A story of strange company: SK-SPC

Imagine you’re working for a company that’s known not just for making money but for making a difference.

Imagine that every project you work on, every decision you make, is tied directly to improving lives, solving social problems, and leaving a positive impact on the world. Sounds pretty cool, right? Well, that’s the vision behind SK Group’s Social Progress Credits, or SPC, program—a pioneering initiative that’s changing the game when it comes to social enterprise and impact.

The Birth of SPC: A Vision at Davos

Let’s rewind to 2013, at the World Economic Forum in Davos, Switzerland. Tae-Won Chey, the CEO of SK Group, one of South Korea’s largest conglomerates, was speaking on a panel about revitalizing social enterprises.

Now, most CEOs would talk about profits, market share, or maybe even corporate social responsibility. But Chey had something different in mind. He proposed an idea that was both bold and revolutionary: “What if we started rewarding companies not just for how much money they make, but for the actual social value they create?”

Think about that for a second. It’s a radical shift from traditional business models, where profits are king, to a model where social impact is just as important—if not more so. Chey envisioned a world where companies are incentivized to solve social problems, not just because it’s the right thing to do, but because it makes good business sense. And from that vision, the SPC program was born.

How SPC Works: Turning Vision into Reality

Now, let’s talk about how this grand idea was brought to life. The SPC program was launched two years after Chey’s Davos speech, and it became the world’s first pay-for-success experiment led by a private company.

The concept is simple but powerful: companies earn financial rewards based on their measurable social impact. These rewards aren’t just handed out willy-nilly—they’re calculated using a system that quantifies the social value created by these companies in monetary terms.

To put it another way, SPC is like a scorecard for social good. Companies that participate in the program are evaluated based on how much positive impact they create, and they’re rewarded accordingly. It’s a win-win situation: companies get financial incentives, and society benefits from the solutions these companies bring to the table.

But getting to this point wasn’t easy. Measuring social impact is tricky—how do you put a price on something as intangible as social good? The SPC team had to develop metrics and systems from scratch, working closely with social enterprises, impact investors, and academic researchers. They spent months—18 to be exact—in regular meetings, workshops, and brainstorming sessions, figuring out how to turn this abstract idea into a concrete reality.

The Challenges: Navigating the Rough Waters

Now, like any pioneering effort, SPC faced its fair share of challenges. First, there was the question of whether it was even possible to measure social performance in monetary terms. How do you quantify the value of providing clean water to a village or reducing child mortality? And even if you can measure it, should you? Is it right to reduce social impact to a dollar amount?

These were tough questions, and not everyone was on board initially. Many social enterprises were skeptical, worried that this new system would make them too dependent on external rewards rather than focusing on building sustainable business models. There was also the concern that the program might inadvertently lead to “gaming the system,” where companies focus on maximizing their SPC rewards at the expense of real, meaningful impact.

To address these concerns, the SPC team came up with a balanced approach. They decided to reward companies with 25% of their calculated social performance as a cash incentive. This amount was carefully chosen—it’s significant enough to motivate companies to create more social impact, but not so large that it encourages dependency on these rewards.

Building the System: A Collaborative Effort

One of the key factors in SPC’s success was the collaborative nature of its development. SK Group didn’t just dictate the terms and expect everyone to follow—they worked closely with the social enterprises, listening to their concerns, incorporating their feedback, and adjusting the program as needed. This collaborative approach helped build trust and buy-in from the participants, which was crucial for the program’s long-term success.

The SPC team also provided non-monetary support to the participating companies. SK Group employees offered services like legal advice, marketing help, and financial management support. This wasn’t just about handing out money—it was about helping these social enterprises become more effective and sustainable in the long run.