Truly successful businesses and technologies should not only be judged on the economic value they create, but also by how they attack (and ultimately defeat) our world's most menacing problems plaguing humanity today.
Conventional wisdom tells us that businesses exist simply to maximize profits for its shareholders, an idea born from the capitalistic roots of our society. And, of course, without profit businesses simply could not exist, let alone grow and prosper. However, too narrow of a focus on this understanding of the role of business in society has paved the way for much of the shortsighted, many times individualistic and greed-driven missteps that corporate entities have taken in the last century. Think Comcast purposefully limiting bandwidth of competing video streaming services to protect market share, or Enron execs cooking their books to cash in on performance incentives. Things have gotten so bad as a result of the profit-only mindset, in fact, that public perception has now shifted to see businesses as not positive, not even neutral, but detrimental to the overall welbeing of our society. Harvard Business School Professor Michael Porter says it best in his TED talk on how businesses can actually be good at solving social problems:
I think many have seen business as the problem, or at least one of the problems, in many of the social challenges we face. You know, think of the fast food industry, the drug industry, the banking industry...Business is not seen as the solution. It's seen as the problem now, for most people. And rightly so, in many cases. There's a lot of bad actors out there that have done the wrong thing, that actually have made the problem worse. So this perspective is perhaps justified.
Porter, as well as a flood of socially-minded entrepreneurs, envisions a radical change in how we gauge business value and success. Imagine a world in which businesses are not only held accountable for the economic value they create, but also the positive impact to society that they generate. In this world, business success doesn't conflict with societal welbeing, but in fact improves it.
Now I know what you're thinking -- isn't that what nonprofits and NGOs are for? Businesses make the money, nonprofits do the social good? There's a simple problem with this model -- scale. Rose Broome, CEO of HandUp, a for-profit direct-donation platform for the homeless, writes about this in a recent blog post:
[Nonprofits] can show benefits and results, but can’t make large-scale impact without more resources. And where can we find these resources in society? We can find them in business. When business solves problems at a profit it creates wealth, and that wealth allows solutions to scale. If a profit can be created by solving a problem successfully, then it becomes self-sustaining.
Hand Up is one of many exciting new companies that works to use its social mission to drive economic value, and vice-versa. HandUp incorporated as a Public Benefit Corporation, a brand-spanking new take on a corporate entity that puts generating social good on equal footing as generating profit. Since 2010, 28 states have passed legislation on allowing the creation of public benefit corporations. The simple beauty is that with these new types of business organizations, there's no need to choose between profit and social good: one fuels the other. In other words, the positive social impact is baked into the product or good offered by the company used to generate a profit, and therefore cannot be separated from driving economic value.
Probably one of the most successful and well-known examples of business baking social good into their product is TOMS. I actually had the privilege of being a web developer for TOMS.com while working as a consultant. For TOMS, the One for One shoe donation program created the compelling narrative that drove the incredible popularity of the shoes. Consumers identified with the idea that their purchase would lead to providing help to someone in need, and wearing the shoes became a visible identifier of their social-mindedness. TOMS is not a non-profit organization. Quite the contrary, actually. They use their profits to scale their organization, recruiting and paying for employees, and to grow their giving presence. In this example, it's clear that the desire to generate profit didn't interfere with their do-good mission, but rather fueled it. Blake Mycoskie, the founder of TOMS, writes in his book "Start Something that Matters":
Conscious capitalism is about more than simply making money—although it’s about that too. It’s about creating a successful business that also connects supporters to something that matters to them and that has great impact in the world.
Note that Mycoskie doesn't ignore profit in lieu of social good here. Instead, it's used as half of two yin-yang forces that, when in balance, creates something more powerful and sucessful than either alone.
I firmly believe in this future of using business to empower solving our nastiest problems. I will continue to explore this in future posts. Next up: how does technology fit into this future?