As the world celebrated New Year’s recently, I can imagine a resolution on the minds of many business executives: bring greater purpose to work in 2019.
Across every dimension of the economy, there is a growing movement to integrate business strategy and social purpose. Investors are now measuring environmental and social impacts alongside financial returns. Companies are developing new products with the simultaneous goals of creating shareholder and societal value. And consumers are increasingly expressing their values through their buying decisions.
Indeed, our colleagues at Deloitte recently published a report on the rise of social purpose in business, indicating that 77% of business leaders now see “social impact” as “important or very important” to their company strategy.
What is behind this rise in socially conscious business? And how do we accelerate the movement from here?
The Rise of Social Purpose in Business
Three influences are driving the private sector to do well and do good, together:
1. Top talent is demanding purpose at work.
The greatest driver of change in business today is coming from our economy’s most important ingredient: human capital. Top talent is demanding jobs where they can make a difference and make a living. More than nine in ten students in our business schools, according to a survey, now say they want to learn about social and environmental issues as a core part of their education. More than half the students in the survey said they seek to explicitly find a career in the private sector where they can make a difference. Indeed, a majority of students in the poll said they’re even willing to take a 15% pay cut to find a company that aligns with their values.
Numerous theories exist for why this change in expectations is taking place, but I find the most convincing answer to be that the rising generation of talent is finding a new source of identity and meaning amidst the decline of traditional guideposts. The old saw in the U.S. is that people find their identity in “God, family, and country.” But that norm is quickly changing: one intergenerational survey found that millennials were about half as likely as their elders to rate religion and being American as an important part of their personal identity. At the same time, this generation has a greater connection between their identity and their career than ever before. As professional identity takes greater priority, employees are demanding that what they do every day for their careers aligns with their core values as people.
2. Business is viewed as better positioned to solve social challenges.
At the same time that talent wants to find purpose at work, business is emerging as the last best hope for solving urgent social challenges. In the U.S., business is now more “trusted” for information than government sources and news media. And it’s simultaneously viewed as more effective than government in leading change; in the minds of employees and consumers alike, this greater trust and effectiveness comes with a responsibility to take action.
3. Social media is forcing business to take a stand.
Alongside changing perceptions of the role of business in society, social media is holding business accountable in new ways. After the death of journalist Jamal Khashoggi, for example, Twitter lit up with news of which companies would still be sending CEOs to the so-called “Davos in the Dessert” summit in Saudi Arabia and which companies would be withdrawing. Companies could not be neutral; sending a leader to the summit would be seen by employees and customers alike as a failure to stand up to an authoritarian government’s civil-rights abuses.
In this new social-media environment, many companies are even taking stands on controversial social issues. For decades, the conventional wisdom has been that CEOs and the companies they lead do not enter this territory. But that wisdom is quickly being replaced by a new reality where CEOs and companies are taking stands on issues that matter to their business, to their employees, and to their consumers.
Investors are still making sense of whether this new trend is good for the bottom line. In the three months immediately following its Colin Kaepernick ad, Nike saw a sales increase of 10%. Meanwhile, Dick’s Sporting Goods saw a 3% decline in same-store sales following its more restricted approach to gun sales after the Parkland school shootings. But the sporting-goods chain’s CEO Ed Stack has been unwavering amidst this decline. “I don’t really care what the financial implication is,” he said, because it was the right thing to do.
What Comes Next: Changing Business Education
All signs point to the rise of social purpose in business accelerating in the years ahead. Early studies of Generation Z indicate even greater commitment to integrating purpose into their careers. Meanwhile, the greatest challenges of our time, from climate change to poverty, require greater business involvement—not less—in designing social solutions.
But a key challenge is that businesses do not currently have the talent they need to fully deliver on their social purpose; only half of companies currently say they are “ready or very ready” to execute on their citizenship and social impact vision.
At Loyola, where I teach business ethics, we see this gap in talent as a charge to design new educational programs to prepare executives of the future. We aim to equip them with the full toolkit to lead business for good. Last fall, we gathered business school deans from across the U.S. to meet with Chicago’s corporate leaders and collectively identified a need to be even more intentional in business school-curriculum around preparing students to simultaneously solve for business and social value.
Energized by that conversation, we are developing new educational programming in our MBA program at Loyola to equip purpose-driven professionals with the skills, values, and networks to do well and do good in their careers.
We see this focus on marrying profit and purpose in business education as just the beginning of developing the business leadership of the future. As the private sector continues to move toward a tipping point where purpose is a “must have” for all businesses, we see a future where all business education is about achieving environmental, social, and financial goals, together.
Seth Green is the founding director of the Baumhart Center, an interdisciplinary center at Loyola University Chicago that equips executives and students with the business tools to accelerate social impact.
Traditionally, most consumer brands have avoided taking positions on hot-button social issues, but several have decided lately that the risk is worth the reward, especially when appealing to a particular demographic. Consumer-brand giant Procter & Gamble Co. decided to be a part of the #MeToo conversation this week when it released its new Gillette razor commercial tackling “toxic masculinity.”
The commercial takes a spin on Gillette’s longtime tagline “The Best a Man Can Get” by challenging the old saying “boys will be boys” and asking “Is this the best a man can get? Is it? We can’t hide from it. It’s been going on far too long. We can’t laugh it off, making the same old excuses.” The commercial shows examples of bullying and sexual harassment, along with examples of enlightened men intervening in such behavior. A short-film version of the ad is approaching 12 million views on YouTube.
The ad has received both praise and backlash, with some customers saying the ad pathologizes men in general. The TV personality Piers Morgan criticized the ad on Twitter, calling it “pathetic” and “a direct consequence of radical feminists who are “driving a war on masculinity.”
While the ad may alienate some customers, marketing experts said it may appeal to younger audiences, who are attracted to socially responsible companies. Pankaj Bhalla, Gillette brand director for North America, told the Wall Street Journal:
“This is an important conversation happening, and as a company that encourages men to be their best, we feel compelled to both address it and take action of our own. We are taking a realistic look at what’s happening today, and aiming to inspire change by acknowledging that the old saying ‘Boys Will Be Boys’ is not an excuse.”
P&G has shown a willingness to wade into social controversy with a positive or progressive message, notably with its “Like a Girl” ad campaign for the feminine-care brand Always.
Its brand Gillette has reason to be aggressive in getting attention, since it faces competition from upstart competitors like the Dollar Shave Club.
“They are smart people, they do so much research,” New York marketing expert Rob Baiocco told NBC News about P&G. “They’re making a decision on who they’re appealing to. Millennials care if a company does good.”
One of the most overlooked opportunities in business today is the idea of reaching beyond your bubble, for example by building unlikely partnerships. One such instance occurred when National Geographic wanted to expand its reach, so it began working with Fox Cable Networks on a new television channel, gaining from Fox’s expertise.
“Most nonprofits wouldn’t think about approaching a large media entity with an idea like that, but it’s turned out to be a remarkably successful through the years,” author Jean Case told Fast Company’s Ben Paynter in a story about her new book, Be Fearless: Five Principles for a Life of Breakthroughs and Purpose.
Case is the CEO of the Case Foundation, a funding organization that has given more than $100 million over two decades to businesses and nonprofits that use innovation to make social change. Case is the chairwoman of the National Geographic Society and her husband is Steve Case, the former CEO of AOL.
The author based her book in part on research at the foundation into the qualities of entrepreneurs who created transformations or found breakthroughs, she said. Besides reaching beyond one’s bubble, she found that success stories had four other ingredients: make a big bet; be bold, take risks; make failure matter; and let urgency conquer fear. Among her examples, writes Paynter:
Astro Teller, the head of X, Google’s moonshot factory, learned to openly encourage failure because it provides concrete direction when building things like self-driving cars. Neil Blumenthal, the cofounder and co-CEO of Warby Parker, drew from his own background and experience as director of a nonprofit to build his seemingly risky buy-one, give-one online glasses company. As an MBA student, Shazi Visram, the founder and CEO of organic food company Happy Family, saw friends struggling to find or make their own healthy baby food, so she started her own brand, complete with a larger social initiative to deliver healthy food to more children around the world.
NBA team owner Mark Cuban, best known for his swagger and combativeness both court side and on TV’s Shark Tank, was in an uncharacteristically vulnerable position early last year. A Sports Illustrated story in February had uncovered a “corrosive” work environment under former CEO Terdema Ussery, including multiple examples of sexual harassment and cover-ups of the behavior. A follow-up report commissioned by the team resulted in a blistering 43-page report about chronic abuses at the company, some of them fostered by Cuban himself.
Given the need for urgent changes, the team recruited Cynthia (“Cynt”) Marshall, the recently retired head of human resources for AT&T, to become the team’s new CEO. Bloomberg Businessweek reports on how she’s remaking the corporate culture:
Before her first day on the job, Marshall drafted a 100-day turnaround plan. It consisted of four parts: modeling zero tolerance, creating a playbook for women in the organization, transforming the culture, and improving operational effectiveness, to be tackled in that order. After starting she arranged for counselors to help the staff cope with what had happened—both the toxic culture and the public cloud surrounding it. She started a hot line for employees to submit anonymous reports of improper office conduct. … And she created new jobs and filled open ones, bringing in a new head of human resources and a chief ethics and compliance officer.
As part of her plan, the team assembled the Dallas Mavericks Advisory Council, known as D-Mac, a brain trust of 26 local leaders, to give feedback and advice to team management.
Are Marshall’s efforts paying off? “All I can tell you,” Cuban told Bloomberg Businessweek in an email, is “Cynthia has done an amazing job.”
In a time when shareholders expect quick turnarounds on their investments, it can be difficult for CEOs to feel empowered to favor their many other constituents. Panera Bread founder Ron Shaich spoke to the New Yorker’s Sheelah Kolhatkar about what it’s like to deal with those pressures, and why we need to build a business culture that promotes long-term investment.
Kolhatkar explained the short-term pressures today’s CEO’s face:
Wall Street has embraced the idea that companies exist solely to serve the holders of their stock. Under this way of thinking, managers of companies should focus their actions on driving short-term value for their shareholders, and should pay far less (or no) regard to other constituents who may have a stake in the business, such as employees, customers, or members of the community.
Shaich went on to explain some of the reasons why that type of thinking can be dangerous for companies and communities:
Stock owners have no public accountability for what the company does, and no responsibility, as executives do, to place the company’s interests above their own. The costs of prioritizing shareholders’ interests are borne by the company, and by society as a whole, which is robbed of innovations, jobs, and tax revenue.
After Panera encountered pressure to expedite return on investment (ROI), Shaich took the company private 2017 to protect its constituents, values, and vision. Shaich also stepped down as CEO at that time to focus on promoting long-term investment and value-building in the business world.
In order to move forward in business and society, long-term thinking and commitment are essential, Shaich said:
We say we want GDP growth, but GDP doesn’t come simply from a sugar high of tax cuts. GDP growth only comes from innovation and productivity increases. And innovation and productivity increases occur because people make commitments and they make transformative events.