Social purpose driven businesses for a better world Post Covid19
Updated: May 4, 2020
(Imagine the day Jack Ma and Mother Theresa (RIP) co-founded a business)
We all know the story about how Jack Ma founded Alibaba in 1999, a China domiciled online marketplace created with 18 jolly friends and 500,000yuan in his back pocket.
Years later in 2014, Alibaba took an enviable position as one of the globes valued firms raising 25 billion USD in an initial public offering.
My research on the current state of Alibaba showed how valuable the company now is with over 100,000 employees, a net income of over 11 billion dollars in 2019 and total assets slightly above 143 billion US dollars.
Mother Theresa, a Nobel laureate/multiple award winner and founder of the Missionaries of Charity was a bastion of hope in the global fight against poverty. Her organization was active in over 100 countries.
She ran multiple mobile clinics, managed several facilities which cared for people living with several types of diseases most notably HIV and leprosy. She also created and ran several orphanages and schools.
Unfortunately, Mother Theresa died in 1997, just two years before Jack Ma founded Alibaba.
Now imagine that Mother Theresa was not yet dead and on that faithful day during the first Alibaba founders meeting with the famous 18 friends seated, Jack Ma gets up and states clearly that his cofounder for Alibaba was Mother Theresa.
He also goes on to tell the group that the foundational reason underpinning the setup of this company was to grow a globally dominant ecommerce company to take on a global social challenge of ensuring poverty is wiped out across the globe. He would focus on driving the company’s growth and global strategy while Mother Theresa would focus on leveraging the brand and defined percentage of profits towards the eradication of global poverty.
I am not talking about an afterthought, I am not talking about a conscience laundering laced corporate social responsibility strategy designed way afterwards, I mean this social impact focus is agreed on ab-initio by all shareholders, built into the organizational dna and guides the recruitment process where people work for the firm not to earn a salary alone but to work for a firm whose corporate philosophy resonates with their personal values, dreams and aspirations.
It would mean that the fight against poverty would have a company with the war chest of an Alibaba on its side. Now imagine again, if the top 50 companies on the FTSE 100 shared these same values and collaborated together on some levels at the same time deploying their individual innovative solutions to strategically tackle these poverty driven problems on a global scale.
As a global business speaker privileged to share the same stage with leading business leaders across the globe I have found out that most business sector players have now come to the painful realisation that aimless profiteering in a progressively fractured world is becoming increasingly challenging.
The rising impact of climate change, high unemployment rates, rapidly deteriorating global health systems, escalating poverty levels, and massive social unrest/protests in several countries indicates that the time has come for businesses and business leaders to rethink the fundamental principles guiding business creation.
With consumer social consciousness on the rise as critical social issues take centre stage, it becomes obvious going forward that purpose driven firms experiencing impact driven social capital formation would stand the test of time.
The Jim Stengel and Milward Brown study on the impact of organizational purpose on annual returns of 50 fast growing brands showed a 400percent increase. This Stengel 50 study is based on close to 10 years of research into 50,000 companies.
Raj Sisodia wrote a great book called Firms of Endearment, in his book he researched 28 firms who have a social purpose, 18 were traded publicly while the other 10 were privately owned firms. Between 1996 and 2011 these firms had a 20% annual return on investment in comparison with S&P 500 that produced an annual return on investment of 6.5%.
Purpose driven organizations are driven by clearly defined purpose statements which drives organizational strategy, operations and overall productivity.
A Social Purpose driven organization on the other hand goes the extra mile and beyond statements to connect the company directly to specific social goals at a foundational level.
These kinds of Businesses and business leaders is what the world desperately needs post covid19.
To inspire a new generation of business leaders and managers who think along these lines a lot needs to be done and I will outline a few.
1) A global business schools led reorientation strategy needs to be deployed to raise a new generation of business leaders and managers. Business schools, in a coordinated manner must help future business leaders know that the time has come for the world to groom a critical mass of successful businesses tackling large social problems backed by the market successes of their creations.
2) Governments around the globe must develop and drive policies that enables large and small social purpose driven firms to thrive. Value Chain Incentives should be provided alongside long-term regulatory support. Government led national orientation agencies must leverage traditional and social media to expand and deepen the nation’s conscious consumer base with consumers educated about how to recognise and actively support social purpose driven companies.
3) Social purpose driven firms must communicate their focus and gains effectively to governments, rival companies with the similar social impact focus, development agencies, civil society and the consumer to drive collaborative innovation, collaborative governance and widespread social impact.
Finally, traditional Investing must gravitate more towards Impact Investing with traditional investors educating and immersing themselves more into the social needs of the world.