Souls Matter in Business: How to Make Sure Your Business Has One

I was recently asked to answer some questions by a technology insurance blog: www.techinsurance.com 

They used one of my answers, but I had written out some others which I share here. It was a great exercise in thinking about some of the issues on which I love to work with business owners. I think the answers also work for more than just technology companies. Here they are:

How can you best communicate to current / potential customers that your business has a “soul?”

You know who you are. You know your values. But perhaps they are unarticulated? Take the time to dig in and think them through and then make some of them public. Put them on your website. Make them the DNA of how you operate your business. This will communicate both directly and indirectly what you stand for as a person and as a business.

Revisit them quarterly and assess if you are straying from what you set out to be like.

It will also remind you how to negotiate unforeseen questions that come up in the day to day running of your business. Staying close to your core values in how you run your business will spill over into how you are seen by your employees and ultimately how you are seen by your customer base and investors. Finally, if the relationships between you and others does not work because of conflicts that arise, it might be because your values differ from another stakeholder. Perhaps the business relationship needs to end.

Be purposeful and intentional about the process. Also, be honest with yourself. If you feel like you should hold to a value, but ultimately that value isn’t you, people will see through that. In the long run that can be damaging. But articulating your values helps you know yourself and your soul, which will communicate your ethical core to others.

Is there a way you can resolve customer disputes to show that your business really does care?

Go above and beyond customer expectations and empower your staff to do so as well. Every client, whether it's a large business or a sole proprietor, behind that entity is a person with a story. Life happens, and when you can make the life of that person more valuable and recognize their dignity, you are not only honoring the client, but you actually become a better person. But you have to set boundaries. If you have clients that abuse your generosity or diligence, perhaps it's time to part ways.

What are some ways you can help out / give back in your community?

There are so many. Never jeopardize the viability of your business, but do give back somehow. The ways I like the best are the ones that marry the mission of your business with social impact. You are an expert in your field. Use that expertise to give back and perhaps learn from the experience. For example, if you are a web design shop you could offer web design consultation for a non-profit whose web presence needs a facelift at a lower rate or pro bono. To make it even more interesting, you could offer a package to ten clients who agree to pay a little more if you then do a pro bono web page for a non-profit from a selection of the five candidates non-profits you chose. Your clients vote on the non-profit. By doing this your “philanthropy” goes both upstream (to your paying clients) and downstream to the non-profit. It might even get your clients to think about how they can give back, not just through you but in other ways. Of course, in this case, the methods are sector specific.

But there are other ways to give back. You could go the classic philanthropic route and give away a small percentage of your revenue to non-profits and let your employees own a part of the decision-making process to where that money goes. It gives your employees purpose. You could allow your employees to spend some time volunteering on your clock. Or you could take a hit on productivity and take on an intern from an underprivileged background. You give somebody a leg up. The returns here are hard to measure, but if you invest the time to listen to your intern about their background, you might learn a lot about a market you did not even know existed.

Should a small business owner take a stand on issues? If yes, what is the best way to handle any potential blowback?

This is a tough question. It depends on the issue and the values the business owner has and how strongly the values of the business owner overlap with the issue they want to stand up for publically and in the name of the business. For a small business owner, I would recommend staying out of causes that are strongly associated with political party rhetoric. Remember, you don't want to scuttle your business over something that might not be as important as taking care of your employees, or your income. Similarly, if it's an issue over which you have little influence or your business cannot have a large impact on the issue, why risk it?

Unless it affects your business directly or effects the mission of your business, you should be careful. But if the issue is a part of your core values and you know your customer base well enough to know they care about that issue too, go for it.

When it comes to blowback, I have a great example. I know a small business owner who operates a web design company. They support KIVA, the microloan portal. Whenever they can put down enough money to make a meaningful contribution to a cause, they do. They also put a little line in their email signature that mentions that they support KIVA and link to the website. Surprisingly to me anyway, they did get blowback, and potential customers complained about it. They decided to continue supporting KIVA but also took out the link from the email marketing signature. Of course, they could have decided that their support for KIVA was an outworking of their values and the type of clients they want are the type that at least do not mind being informed about what the web design company does to give back in a little thing like an email signature. You know your customer base. Be wise, or seek wise counsel about how to deal with the blowback.

If all else fails? Apologize. Perhaps the blowback is merited? Perhaps if your "giving back" is done not in the name of your true core values, but because you thought it might bring you business, well perhaps your potential clients sees a disconnect with how you run your business and what you say your values are. That's why it's important to stay honest and consistent when you articulate those values and make some public. Equally, if you have not made some of your values public, perhaps there is a disconnect between the audience that you are marketing to and the values you hold. And sometimes you just have to let people go elsewhere if the business relationship is not a good fit. That might be hard, but it might be better in the long run.

Impact investing, Program Related Investment, Pay For Success and Social Bonds

If you have not heard of these terms, perhaps it's because they are relatively new concepts. But if you are in the non-profit world or have a social enterprise, or are a mission-driven business, or in fact are a business that cares about the location you are in, they are important concepts.

Impact investing is a relatively new way of viewing how capital can be used not just to grow value neutral businesses, but for good business that has a positive impact beyond the bottom line. There are many financial vehicles that fit impact investment criteria. There are also many metrics that measure the outcome of these investments. Thankful Gleaner can help you here by developing solutions which could attract impact investment money.

Program Related Investments are one vehicle that can increase investors impact. As a colleague put it:

"Program Related Investments are based on IRS rule that allows private foundations to treat PRIs as a distribution that counts toward their annual 5% distribution requirement even though they are not grants, but investments.

PRIs have to relate to non-profit goals and their mission. They are often, but not always expected to yield financial returns below market rates. However, they should yield a financial return.

Social Bond's on the other hand, are a slightly different vehicle. They are based on a Pay For Success model of funding where an investor will put money into a non-profit program and receive their investment returned after the life cycle of the program through the maturation of a social bond. That is if the program was a success. These investment returns are most often guaranteed by the government, but need not be exclusively so. What makes a Pay For Success model? The bond is only paid if the program was a success. What then is success?

Non-Profits set goals that are often measured in the form of outputs (e.g., how many clients were seen). The PFS model is based on longer term outcomes that show a change in the problem the non-profit is trying to address (e.g., jobs preparedness programs that not only help somebody find a job but also help them keep it and increase their earnings in the longer term). Of course, this can take a longer time to implement and measure. Non-profits need funding to implement programs that can then show longer term success. Enter the social bond. Measuring the impact of such investments is, of course, harder than showing outputs, but truthfully, such outcomes are far more valuable, particularly if the program helps a client. Success is often verified by a third party.

We work with non-profits and for-profit businesses that want to have an impact beyond short-term financial indicators. Let's talk if you are interested in working with us. 

 

 

 

Six shades of corporate value taxonomy: What is missing?

Corporations come in many shades of shareholder value So say's Schumpeter of the Economist.

In a recent Economist editorial, Schumpeter outlines six different types of corporate tribes. His opening perspective starts from the view of the executive tasked with managing corporations. A growing body of people, shareholders, included, want corporations to do good, or as Schumpeter puts it: "citizens want corporations to be cuddlier, invest more at home, pay higher taxes and wages and employ more people."

But corporations are tasked by law to maximize profit. Naive executives, Schumpeter argues, have trouble reconciling these contradictory impulses. But wise executives know this not to be the case. Thus starts Schumpeter's taxonomy of shareholder values. But notice how he moves the perspective from the view of the executives as individual business practitioners to a more corporate, even communal or general view of shareholder practice, thus taking out the power dynamic faced by executives accountable to a board who represent their shareholders. (I'll circle back to why this is an important omission in a minute.) First to the taxonomy.

Corporate Fundamentalists: These are companies that want to maximize profits in the shortest amount of time, but still staying within the legal bounds of the law. Schumpeter mentions Valent and IBM as examples through pointing to current corporate behavior.

Corporate Toilers:  These are companies that believe in maximizing shareholder profits but are patient: "At their best these firms are consistently successful—think of Shell or Intel investing on a ten-year time horizon."

Corporate Oracles: These are companies that want to maximize profit within the bounds of the law "but with a twist." They anticipate legal chances in regulation and thus voluntarily change their behavior to fit with the direction regulation might take in the future. 

Corporate Kings: These are companies that are so successful at creating shareholder value that sometimes they can ignore the demands to maximize profit. Unilever apparently sees itself as: "the consumer-goods firm [that is] a non-governmental organization committed to cutting poverty."

Corporate Socialists: These are corporations found mostly outside the west are controlled by "states, families or dominant managers." These firms: "think that shareholder value is not as important as social objectives such as employment, high pay or cheap products. But they recognize that institutional investors have some legal powers." Goldman Sachs, Schumpeter says, is a Corporate Champagne Socialist. Read the article to find out why.

Corporate Apostates: These are corporations that do not care for shareholders at all. Apparently, they exist due to political dysfunction. Schumpeter namechecks Franny Mae and Fredy Mac as such companies because they are "state-owned American mortgage firms [that are] run to make cheap loans, not profits.

Complicating the taxonomy

The article is written from the perspective of somebody who seems to assume free market orthodoxy: The market will provide a mechanism to create the most efficient way of build a commodity and value that commodity according to direct financial gains to shareholders. In other words, money is the only way to measure efficiency and thus value. Moreover, money must be the only way we measure value. Money, as it happens, belongs only to individuals. So the value created by a business can only ever belong to individuals.

The recognition that shareholder values, as they relate to executive and board level decision making are complicated by the article. This is welcome. It shows at least that there is a recognition by the Economist that liberal economic orthodoxy is theoretical. Practice is messier, since we all value, to a greater or lesser degree, things which money cannot buy. What would be interesting is an analysis by the Economist on the executives who are part of the emerging B Corporation field, where more than a single bottom line is measured. B Corp shareholders value this. Here it seems executives are intent on working with shareholder agreement to create value that is more than shareholders financial return. Perhaps that requires less distance between the business and the shareholder. Enter impact investing. It's a further example of shareholder recognition that simple financial returns might not be the only thing valued by investors. Champagne socialism aside, the personal generosity of philanthropists as well as most of the American people, seem to indicate that generosity need not be divorced from business.

Shure, both B corporations and impact investing are relatively new. Of course, it is naive to assume that the power of the single bottom line measurement will ever go away. But where do more complex measures of shareholder return overlap with the long-run and healthy growth? Isn't that the sweet spot? Efficiency needs to be measured over a longer life cycle, but I am certainly not the first to say that.

 

Cafe by day feeds the homeless dinner by night: The humanizing effect of giving dignity

I am not a big fan of the name Robin Hood cafe/restaurant. But it marks it out as a social enterprise. What's more it's a great idea. This restaurant in Madrid offers--and this is crucial--a dignified and free dinner experience to the homeless. It's funded by the cafe/restaurants paying breakfast and lunch customers. I say the key element is a dignified dinner experience because the restaurant serves its food on real plates, glasses and metal knives and forks. The homeless are served at their own tables, and they are greeted warmly on arrival.

Why is this significant? One of the things that homeless people experience internally is a deep sense of shame. The loss of a home usually comes with some other type of loss to the person or her family. But what follows that loss of security is the erosion of both a sense of self-worth and the experience (subjectively, but sadly also objectively) of the loss of dignity before other human beings. Restaurants are not a place you will often find a homeless person unless of course they are being bought lunch or dinner by a customer confident enough to take them out for a sit-down meal. At Robin Hood, they are also given plenty of good food.

If you have ever served in a soup kitchen, then you know that lines, plastic trays, and often plastic spoons and forks, coupled with institutionalized cafeteria style seating and decor are part of life. In my vocabulary, 'institutionalized' often also means 'dehumanized.' Though they are necessary, and welcome (I serve in a local kitchen), it would be lovely to have a version of this Madrid cafe/restaurant here in Chattanooga.

One Table as a model

I have seen the humanizing effect of giving dignity in the face of a homeless man here in Chattanooga. For the last three years, Causeway has organized an event called OneTable, which is a potluck where everybody in the community is invited to participate in a meal around Thanksgiving together. The tables are set out on a closed street between two segments of our city, one a park where homeless people often spend their day and the other a plaza where many downtown employees spend their lunch break. OneTable is therefore not only symbolic, but it actually brings people together at one, long table. But it's not a bunch of plastic tables bunched together, rather the tables are put together and then decorated in keeping with the holiday season. This year I recognized one of the people I knew from the soup kitchen and knowing he needed help to get seated because of his crutches, I helped him to the table. I encouraged him along to a further spot since there was some fall sun and when he went to sit down, he explained: "You decorated the table!" and broke out in a big grin. Such small things make all the difference. The humanizing effect of giving dignity in such ways can have a powerful effect on one struggling to find dignity in a spiral of desperation.

Of course, we must not romanticize the homeless. There is a reason many of these folks are homeless, and it's often in part their own fault. They are still human, in deep need of honor and a recognition of dignity, love even.

Is the restaurant model sustainable?

Does the Robin Hood restaurant have legs? The restaurant in Madrid, which opened in December 2016, has a waiting list for paying customers going into March. Of course it might just be the hype of a new restaurant with a different angle. I remain hopeful. An NPR interview tells us they have poached workers from hotels and other restaurants wanting to be part of something bigger. And apparently, famous chefs are volunteering their time once a week to cook for Robin Hood.

Sustainability, corporate social responsibility and other jargon based on good ideas

"Don't you hate corporate jargon?!"


This is what somebody recently confessed to me. I am not intimately familiar with the corporate business world. In a sense, I was part of that world from the outside. As a lobbyist and political researcher, I would frequently have conversations with people in corporations. When the subject came up many of them complained about the language they were forced to use. Buzzwords whose meaning morphed. Often the language was unintelligible. To be a player in the game, however, you had to use them. But when the meaning behind the word is about something praiseworthy, well, perhaps we just need to work on making the language less about the jargon and more about the story behind the word.

I care about language. That's why when I hear words like sustainability, corporate social responsibility, or the triple bottom line I get slightly irritated. Why? Because the stories behind those principles, the people who have been impacted by good decision-making in the business world, they matter. Their stories speak volumes about how business can shape the common good. They are not just numbers for a spreadsheet. They are a Dad who can bring home a living wage. This family might have buckled under financial pressure leading to divorce and further heartbreak. They are the stories of relationships built through a company adopting a children's hospital and encouraging their workforce to do something special for that kid suffering from leukemia. They are the story of a business owner deciding to hire displaced refugees fleeing persecution. Sure sometimes some of these words are linked to “greenwashing” only for the good of corporate public relations.

But the words I mentioned above that have a jargony tone, more often than not they represent the story of a business leader deciding to do good with their business. When businesses do good, the world becomes a little better.

This series of blog posts will showcase some business owners who are doing good by going beyond the single bottom line. I will also look at some of the jargony words and help explain what they mean.