Challenging the Paradigms of Business, with Merit Goodness
Open Road — Week One by Team RAZA
“Everyone kept telling me that the model wouldn’t succeed. They’d say, ‘David, that’s not how business works. You can’t give away your profits.’” This was how David Merritt characterized the reactions to his business model for Merit Goodness, a cause-based clothing company founded in Detroit. For the past four years, Merit Goodness has donated 20% of its revenue to fund college scholarships for underserved youth. As David shared his journey, we sat there in awe of his resilience and clear sense of purpose. He continued, “The scholarship model is a different way of doing business. It challenges the existing paradigms of how to do business.”
Over the past few years, we’ve seen several global corporations come under intense scrutiny for engaging in practices that prioritize the “bottom line” over the rights of workers, the planet, and communities. And though some companies have incorporated social responsibility into their strategy and operations, the existing paradigm of business remains: the purpose of business is to maximize profits.
However, Merit Goodness takes on a different perspective. Their sole purpose for existing is to bring about economic development and help the next generation of Detroit to succeed. “It’s a vehicle,” David stated, without pause or doubt. As our team conducted research on similar cause brands, we began to see that this sentiment is more widespread than we thought. We found companies like Rebel Nell, a graffiti jewelry company that employs disadvantaged women, and Lazlo, a men’s tee company that hires returning citizens. These companies are intentional and clear about their “why.” In fact, Rebel Nell’s site states that the company began “with the sole purpose of” employing and empowering women. The origin for Merit Goodness is similar. “I don’t think Merit exists without Fate,” David shared. Fate is the high school mentorship program David founded, through his nonprofit Give Merit, to which Merit Goodness makes its donations. “Merit is not a clothing brand on its own. I wouldn’t get up every day to do this if Merit wasn’t tied to Fate.” To that effect, David is moving towards a workforce development model similar to Rebel Nell and Lazlo as a new way for Merit to contribute to Fate.
In addition to having their cause as the driving force for their businesses, these companies share another commonality: Detroit.
“Merit Goodness is a Detroit-based company,” explained Kuhu Saha, the Executive Director of Give Merit. Prior to starting Open Road, our team was familiar with Detroit-based companies but after a week with Merit Goodness, we left with an intimate understanding of what that actually means. “It’s the vibe of the city. There’s a small town feel to Detroit because everyone has this drive to make a difference and make a mark.”
Needless to say, Merit Goodness left its mark on us. We often hear one of two arguments in business school: (1) business is doing good for society by achieving profits or (2) government is the force to curb the inevitable negative externalities of business. However, David and the Merit Goodness team presented us with a new vision for future business leaders. This vision neither resists nor works within the current system. Instead, it’s a vision of a new system in which the purpose of business is to intentionally shape and impact the world.
And what better time than now for us to embrace this vision. “I think this generation over any other has this unified belief that they personally can change the world,” stated David. “I think it’s time to take ownership of that and find ways to put it into effect.”