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Like many professionals in the industry, we couldn’t help but be a bit bemused by last month’s announcement from the Business Roundtable. As you have probably read, this group of CEOs of America’s largest companies issued a statement declaring that the purpose of business should be more than profit. The group committed to “lead their companies for the benefit of all stakeholders — customers, employees, suppliers, communities, and shareholders.”
Our first reaction, honestly, was “Um, okay — where have you guys been?”
The work that Plenty does to help companies, nonprofits, and leaders make a difference in the world is part of a massive, growing sector of committed people using the tools of business to create social change. It’s nice that the largest companies have finally caught up, although reading billionaires like Jamie Dimon, chairman and CEO of JPMorgan Chase, say earnestly that “the American Dream is alive, but fraying” had us rolling our eyes. Seriously?! Hyprocrisy knows no bounds!
Social purpose has been inherent in many businesses since the very advent of business. The examples are many.
In 1913 Henry Ford famously increased the pay of his factory workers to reduce turnover and in doing so made large strides in establishing a new, more financially secure working class. When Bank of America was destroyed in 1906 by the San Francisco earthquake, founder Amadeo Giannini salvaged what was left of the bank’s holdings, set up a makeshift storefront in the ruins of the city, and loaned it all out to help rebuild the city, asking lenders for only a personal promise to repay.
There are literally thousands of examples of business leaders thinking about how to help the world around them. Still, we’re not going to argue with growth, and there’s no denying that we’re living into a new era for business and social change. Driven by a generation of conscious consumers and enlightened leaders, more people than ever are realizing that they don’t have to separate their heads and their hearts – and that wallets can be put to work to address issues that alarm, concern, inspire, and motivate them.
In our experience, the idea of crafting social purpose strategy that truly works can be sticky. First of all, there’s a difference between cause marketing and social purpose. Cause marketing is a charitable donation that a company gives to a nonprofit entity in exchange for publicity or awareness of some kind. It’s a gift – sort of. Many cause marketing programs have noble intent, but some don’t. There are examples of unscrupulous companies making money any way they can and then donating to charity later to try to clean up their brands. This kind of “cause-washing” can be beneficial to charities in the short run but is almost always destructive to real change in the long run.
In other words, corporate cause marketing, while it can be incredibly important and incredibly helpful, may or may not be connected to the core purpose of the business. Social purpose, on the other hand, is broader, wider, deeper, and more immersive. Social purpose involves ensuring the entire operation helps lifts all of the operation’s stakeholders. This means the whole ecosystem of the firm: the owners, yes, but also the employees, customers, partners, environment, and society.
As such, real social purpose requires intention, authenticity and deliberation. We advise our clients to use a basic three-point model as a starting point. Great social purpose should drive growth in three ways: revenue, impact, and fulfillment.
While charitable donations are essentially an expense on the P & L, great social purpose strategy should show up as growth in the financials. The core business should benefit – and that benefit should be deliberate and direct.
Why? Think about your own giving: If you get laid off, do you continue to donate to charity at the same level you had before?
Without a financial component, social purpose is often unsustainable. We’ve had experience with thoughtful, idealistic companies who wanted to create real change, but didn’t engineer it to their core business. When the business hits challenging times, the charitable donations get cut.
A better way to work is to create a social purpose program that actually helps drive sales!
Building in a revenue component to your social purpose strategy isn’t overly capitalistic — it is the foundation of creating sustainable change.
The second component of social purpose growth is impact. We have to make a real and measurable difference in the world. Consumers are savvy – inauthentic social purpose is worse than no social purpose at all. That means you have to do the work to move beyond cause-washing. You have to find true partners who are authentic to your business and who are actually making real change on the ground.
Sometimes, you may find that the largest and most recognizable charity partner is a great fit for your business. But more often than not, there are other entities worth a look. “Bigger” doesn’t always mean “greater impact.” Smaller, local organizations may have more reach and more ability to create real change that your consumers, team, supply chain, communities, and partners will notice. Increasingly, we have been helping our clients explore the world of fiscal sponsors and commercial co-ventures. Creating a purpose-built, proprietary entity with a trusted partner, while more complex to set up, may offer a lot more flexibility than working with an existing organization.
Finally, and perhaps most importantly, great social purpose strategies provide fulfillment to the people contributing to them. In other words, we want our teams, supply chain, marketing channels, and consumers to be more prideful and joyful by our efforts.
Think about it: What really motivates your team? Do they do what you tell them to? Sometimes. Do they do what you pay them to? Maybe more often. Do they do what they love? Always. Dee Hock, one of our favorite social purpose innovators, quoted Napoleon as saying, “No amount of money will induce someone to lay down their life, but they will gladly do so for a bit of yellow ribbon.” In other words, no motivations are more powerful than our intrinsic motivations.
Particularly in large companies, where turnover is common, priorities are numerous, and change is rapid, it is critical to build pride and joy into your social purpose strategy — that is, if you want it to last beyond the next budget cycle. Our goal is always to make the initiatives we work on the favorite thing for our clients to do. We know that creating that excitement pays massive dividends in growth.
Ultimately, in great social purpose strategies, the three dimensions of revenue, impact, and fulfillment work together. Creating a noticeable impact increases the pride of your team. The pride of your team stokes their eagerness to talk about the work, which creates revenue growth. Revenue allows you to make more impact. And so on and so on.
We encourage you to move beyond the basics of charity and cause marketing and engage deeper about the many ways your business can grow while you make a difference in the world. You don’t need to wait for a group of self-important CEOs to tell you the time is right — if you’ve read this far, the time is now.
Your work matters, and the difference you can make is profound.
If we can help, we’d love to. We’ve developed an incredible three-month process called Meridian to help you clarify your passions, focus on your social purpose, describe what is possible, and put in place the revenue, impact, and fulfillment mechanisms to make it real.