|The Business of Being Good
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way“, Charles Dickens, The Tale of Two Cities
In these modern times, when humanity is at the pinnacle of it’s evolutionary potential and the telescopic nature of technological progress and development will soon become exponential – leading to futurists like Ray Kurzweil to call ‘Transcendence’ (not to be confused with the awful Johnny Depp film about the matter). But as we move ever closer towards bigger achievements, one often forgets to include the rest of the world in our ambitious plans. Many in the developing world are still living on less than $2 a day (as many of an Oxfam report has reminded us, 8 people you know have more wealth than the bottom half).
It has long been the focus of charities, Non-Governmental Organisations (NGOs), other Not-For-Profit (NFP) institutions – usually in partnership with governments which collaborated to solve problems. However, a deep dive into statistics reveals an important part the free market played in bringing those in poverty towards a better standard of living.
The reason for this is simple. The free market – when free enterprise and trade is conducted between free people, without coercion, what flourishes is an organically, self-organising system which incorporates jobs, training, education, investments, expansion and finally, tax revenue. This helps fund infrastructure, institutional development, central administration and so on. This self-sustaining model, albeit not without it’s excesses, creates a self-sustaining model where supply equalises with demand, like population relationships between predator and prey.
In the 18th Century, following the enlightenment and the emergence of the scientific and industrial revolutions – many great thinkers emerged and commented on how the world was developing. One of these thinkers, Adam Smith, still leaves a legacy to this day. As the founder of modern free market theory – his concept of the ‘invisible hand’ that guides the relationship between supply and demand is widely referenced to this day.
However, what’s missing from that narrative is the wider contributions Adam Smith made to intellectual and moral thinking on the subject. At the time of his writing, Smith dedicated the topic of one book to the frivolities of ‘consumer capitalism’. Thinkers like Rosseau argued that frivolous consumption of luxury goods compromised the enlightened values of contemporary man and that actually man should aim to live within his means and pursue more virtuous aims. Smith agreed with the outcome but not the process. For Smith, consumer capitalism and the material chasing of luxury goods helped people satisfy their self-interest, demonstrate there success, but also, allow money to ‘buy’ themselves more time to pursue enlightened virtues.
Okay – so he might have missed the point on the last aspect, but Smith is right that the free market helps build the foundations an enlightened society needs to develop. He was also very interested in the role the wealthy played in this. His theory was that it’s not money that rich people want; but authority, respect, influence. They want to put their money to good use – which explains by many US industrialists funded and sponsored the development of some of the worlds most prestigious educational institutions. If we demand more from them they would, and rightfully so, as anyone would should someone come chasing after your hard earned cash, flee. Instead – we should reward them for investing their money responsibly through honours and titles, let them put their names on things, sponsor initiatives and encourage them to contribute to civic society – one of the highest virtues at the time.
To this day, the debate goes on and shows no signs of stopping. Rather than do what Smith predicted, few of the super wealthy embark on this challenge of doing good unto the world with their wealth (except for maybe a handful of the mega wealthy). However, this leaves social change in the hands of a few and as we know from above, the model is unsustainable; unless they make more money – they’ll spend their reserves and eventually leave this world with nothing but their legacy. The problem continues.
The future, I believe lies with business. I’m seeing an emerging trend which harkens back to the great industrialists of the 19th Century like Joseph Rowntree and Titus Salt who make the correlation between a healthier, wealthier, happier worker and a more profitable business. With that in mind, they invested heavily in raising the standard of living for their employees – giving them homes, hospitals, festivals, holidays, bonuses and so on. This was what Adam Smith was referring to, and better yet, this model is self-sustaining. Companies like Pepsi, Pret a Manger, Innocent (to name a small few) are building their social conscience into their brand. There are a number of reasons for this:
- It’s a great marketing strategy (let’s not pretend it isn’t)
- It’s something stakeholders can get behind
- It’s the ‘right’ thing to do
But also, whats becoming apparent now is that there is a compelling narrative to focussing on this agenda within your own business.
Unilever is a classic example. In 2010, the new CEO, Paul Polman made a bold move. Unilever’s new strategy would be to double its profits but half it’s environmental impact. The reasoning was simple. Every day, 2 billion people interact with Unilever products across the world. So many of those people are living below the poverty line so the least Unilever can do is supply sustainable, innovative products to these people to make their lives easier. The Sustainable Living Plan was launched to make Unilever a brand that stood for social and environmental change and built products that were sustainable across all aspects of the ‘value chain’ from the mining of natural resource, manufacturing, logistics, consumption and disposal – all aspects had to have a net reduction on environmental impact. Unilever was the umbrella but under it stood 40 other brands (each worth more than $1 billion each) to become ‘sustainable living brands’. That meaning that each of them was working towards a higher purpose. This includes the following:
- Lifebouy – solving problems of infant mortality in the developing world by providing access to low cost, sustainable sanitation
- Knorr – brining nutrition to people in the developing world by incorporating the consumption of iron-based products (where anaemia is a big problem)
- Dove – championing women’s rights and tackling body dysmorphea and self-esteem issues
- Domestos – tackling the problem of open defecation in the developing world where 1.4 billion don’t have access to a toilets
The CEO, Paul Polman believes that the assumption that profits must be increased at the expense of the environment is wrong. His rational is that all we’re doing is stealing the future from our children. He talks about major global issues such as energy, water, climate changes as the problems of business. He talks lengthily about the UN and their Millennium Development Goals and Sustainable Development Goals – a monumental achievement which brought thousands of partners and millions of people together to solve some of the worlds biggest problems (including Junior Chamber International – might I add).
This form of socially conscious business, or the business of being good is the future of solving some of the worlds most difficult problems. Forums such as the World Economic Forum talk about Responsible Leadership and is often a show-case of the great collaborations done between governments, NGOs and private businesses to create sustainable change within communities.
A big part of this is around what Polman refers to as the Value Chain – ensuring that all members (suppliers, partners, customers and collaborators) are being encouraged to use and supply products and services in a sustainable manner which helps an organisation like Unilever meet its own sustainability target.
Many cynics will jump at the opportunity (usually from the left of the political spectrum) to question either their intentions, conspiratorial manipulations, over-speculation of impact, not being fully committed etc. Even when doing research for this post – there were similarly negative articles for every positive one. But I’d like to point the naysayers back to Adam Smith and his assertions that if we offer the wealthy want they want (praise, honours, influence and the opportunity to contribute) then they will do – and that’s what we want. But if we come with a pitchforks demanding tax increases they’ll run a mile.
However, this ‘business of being good’ isn’t just in the hands of multi-national corporations. It can be utilised everywhere, at all levels of commerce. Whether it’s local professionals service firms doing charity fundraisers, running and organising community projects, encouraging their staff to contribute to the civic and volunteer society, donating some of your time as a freelancer to do pro-bono work. There is a mountain of options but I’ll conclude by going back to where I started – with Adam Smith. Smith believed that main principle which made the free market sustainable was the consumer. The consumer held all the power – they can fire everyone from the clerk to the chairman by taking their money elsewhere. The main antidote for solving these problems is exercising your freedom of choice and not giving your business to the lowest bidder – instead, give your business to those with the most virtuous purpose. Only that way will commerce learns it’s lesson – that the business of doing good is the most profitable business to be in.
37 of the worlds largest 100 economies are businesses. An investment of between 2 – 3% of net profits for a single year could alleviate the world of poverty for the foreseeable future. Unilever is the first major player but more will come. The key to this is openness and transparency, along with integrity and virtue in your organisations commitment to positive social change. The Good Governance Institute (GGI) can help make this a reality by instilling these values at all levels of your business and supporting you and you move to creating a better world for you, your staff and your customers.