner. Safeway, Wal-Mart, and others have used this model by advocating universal healthcare coverage, legislation that has the potential to improve individuals’ physical health, the U.S.’s fiscal health, and the lobbying corporations’ bottom line (by reducing their healthcare benefit costs).

Each of these strategies relies on the core business to generate significant business value, creating new revenue streams, growth opportunities, and reduced costs. What’s more, these strategies can magnify positive social and environmental impacts by applying fundamental and sustainable business resources to significant social problems.

It’s About Results
In the end, the drive for measurement is really a drive toward relevance. And as such, measurement can no longer remain technocratic or academic. Instead, measurement must become a strategic endeavor that engages real stakeholders, identifies meaningful results, and leads to the right strategies that go beyond philanthropy and compliance to produce significant business value and social change.

Jason Saul is the founder and CEO of Chicago-based social impact consulting firm, Mission Measurement. His forthcoming book, Social Innovation, Inc. names five strategies to produce business value through social change and will be released in October. Cheryl Davenport leads Mission Measurement’s corporate and international development practice team serving clients such as Walmart, Pepsi, USAID and the Initiative for Global Development.