“No one has ever become poor by giving.” I love this quote by Anne Frank. And it got me thinking. Can big business serve communities, employees and customers and still be profitable? I’m not talking about the corporate social responsibility of business or simple giving programs. These are needed for sure, but what I want to examine is far deeper than a strategy.
I am thinking about the entire construct of the role business plays in society – whether the goal is to maximize profits for shareholders or to maximize the interests of all stakeholders. Can business be good for employees, customers, community, the environment and deliver returns to shareholders? I strongly believe that business can significantly contribute to the lifeline that keeps communities and entrepreneurs alive and thriving. But is that the view of the majority? I don’t think so.
We’ve all witnessed the terrific contributions that big business has made in creating wealth for economies, individuals and governments. Our lives have surely advanced with the development of new technologies with significant innovation in all areas of life – consumer products, healthcare, education, etc. And we’ve certainly made a lot of shareholders happy.
But what about the communities in which we live? You know, the local small business, the entrepreneur with a great idea struggling to get his or her business funded and off the ground.
I’m not sure that we’ve reached a balance between the important necessity to make money and the direct effect any business can have on the local communities, and the lives of employees and customers. I am certain that my view is not popular. The scale is generously tipping towards the traditional standard practise prioritizing the shareholder and profit.
It’s time to ask this very important question: what is the role of business in society and in the communities in which they operate? This is not a CSR or PR matter. It is an issue that must take up space in the business model – a model that is being revisited by many. I am aware that we are not there yet and perhaps I’m being overly optimistic that we can make this happen soon. But I don’t doubt that you would agree, a shift from profit-first thinking is needed.
It’s almost impossible to avoid getting caught-up in the fast paced, day-to-day, month-to-month, quarter-to-quarter cadence of our financial markets and commerce in general. Even many incentive structures make it difficult for businesses and their leaders to shift their focus from profit only to a more balanced view. But I’ve always seen it this way: we take from the community, so we must give back to the community. We ask employees, customers and the community at large to contribute to our success, so they are as important a group of stakeholders as our shareholders are.
We take an active part of the ecology of the communities where we live and work through our nation-wide cafés and Network Orange. I recently shared this story of a typical day at our Toronto café. Perhaps coffee, healthy living, live music or supporting entrepreneurs are not the most popular tie-in to a banking brand for shareholders, but it has undoubtedly brought a great deal of value to our business, to our brand and to the many people who live and work near these locations.
When Howard Schultz founded Starbucks, it was to recreate what he had experienced in Europe, a great cup of coffee in a café that served as a third place for people go to, besides work and home. But when he left, strategies shifted from a store-level community focus to the Starbuck’s share price. Ironically stock prices fell, forcing Schultz to return and realign the business.
Nevertheless, we can’t be naïve to how business works. It’s not a charity, and without profit, a business can’t begin to attempt to positively impact society. But we also know that big organizations won’t go poor by shifting from profit-driven objectives to investing in the communities in which they operate. Quite the contrary, much can be gained by adapting a well-balanced approach of profit and social impact into the business model, as we’ve certainly seen at ING DIRECT.
If you rethink your business model, which you will need to do in time, it is absolutely possible that employees, customers, community and shareholders can be happy at the same time. In fact this is the stronger and long term sustainable strategy that future leaders must be determined to fight for. It’s time to redefine old standards and drive forward ideas and business models that are truly sustainable and good for all.