Since last September, under the auspices of Harvard Business School's Social Enterprise Initiative, Professor Rosabeth Moss Kanter has been leading a team of research associates and MBA students addressing the vital question of how businesses can help solve the country's problems in education, welfare reform, and inner-city investment and development.

According to Kanter, she chose these three issues because together they form what she describes as the "nexus of urban prosperity."

"We need to find more effective ways to improve public education so that it does better at providing all people, including the poor and underprivileged, with the skills needed for jobs in today's economy," she says. "Mechanisms must also be in place to facilitate the transition from welfare to work." Citing the research of HBS professor James E. Austin, Kanter adds that the urban investment funds he is studying are contributing significantly to the revitalization of a number of inner-city neighborhoods by accelerating economic growth and job creation and establishing new collaborative relationships between big corporations, small entrepreneurs, and local communities.

Working Knowledge editor Jim Aisner spoke with Professor Kanter in April while she was hosting Business Leadership in the Social Sector (BLSS), a national forum she organized at the School centering on these issues and attended by some one hundred leaders from business, government, labor, education, foundations, and nonprofit associations.

Companies have been talking about their social responsibility for some time. What's different about your approach?

The traditional corporate approach is, in fact, rather passive -- don't do anything "bad," help out in the community if someone asks you, hand over a donation. But with the sense of urgency borne of the trend toward privatization, the downsizing of government, and continuing educational and social problems that have an increasingly negative impact on how well companies can do business, there's clearly a need for a new paradigm. This involves forming innovation-creating, high-impact partnerships between corporate America and public schools, community organizations, and other entities in which companies can play an active role in addressing and solving national needs. Using the social sector as a beta site, if you will, businesses can leverage their core competence to learn something new by confronting a problem and developing creative solutions that make a difference in the community. At the same time, they come out ahead by building their own capabilities. The way this paradigm operates, corporate programs that affect the social sector can be funded out of operations, not philanthropy.

Can you give us some examples of your new paradigm in action?

As part of our research leading up to the forum, we developed cases and video briefings on the efforts of Bell Atlantic, IBM, Lockheed Martin Information Management Services, Marriott International, and United Airlines in pioneering the model I've described. In the area of education, for instance, in 1993 Bell Atlantic launched one of the first computer networks to improve public schools. By wiring a middle school in Union City, New Jersey, and supplying computers and Internet connectivity for home and school use, the company helped a needy community while taking advantage of an opportunity to field-test some of its new technology.

IBM's Reinventing Education program commits the company's best talent and technology to removing barriers to learning in school systems around the country. Our research documented IBM's activities in Broward County, Florida; Philadelphia; San Jose; and Cincinnati in matters such as bettering teacher training and development and setting achievement standards and flexible schedules for students.

	Corporate programs that affect the social sector can be funded out of operations, not philanthropy.

Let's turn to welfare reform. As people come off the welfare rolls in greater numbers in accordance with the Personal Responsibility and Work Opportunity Act of 1996, what can companies do to bring welfare recipients into the work force in a sustainable way?

We have spent time over the past months looking at the Welfare to Work Partnership, a national mobilization effort to encourage employers to hire people off welfare. But unlike education, where 90 percent of the 593 principals we surveyed wanted more business involvement in their schools, welfare-reform partnerships seem to be a tougher sell. In fact, a 1997 Associated Press survey of the 100 biggest U.S. companies found that 76 had no plans to make special attempts to hire welfare recipients. United Airlines, however, whose president and CEO, Gerald Greenwald, heads the Welfare to Work Partnership, is a company at the forefront of meeting this challenge head-on. It has pledged to hire two thousand employees off welfare by the year 2000 and so far has been exceeding its annual targets. In dealing with this new group of workers, the company changed its internal human resource practices after discovering that the first person it hired happened to fall under the guidance of a mentor. The relationship worked so well that United has designed a formal mentoring program, first for the other former welfare recipients and now for all its new hires.

At Marriott, as the company creates "pathways to independence" for welfare-to-work employees via classroom and on-the-job training in its hotels, it also finds itself improving child-care facilities throughout the organization. These are perfect examples of the paradigm we¼re proposing. While helping the community, companies are helping themselves. It's a win-win situation.

You've mentioned some major companies. Are these kinds of efforts limited to large organizations?

Not at all, although big companies do play a leadership role, because they have such deep financial and human resources and their CEOs tend to see these efforts as part of their responsibility. But we¼ve also come across many small companies that want to become involved, although they usually have to depend more on community-based resources for help. It's also possible for them to pool their resources by working under the umbrella of, say, a trade organization. The Massachusetts Software Council, for example, has mobilized more than eight hundred people from high-tech companies in this state to do things like wire schools and teach teachers about software.

What are some of the new pools of capital that have been created to benefit the inner city?

Jim Austin and his researchers have begun to investigate a number of investment funds created under the aegis of Cleveland Tomorrow that have had a significant impact on the economic revitalization of Cleveland and northeast Ohio. More recent contributors are the New York City Investment Fund and an array of organizations that make up the community development venture capital industry in various parts of the country.

I've looked closely at some things BankBoston has accomplished, including its launch of First Community Bank, a bank within a bank that has successfully brought banking services to a number of local neighborhoods that didn't have ready access to them before. BankBoston has also recently established an equity investment fund to provide venture capital for inner-city businesses in the area.

You've used the videos, cases, and other products of your research as the basis for a dialogue among numerous opinion leaders at the BLSS Forum. What's next on your agenda?

The people attending our forum, from the CEOs of Fortune 500 companies to the heads of organizations such as the National Alliance of Business, the National Education Association, and the Committee for Economic Development, are helping us understand how to replicate and sustain on a larger scale the programs we've studied. The next step is the national dissemination of our work through various means, including a stream of articles and, I hope, some television programs, all of which will call the citizens of this country to action. This effort is designed to be more than academic; we want to help effect change and accelerate progress throughout the United States. It's an incredibly important challenge.

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