Lesson 2: Starting a Responsible Business

What You’ll Learn: Corporate social responsibility is an evolving business practice that incorporates sustainable development into a company’s business model.  It is not enough for companies to generate a profit anymore. Today’s customers want to do business with companies that also demonstrate good corporate citizenship. This module will walk you through the process of creating a business that has a social purpose and mission.

Starting a Responsible Business (continued)

Advantages of an SPC

Making a buck and tackling an issue are not mutually exclusive. The secret is to align the “why” (your purpose) with the “how” (your operations), then creating products and services that fulfill real needs. As you think about your company’s purpose, choose something you are passionate about. Be bold and be steadfast in your vision and mission as your entire team will need to embrace it and infuse it into every action and decision your company makes.

One of the benefits of the SPC structure is that it protects your stated purpose from future influence. Even if new investors come in or there are changes in senior management, the company is legally obligated to consider its social purpose as well as its stakeholders when making decisions. This adds a level of consistency and sustainability that traditional corporations are rarely able to achieve, let alone maintain.

This is particularly true for businesses whose designated purpose is aligned with the environment. As external pressures to be good stewards of the environment continue to build, a social purpose corporation can clearly articulate that connection.

Combining a for-profit and social purpose model has an added advantage when it comes to attracting and retaining workers. As noted, future generations want to tie their labors to meaningful work, and that often means working for a company whose mission and activities are aligned with personal and professional values. Additionally, the culture of Social Purpose Corporations tends to be stronger, as employees and management are all on the same page.

This is a new way of thinking about corporate wealth, one where social and environmental change occurs in parallel with profits. Wealth becomes more than quarterly earnings reports. It permeates on many levels, changing the trajectory of the company from the beginning.

Telling Your Story

Increasingly, customers want to support businesses that stand for or support what they do. Paying lip service to a cause in an ad campaign or doing some gimmicky marketing play to appease an audience doesn’t work anymore. Customers want to know who you are, they want to hear authentic stories and they want to see that you stand by what you say and deliver the goods.

A great example of this is Tom’s Shoes, which was founded on the idea that for every pair of shoes they sold, they would donate a pair of shoes to a child in need. Since 2006, they have donated 95+ million pairs of shoes. For every $3 in profits, $1 goes to one of their causes, whether its kid’s shoes, sight restoration procedures (780,000), weeks of safe water (722,000) or any other social cause that is important to them and their customers.

Tom’s doesn’t have to do a thing to embellish them or connect them to a cause. The work speaks for itself and public opinion takes care of the rest.

Lead authentically, and others will follow.

Social Purpose Corporations tend to draw like minds. That’s not to say you want a team of clones, built in your own image. Instead, you want people from all walks of life who have the same purpose. They are all committed to your company’s vision. If your team, customers and suppliers are excited and proud to be associated with your company, sustainable growth will come naturally.

This all begins with you, of course. As you think about your new enterprise, think about what is important to you. What do you genuinely care about?

As you formulate a social purpose that is aligned with your own values and passions, extend it to what a team would look like.

  • What would make them proud in terms of their work at your company?
  • What causes align with that sense of pride?
  • What undertaking is large enough in scope that you can make a lasting impact over time.

It’s easy to give money once to a smaller cause. Any business can do that. But this will be your continual focus; it will inform your culture, shape your operations, and over time, become the lasting legacy of your business.

Think about Patagonia’s workforce. They come in all shapes and sizes and are interested in a range of outdoor pursuits, from flyfishing and mountain climbing to surfing. But they are all bonded with the same purpose – good stewardship of the environment – creating a motivated, almost fanatical workforce that is committed to the company, its customers and its reason for existing. Everyone, from the CEO to the mailroom clerk, is part of the salesforce.

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