“I’m starting to think this world is just a place for us to learn that we need each other more than we want to admit.” ? Richelle E. Goodrich, Smile Anyway
Purpose used to be a “nice to have” for corporates and startups, that was usually tucked away in the CSR department. I know its not a fair generalisation as many companies have put significant efforts into giving back to society, but general business wisdom has put purpose, or any kind of “social mission”, at odds with the core goals of a corporation: to maximise shareholder value.
However, the tides are changing. Study after study points to the preferences of the younger generations valuing?—?even demanding?—?products and services from companies that are “doing well by doing good”. With their rising purchasing power and a change in broader social norms, purpose can no longer be a nice to have, and companies that neglect having purpose drive the core of their business, will start feeling the impact, perhaps even directly from their shareholders.
BlackRock Founder and CEO Larry Fink, the largest asset manager in the world, sent a letter to the chief executives of the world’s largest public companies this week telling them that they must be more socially responsible and can no longer judge themselves solely by profitability.
“Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”
Tech and Venture Capital plays a big role in this too. Silicon Valley is in the midst of a negative backlash for its ethics code, greed and discrimination, and no company seems to be immune: Google, Facebook, Amazon, Apple… read “the other tech bubble” to get the picture.
There is, in B Corp, terms, a “movement” underway in which even traditional, publicly-traded companies will prioritise “being good” as a core aim rather than a way of minimising downside.
So how should we further propel the movement? What tools or methods need to be in place to harness the energy?
I offer two ways forward, and then close the post with a question for you: which companies or tools do you know of?
- Dr Robyn Klingler-Vidra (happens to be my wife) and Mark Florman, the former Chairman of B Corp, wrote an LSE working paper in 2016 on how we should measure social impact assessment. They evaluate existing methods for measuring social impact of business activities, pointing out problems of transparency, accessibility, duplicity of efforts and subjectivity in measurement and valuation. As a solution, they have proposed?—?and are working on?—?an “open source”, transparent and both qualitative/quantitative platform, called the “External Rate of Return”, that would enable both companies and society at large (including their customers, local communities, employees and suppliers) to have an open and ongoing conversation on how business activities can be a force for good.
- I just attended the launch of “Purpose, Incorporated”, the latest book by John Wood, founder of Room to Read. In the book John interviewed over 100 CEOs and founders who found a way to unite cause with capitalism and purpose with profitability. Among others, the book features Techbikers, and stories of the positive outcomes participants have achieved, as a result of putting down their laptop and doing something for the greater good. I share John’s belief that many execs and companies do want to move in that direction, but need for someone to show them HOW. They want to find the middle ground between running a business and doing good, and luckily there are many ways to make that happen.
So now I turn to you: I’d love to hear from startups, funds or larger companies who found a way to make this happen (e.g. to put social good at the core of their business) and have seen positive outcomes as a result. Please share this form?—?the change starts with us.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
- Weekly #FIRGUN Newsletter – November 1 2024 - November 1, 2024
- The Art of Non-Consensus Investing: Unlocking Venture Capital’s Hidden Gems - October 31, 2024
- Weekly #FIRGUN Newsletter – October 25 2024 - October 25, 2024
Hi Eze,
I loved this piece you wrote here. It really resonated with me.
It seems the older generation, baby boomers (I’m in that group) has no conscience in devouring this planet and or poisoning anything and everything, just to make money.
I have always thought there must be a way to build an amazing company where it solves a problem that has large scale and negative impacts on society. In addition to that, everyone in the ecosystem is positively affected. It has taken me 3 years to design and test it in the market and your article gives me hope that there are people out there that think like this.
Thank you for writing an impactful and concise article.
Cheers
Peter