Why Mission-Driven Companies Always Win
Purpose driven entrepreneurs and businesses are redefining social enterprise, a term that was traditionally reserved for non-profit organizations. This week, I'm shedding light on the subject as well as sharing a bit of my personal narrative! Sit back and enjoy the read.
The year is 1996. I'm eight years old, and I'm frantically searching for the T.V. remote. You see, I was busily eavesdropping on my sister's conversation and had been distracted. My ear was pressed onto a glass cup which I had gingerly placed over the bedroom door.
Yes, I was that sister, don't judge me.
That's when I heard it, Alan Sader's voice came wafting through the T.V. screen. His infamous Children's Fund commercial was playing; you know, the one where children living in abject conditions are used to shock viewers into action. Here's a short clip to jog your memory.
Every time the commercial would come on my eyes would well up with tears and for the next 24 hours, I'd follow my folks around begging them to let me sponsor a child.
"Ándele má!" I'd urge, "it's only 70 cents a day!"
My parents were skeptical, and I don't blame them. Impulse decisions rarely lead to sustainable solutions.
On the other hand, my parents were also unfamiliar with the concept of social entrepreneurship, the idea that individuals can steward social and economic advancements to transform the lives of others. Had they known perhaps I'd be another Bill Gates by now. Guess there's still time right?
I'm just as tenacious about empowering others as I was then, but now I have a strategy. It's called purpose-driven business and social entrepreneurship.
Social Entrepreneurship 101
The definitions of social entrepreneurship, social enterprise, and socially responsible companies are often debated. Some believe only non-profits that operate with a business model (think GirlsScouts) should be considered a social enterprise. Yet with so many purpose-driven entrepreneurs and companies springing forth, many (myself included) believe the term must expand. Here's a widely accepted definition that covers the essence of socially conscious companies:
"Socially conscious companies are organisations that exists for a social purpose and engages in trading to fulfil its mission, using market-based techniques to achieve social ends. Emerging from a non-profit background, social entrepreneurship and socially responsible companies are a renewed, rather than new concept, involving business as an instrument for social development alongside profitable returns (Barraket et al.,2010). "
Purpose-driven entrepreneurs and companies embrace all the components of a successful business. Healthy revenue, expansion, and having a marketplace advantage are still important. The only difference is that along with profit, these social startups and businesses are equally intentional about improving the economy, environment, and empowering others.
You're likely wondering how this works or if it works at all. Here's where I drop the mic: Patagonia.
Also, here are a few stats from Mintel to consider:
- 63% of consumers feel that ethical issues are becoming more important.
- 56% of US consumers stopped buying from companies they believe are unethical.
- 34% of consumers tell others when they believe a brand to be making ethical actions or actions that are honest and fair.
Why Purpose-Driven Businesses Win
It's clear that consumers are no longer simply interested in the contents of their wallet. Many of them are increasingly mindful about the ethical impact of their purchases.
Although socially conscious companies may seem unorthodox, these businesses actually have a competitive advantage. They understand that in order to grow they have to listen to the needs of their customers and adapt their practices. As a result, social companies are agile, and when combined with a well-planned business model, are more likely to achieve sustainable growth. Best of all, they can leverage free marketing from their customers!
As noted above 34% of customers will share ethical brands with their immediate community, but 29% of them will also publicly champion ethical companies on social media. #howboutdah
To further debunk the myth that businesses can't be profitable while pursuing social good, here's a glimpse at Patagonia's revenue.
Patagonia's mission is very simple:
“Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis (PYMNTS)."
Most well known for its "Don't Buy This Jacket" campaign and for being one of the first retailers to close it's doors on Black Friday, Patagonia boldly fuels the thoughtful consumption movement. Yet sales are as healthy as ever with an annual growth of 14% and revenue sitting just below $75 million. Hats off to Patagonia founder Yvon Chouinard!
Now, you're probably thinking, "Patagonia is a huge company that can afford to be socially conscious. How can smaller businesses achieve the same success?"
I present to you Raven+Lily.
Kirsten Dickerson, CEO and Founder of Raven + Lily, promotes ethical fashion as a means of providing a dignified way to alleviate poverty. Starting as an e-commerce store in 2008, Raven + Lily now employs 1,500 marginalized women at fair trade wages to give them access to sustainable income, health care, education, and a way to break the cycle of poverty. Their revenue is equally impressive, with 189% growth in 2015, and a recent opening of their second brick and mortar location in Austin.
So, have I peaked your interest?
I'm going to assume that you're furiously nodding your head so here's what you'll need to consider before getting started.
Before you begin
First ask the following questions:
- What does my business stand for? Does my business have firmly rooted core values?
- Take a look at the social landscape. Are there any issues either locally or globally, that resonate with you?
- Does this issue have long-term viability?
If your business can realistically address a social need and you'd like to move forward here's a purpose-drive business model canvas to help generate a strategy.
Purpose Driven Business Model Canvas
Funny how some memories just seem to stick with you. I'll never live down my blubbering eight-year-old self but perhaps that's not a bad thing. I now realize that having empathy for others is the first step to changing the world.
Stay tuned for my next blog where I'll discuss my favorite purpose-driven business models across various industries. I'll also share a few books and tools to help you implement the right strategy for your business!
- Barraket J, Collyer N, O’Connor M, et al. (2010) Finding Australia’s social enterprise sector. (n.d.): n. pag. Web.
- Luke, Belinda, and Vien Chu. "Social Enterprise versus Social Entrepreneurship: An Examination of the ‘why’ and ‘how’ in Pursuing Social Change." (n.d.): n. pag. Web.
- Pymnts. "How Patagonia Grows Without Growth." PYMNTS.com. N.p., 01 Dec. 2015. Web. 20 Apr. 2017.