Business Purpose Reset
Generally speaking, we have three capitalistic models to choose from.
- Shareholder Capitalism:
- Embraced by most Western corporations, which holds that a corporation’s primary goal should be to maximize its profits.
- Currently the dominant model, first gained ground in the United States in the 1970s. Expanded influence globally in the following decades.
- Hundreds of millions of people around the world prospered, as profit-seeking companies unlocked new markets and created new jobs.
- Advocates including Milton Friedman neglected the fact that a publicly corporation is not just a profit-seeking entity but also a social organism. There was a single-minded focus on profits caused this to become increasingly disconnected.
- Many realize this form of capitalism is no longer sustainable. The question is: why have attitudes begun to change only now? The Greta Effect
- State Capitalism: Which entrusts the government with setting the direction of the economy and has risen to prominence in many emerging markets, not least China.
- Stakeholder Capitalism: The recommended model first proposed a half-century ago, positions private corporations as trustees of society, and is clearly the best response to today’s social and environmental challenges.
The “Greta” Effect and the Davos Manifesto
→ The “Greta Thunberg” effect:
Named after the activist, reminds us that adherence to the current economic system represents a betrayal of future generations, owing to its environmental unsustainability. Another (related) reason is that millennials and Generation Z no longer want to work for, invest in, or buy from companies that lack values beyond maximizing shareholder value. And, finally, executives and investors have started to recognize that their own long-term success is closely linked to that of their customers, employees, and suppliers.
→ Davos Manifesto
Mission: To ensure Stakeholder capitalism remains the new dominant model) Created By: Klaus Schwab, Founder and Executive Chairman, WEF
Under this model, companies would: Pay their fair share of taxes, show zero tolerance for corruption, uphold human rights throughout their global supply chains, and advocate for a competitive level playing field — particularly in the “platform economy.”
To uphold these principles, companies will need new metrics.
- “Shared value creation” (SVC) should include “environmental, social, and governance” (ESG) goals as a complement to standard financial metrics.
- The executive remuneration where salaries should instead align with the new measures of long-term SVC
- Since the 1970s, executive pay has skyrocketed, mostly to “align” management decision-making with shareholder interests.
- Large companies should understand that they themselves are major stakeholders in our common future.
- All companies should still seek to harness their core competencies and maintain an entrepreneurial mindset; however, they should also work with others to improve the state of the area/world in which they live. This should be a priority.
Sustainable Development Goals
- No Poverty
- Zero Hunger
- Good Health and Well-being
- Quality Education
- Gender Equality
- Clean water and sanitation
- Affordable and Clean Energy
- Decent work and economic growth
- Industry, Innovation, Infrastructure
- Reduced Inequalities
- Sustainable cities and communities
- Responsible consumption and production
- Climate Action
- Life below water
- Life on Land
- Peace, Justice and strong foundations
- Partnerships for the goal
B-Corporations & The “Benefit” Corporation (Founded 2007)
“Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. B Corps are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy.” —B Lab
Defined | A Company that voluntarily meets the highest standards for social and environmental performance. |
How | They go through a rigorous certification process, completing a comprehensive assessment of their company’s impacts on all stakeholders, and having their assessment verified by B Lab, the nonprofit behind the B Corp certification. They’re committed to using business as a force for good – and they’re willing to have their practices be independently vetted by a third-party and to make their results transparent. You can see the score of any B Corp on the B Corp directory. |
Difference between traditional companies | Traditional corporation that gives priority only to financial profitability; B Corps actually look at the triple bottom line* and use the power of business to address social and environmental problems. |
B-corporation vs. Benefit corporation | Certified B Corps earn a certification by scoring a minimum of 80 points on the B Impact Assessment. Benefit Corporations adopt a corporate form that is legally recognized, similar to a C Corporation or S Corporation (the key difference being, of course, the consideration of all stakeholders). |
Differences between Benefit Corporations and Certified B Corporations
Issue | Benefit Corporations | Certified B Corporations |
Accountability | Directors required to consider impact on all stake holders | Same |
Transparency | Must publish public report of overall social and environmental performance assessed against a third-party standard | Same |
Performance | Self-reported | Must achieve minimum verified score on B Impact Assessment, Recertification every 2 years against evolving standard |
Availability | Available in corporations in 30 states including Washington D.C. | Available to every corporation regardless of structure, location/state, or country of incorporation |
Cost | $70-200 state filing fee | $500-50,000 based on revenue per B Lab certification |
Role of B Lab | Developed Model Legislation, works for its passage and use, offers free reporting tool to meet transparency requirements, and no role in oversight. | Certifying body and supporting 501(c)(3), offering access to certified B corporation logo, portfolio of services, and vibrant community of practice among B Corps. |
→ “Triple-Bottom Line”: Economic, Environmental, Social
The term was first coined by John Elkington in his 1994 book “Cannibals with Forks.”
- This “bottom line” refers, literally, to the last line on an income statement that shows the profits made by a business. The triple bottom line means now there is not just one bottom line (profit), but two more (people and planet).
- This new triple bottom line of people, planet, and profit considers the social and environmental impacts of a business in its pursuit of profits.
- This has been recast in several related ways, such as “environment, economy, equity” and “human, natural, financial resources.”
Saving Lives through Clean Cookstoves
Ted Talk: Saving Lives through Clean Cookstoves
Speaker: Ethan Kay
Cookstoves cause poverty, disease and climate change. Ethan Kay sheds light on one of the most unreported stories about life in the developing world and discusses how to change this.
→ The Problem
- 2 million deaths per year (around half are children under five): About 50% of the world doing this (3 billion people)
- Caused by breathing in smoke from open flame cooking
- Smoke from open fire is the second biggest negative contributor to climate change because it releases “black carbon”
- Releases more black carbon than all of the trucks and automobiles in the world combined
→ The Solution
Consideration: Impoverished people cannot afford the product
- Even so, an organization should not give away stove because it poses an international development problem.
- “Good Intentions have unintended consequences”: Giving goods for free inhibits cultural economic growth and creates a culture of dependence.
- Instead, the organization should practice cultural sensitivity and respect cultural, social and religious traditions, and understand the pride gained from self-purchasing.
Social and Human Ventures including Impact Capital
Patagonia: Example of Eco-conscious company
“Its journey from its origin as 60% recycled polyester to our reno warehouse generated nearly 20 pounds of carbon dioxide, 24 times the weight of the finished product.” —Patagonia, “Don’t buy this jacket” Ad.
Video: Patagonia, The Paradox of an Eco-Conscious Company
Speaker: Our Changing Climate YouTube Content Creator
With Patagonia as a guide, I look at the paradox of embracing an eco-conscious and sustainable message as a for-profit company.
Patagonia positions themselves as anti-consumerist. They use their “Common Threads” Initiative (Reduce, Repair, Reuse, Recycle)
- Reduce: We make useful gear that lasts longer so you don’t buy what you don’t need
- Repair: We help you repair your Patagonia gear; You pledge to fix what’s broken
- Reuse: We help find a home for Patagonia gear you no longer need; You pledge to sell or pass it on
- Recycle: We take back your Patagonia gear that is worn out; You pledge to keep your stuff out of the landfill and incinerator.
Social Entrepreneurship (Engineers without Borders, Part 1)
Video: My talk on Social Entrepreneurship Pt. 1 to Engineers without Borders
Speaker: Mike Grandinetti
In this MasterClass, I discuss the rapidly growing global wave of social innovation & social entrepreneurship ventures leveraging Design for Extreme Affordability methods with the global organization Engineers Without Borders. EWB builds a better world through engineering projects that empower communities to meet their basic human needs.
Power in Our Interconnectedness
Ted Talk: Power in Our Interconnectedness: Jacqueline Novogratz at TEDxEuston
Speaker: Jacqueline Novogratz
Jacqueline Novogratz is the founder and CEO of Acumen Fund, a non-profit global venture fund that uses entrepreneurial approaches to solve the problems of poverty. Acumen Fund aims to create a world beyond poverty by investing in social enterprises, emerging leaders, and breakthrough ideas. Under Jacqueline's leadership, Acumen Fund has invested more than $72 million in 65 companies in South Asia and Africa, all focused on delivering affordable healthcare, water, housing and energy to the poor. These companies have created and supported more than 55,000 jobs, leveraged an additional $200 million, and brought basic services to tens of millions.
→ Operating System / Mental Model
Moral Imagination | The humility to see the world as it is and the audacity to imagine the world as it should be. |
Operational Expertise | Skills essential to starting, running and scaling your vision for the world |
Financial Expertise | Using capital as a tool we can control to execute on our vision sustainably |
Story #1: Impact Hub
2005, London — Shared workspace that individuals could both work and connect to both colleagues and investors with similar ideas and visions. Impact hub is a mesh between local networks, incubators, and accelerators that all work together in support of great ideas and common visions.
“What affects you, affects me”: Impact hub instills a “Collaboration Economy” among its participants where people work together and back each other’s projects. Every person affects everyone and so everyone works towards the minimum common goal: the movement and productivity of people. Participants were asked what they gained from the experience and the message was clear: Inspiration and the ability to overcoming challenges.
Video: Welcome to Impact Hub #ImpactHubAfrica
Speaker: Various
What is the Impact Hub network? What type of impact can be created in Africa? #ImpactHubAfrica. The Africa Seed program has been designed to support the creation and incubation of new Impact Hubs in the African regions. This program has been designed on top of the current on-boarding process and addresses the key issue for Hubs in Africa.
Video: SOCAP + Impact Hub - YouTube
Speaker: Penelope Douglas, Kevin Jones, Michael Cox, Patrick Donohue, Roshanda Cummings
We are an acceleration platform for people, ideas and money interested in impact and meaning. Impact Hub is a physical workspace where we meet, collaborate and get access to capital—60 Hubs, 5,000 members, across 6 continents—connected together. The SOCAP conferences bring the market to key flash points, convening the larger global community in the US, Europe and beyond. To this we add analytics and rich media to clarify the space —to move more innovation, better and faster.
Video: What have you gained from joining HUB Singapore?
Speaker: Various (See below)
In our first little video, eight Hubbers share what they love about this home for purpose-driven people. Say hello to the featured eight: Stefan, Jayce, Sonya, Sung, Ashima, Peter Yang, Angela, and Kirsty
Story #2: Ashoka
“All it takes to change the world is a person who recognizes a problem and finds a solution.”
It started with a man that thought the world’s problems would not be solved the by the institutions that created them. These companies knew how to make their products more efficient and cheaper; however, they did not know how to use these systems to help the people they had hurt. This man had an idea.
If this person can articulate their solution with passion and intelligence (that these aforementioned companies could not) can be called a “Social Entrepreneur”. Social Entrepreneurs do not only fix the problem, but often find new and innovative ways to approach the problem.