3 businesses that succeed by leading with purpose
For a long time, business and the market-system have been rightfully blamed for exacerbating the problems that we face as a society, rather than playing an active, honest role in trying to fix them. There is case study after case study of corporate malfeasance, corruption, and fraud. 2015 provided us with a few — look to, for example, the Volkswagen emissions scandal, price-gouging of an AIDs drug by pharma CEO Martin Shkreli, the deep corruption at FIFA, and the exposé of the ruthless corporate culture at Amazon. With scandal after scandal, one could be forgiven for not trusting business to address society’s problems. Given the social and environmental ills wrought by business and the market system throughout history, one could be forgiven for thinking that it’s impossible for a business to pursue earning a profit and make a meaningful, sustainable social impact at the same time.
While this may have been its past, I don’t think this is the future of business. I believe that the future of business lies at the intersection of profit and purpose. We can blend profit and purpose, and not for one at the expense of the other, but for the benefit of both. The new wave of social enterprises, B Corps, hybrid organizations, and socially-conscious businesses — call them what you want — are building what the future of business should look like, especially if we truly expect business to play any meaningful role in solving society’s most pressing problems.
Let’s take a look at 3 great examples:
1. Warby Parker
Warby Parker sells inexpensive, well-designed glasses and distributes a pair of glasses in developing countries for every pair that they sell. Warby Parker started just five years ago, and they have already distributed over 1 million pairs of glasses to people in need.
It’s important to note that Warby Parker doesn’t give away a pair of glasses for free, an approach pioneered by TOMS Shoes. Instead, they have social enterprise partners like VisionSpring, and for every pair they sell they donate the cost of production for one pair of glasses. Partners like VisionSpring then train local merchants in developing countries to conduct eye exams and sell these glasses at a super-inexpensive price. This creates real, sustainable impact, rather than developing a culture of dependency. Through its partnerships with effective social enterprises like VisionSpring, Warby Parker has been able to help foster entrepreneurship in underserved communities across the world, and avoided the less effective approach that TOMS Shoes took.
Warby Parker has distributed over 1 million pairs of glasses to those in need, living in developing countries.
2. Public — Supply
Then there’s Brooklyn-based Public — Supply, which sells notebooks and pencils and distributes 25% of its profits to underfunded public school arts programs in the U.S. They funded 52 projects across the country in 2015 — check out some of the classrooms they impacted this past year. Public — Supply is filling in the funding gaps left by budget cuts across the U.S., and helping restore creativity to U.S. public schools, one project at a time.
Brooklyn-based Public — Supply sells notebooks and other office supplies, and donates 25% of its profits to underfunded creative programs at public schools across the U.S.
3. Uncharted Play
One of my personal favourites is Uncharted Play. As part of a class project in her junior year at Harvard, Jessica O. Matthews helped invent the Soccket, a soccer ball that can harness energy the more it is used, and can serve as an off-the-grid power source to those around the world who lack reliable electricity.
The Soccket can provide up to 3 hours of power with only 30 minutes of play. It’s a reliable source of power for lights, heaters, and more.
These companies — and there are many more, popping up every day — have demonstrated that it’s possible to make a real, sustainable, and scalable social impact by participating in the market and offering a product or service that people want to pay for.
What role does the market play? At its core, the market has a vital role to play in offering the goods and services that we need and want, ensuring these offerings are safe and fairly priced, along with providing stable employment, preserving our environment, and empowering communities it reaches.
I believe that social enterprises, in all of their various models and forms, are a key way forward for us to build a healthier, more regenerative economy, to help us solve some of our most pressing problems, and to restore trust and credibility in the market and business as an institution.
However, socially-conscious businesses, and the one-for-one model in particular, have not gone without criticism. A recent FastCompany op-ed decried the one-for-one model, saying that:
“They’re about feeling good about ourselves and convincing ourselves that we’re not a part of the problem, that we’re somehow outside the global systems that are causing the issues our buying was meant to solve.”
In other words, the author asserts that we can’t buy our way to equality and fairness, and that instead we need to fundamentally overhaul the global systems that we operate in, implying that the market system should be up first. However, I would argue that the more important point here is that companies like Warby Parker or Public — Supply do not purport to be outside of the market system, but rather, they aim to serve as models for how the market system could work for everyone’s benefit.
Socially-conscious businesses do not suggest they can replace good government, and many charities and non-profits do vital, effective, life-changing work across the world. What they do suggest is that the market and its agents can and should play a far more contributive role to society and the environment than it has been so far, and that if there is a better way to enact social change, then we should embrace it. To paraphrase Michael Porter, we need to change how we see business, and to change how business sees itself.
We need to change how we see business, and change how business sees itself.
Let’s consider some of the upsides of one-for-one, in particular, as it is the most well-known model of social enterprise. The one-for-one model can “unlock” giving in our purchasing habits, and make giving a regular part of everyday life. This is crucial if we are to achieve the scale of giving necessary to address some of our biggest problems and priorities. Giving should not be considered an extraordinary act of benevolence and selflessness. We need to come to terms with the fact that self-interest also has a role to play, even when people donate to charity. When people buy glasses or notebooks or soccer balls, we should enable them to cater to their own self-interest both in the sense that they want the product, but that they also genuinely want to make an impact and feel good about doing that too.
What’s most important is that the one-for-one model and other models of social enterprise are not only an effective way to make social impact — as Warby Parker and other disruptive, socially innovative companies have demonstrated — but it’s also simply an inherently “better” way to do business as we know it. It is better for all typical stakeholders — owners, investors, employees, customers, suppliers, governments, the community, and the environment, to name a few— than the standard for-profit, short-termist, shareholder-driven approach that has become the norm in the past few decades. If we are to truly harness the power of social enterprise — and of business and the market system overall — then we need to encourage and embrace it so it can become the norm.
