Profit & Purpose
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Profit & Purpose

How Social Innovation Is Transforming Business for Good

Kyle Westaway

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eBook - ePub

Profit & Purpose

How Social Innovation Is Transforming Business for Good

Kyle Westaway

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About This Book

Why has Warby Parker been able to make such dramatic inroads against the behemoths in the long established eyeglass market? How has Method revolutionized the soap aisle? Amid the cacophony of online retailers, why has Etsy seen such explosive growth, with 2013 annual sales north of $1 billion?

These companies all have been disruptive because they are operating from a strong social/environmental purpose. They are proving a counterintuitive truth – purpose can drive profits. But it's not just innovative startups that are getting in on the action. Blue chip companies such as Nike, Coca-Cola and IBM are innovating within their organization to create a positive social and environmental impact globally.

This is not a trend. It's the future of business.
Based on in-depth interviews with founders, Profit & Purpose profiles a number of the most successful pioneers of this new way forward, telling the stories of thirteen social enterprises ranging from non-profits like Charity: Water and D onorsChoose.org, to for-profits, like Method and Burts Bees; from startups like Etsy and Warby Parker, to multinational corporations with market capitalizations in the hundreds of billions, like Coca-Cola, IBM and Nike. Kyle Westaway digs beneath the public stories of these organizations' success to reveal how they have harness the power of purpose.

Taking readers behind the scenes, he shows how these leading social enterprises progressed from concept to scale, how they overcame common pitfalls, and how they managed to find an optimal balance between their mission and their business mandates. Westaway reveals that though there is no magic bullet formula that guarantees success, there are seven core practices that distinguish these market leaders from the pack of contenders. They are:

  • DISCOVER THROUGH CURIOSITY // Finding the right opportunity catalyzes impact.
  • DESIGN WITH HUMILTY // Prioritizing users creates killer products.
  • BUILD THROUGH HUSTLE // Rallying people creates critical momentum for launch.
  • FUND BY COMMITMENT // Aligning funders around a vision creates true partnerships.
  • CONNECT WITH AUTHENTICITY // Authentic connection builds a movement.
  • SCALE THROUGH COMMUNITY // Focusing on culture ensures smart growth.
  • EVALUATE WITH HONESTY // Honest measurement ensures continual improvement.

Profit & Purpose takes the literature on social entrepreneurship an important step forward, providing the practical tools for turning good intentions into breakaway success.

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Information

Publisher
Wiley
Year
2014
ISBN
9781118708552

Chapter One
Discover Through Curiosity

The genesis of creating a successful social enterprise is discovering the right opportunity for you, one that will allow you to tackle a problem effectively, with your particular talents and will create significant impact. This is a process of discovery that involves defining a purpose, targeting a specific problem to tackle, and determining the approach to take.
Defining a clear purpose is essential. Purpose acts as a fuel, driving momentum forward. It's also a compass, keeping an organization moving in the right direction. Purpose is what gets an entrepreneur up at 5:00 a.m. to get to work. It's the reason why a social enterprise will be able to hire and retain high-caliber talent and keep them engaged once they are there. Purpose will attract the right type of funders and it will inspire people to become brand advocates, spreading the word about you and your product or service to their network.
Passion, talent, timing, place, and people must line up for a social entrepreneur to find the idea that is right for him or her. When all of those elements align correctly, a founder has discovered what I call the Purpose Point for an organization: the point where a founder's passions and skills can be used to their optimal capacity for the greatest impact. This is the sweet spot that aspiring entrepreneurs must find for themselves. It is the place of strength from which a social innovator should move into the world.
So how does a social entrepreneur, or social intrapreneur, find this Purpose Point? Doing so can seem as challenging as trapping lightning in a bottle. With a seemingly endless supply of problems to tackle, how should an aspiring social entrepreneur decide which one to pursue and which ones to pass on? Is finding the Purpose Point just dumb luck, or are other factors at play?
Every social entrepreneur follows a unique path. For some of the founders profiled here, their Purpose Point was discovered in a powerful personal moment that allowed them to see clearly the problem they wanted to tackle and how they could apply their particular talents to solving it. For others, their path was more analytical—systemically weighing their options. Still others were in the midst of pursuing one thing they thought was their purpose only to find their more authentic purpose was some- thing else.
The social entrepreneurs in this book started their journeys at various levels of knowledge about the problems they were tackling, and skills required to execute on their vision. They came from all walks of life. They include the young and old, students and business professionals, a club promoter living the high life and a drifter. They are male and female, and are from a range of ethnic backgrounds. They found their Purpose Points in the most unexpected places, from a concert in Costa Rica to a scummy pond in West Africa to the rough streets of a decaying city.
Finding your Purpose Point is not unlike finding love: everybody must also find it in his or her own way. It's a mix of head and heart, analysis and intuition, and sometimes just pure luck. But though there is no formula for finding your way, there is a set of core insights that emerges from the stories of many successful social enterprises, which boils down to a simple but powerful set of key steps to take:
  1. Specify the problem
  2. Leverage shifts in culture
  3. Build around talent

Identifying the Problem of Eyeglasses

In October 2008, Dave Gilboa walked off a plane and did something many of us have done: he left something behind. In his case, it was his $600 pair of glasses, which he'd stowed in the back of the seat in front of his.
He was a student at the Wharton School of Business at the time, and back in the computer lab, he recounted this minor tragedy to a few new-found business school friends—Neil Blumenthal, Andy Hunt, and Jeff Raider—lamenting that he had to pony up another $600 for a new pair of glasses.
“Why is a product that's essentially made with a 500-year-old technology the same price as an iPhone?” Dave asked.
Neil knew it didn't need to be that way.

Learning at the ScoJo Foundation

Five years earlier, Neil, whose undergraduate degree was in international affairs, wanted to do some work in international development. Through a random introduction from a friend, he met an eye doctor, Dr. Jordan Kassalow, who had started the ScoJo Foundation to bring glasses to the poor across the globe. Kassalow invited Neil to help monitor his first pilot program in El Salvador.
The foundation works with local entrepreneurs in the developing world to help them sell ultra-low-cost glasses in underserved communities. By tapping a local work force, the foundation solves the difficult problem in so much of the developing world of the last mile of distribution to rural areas, while also creating much-needed jobs. The foundation also trains the sales recruits to give eye exams, thereby improving eye care. And the impact doesn't stop there. The jobs created provide the recruits with a sense of dignity as well as the means to invest in the health and education of their families, which has further positive ripple effects for the communities. It's a powerful model.
According to Dr. Kassalow, “There are over 700 million people who need eyeglasses. It became clear to us pretty quickly that unless we created a market-based solution to the problem, we would never be able to scale. That's why I chose a social entrepreneurial model.”
It sounds so simple. But it took a lot of trial and error to fully execute the vision of the ScoJo Foundation. During its first pilot, the goal was to partner with a microfinance institution that would give very small loans to the entrepreneurs to enable them to buy an initial inventory of glasses from ScoJo. The entrepreneurs would then pay the micro finance institution back after they had made money from selling the glasses.
The first lesson was that this model was not going to work because it required the most vulnerable people in the equation—the new entrepreneurs—to bear the burden of the financial risk if the glasses didn't sell.
So ScoJo switched from a microfinance model to a microconsignment model, giving the entrepreneurs the glasses on a consignment basis. This way the entrepreneurs pay ScoJo as they sell the glasses, and if they fail to make sales, they simply return the glasses.
Upon returning from the pilot in El Salvador, Neil was hired to work for the foundation full time and was put in charge of rolling out their programs globally. He was essentially launching a new startup every 18 months across the globe.

What Are the Stars Wearing?

The most striking lesson Neil learned over time was that no matter who you are—whether rich or poor, from the East or the West—design matters.
The ScoJo team started doing careful analysis of the style of frames that were selling and the ones that weren't in each area. To do a better job of catering to demand, they began watching TV and paying close attention to what the Hollywood, Bollywood, and Nollywood stars were wearing. They also went to upscale eyewear shops to discover the styles that were most popular. They were in relentless pursuit of all the information that would help them to create a product their customers actually wanted.
But to do that they would need to develop their own relationships with designers and manufacturers. One of the board members of ScoJo was from Oliver Peoples, and he began to show Neil the ropes of eyeglass manufacturing in Asia, taking him to the big trade shows and on visits to factories. Little by little, Neil learned the production process, and it became clear that it doesn't necessarily cost anything extra to design and manufacture glasses that are stylish than it does to make those that aren't. It simply takes intentionality.
So ScoJo began designing its own glasses and working with manufacturers to create the styles that specific segments of the market wanted, at a price point that was reasonable.
The foundation eventually rebranded and became VisionSpring, continuing to do great work across the globe.

Is There a Better Way for the Glasses Industry to Operate?

After five years of bringing the model into communities all around the developing world, Neil had decided to attend Wharton. Neil shared his insights from his VisionSpring work, with his new friends at Wharton, and, as business students are want to do, the four friends began riffing. Jeff shared that he had a pair of glasses at home that were put together with duct tape, and had a hard time justifying the cost of buying expensive glasses as a full-time student. Apparently, the high cost of glasses wasn't a problem only in poor countries. Andy chimed in that maybe glasses could be sold online, which could help to reduce the cost. They cooked up an idea: Might they apply the lessons Neil had learned to disrupt the eyewear industry?
The next day the four friends met up at a pub. Over a few Yeunglings, they decided that they really wanted to give the idea a shot. They would launch a company that would produce stylish, low-cost glasses and sell them online through the mail in the United States, for a start. For every pair of glasses they sold, they would give one away to someone in the developing world, following the established one-for-one model. Passion, talent, timing, place, and people had lined up for them.
The four immediately sketched out the basic idea for a company that would indeed soon upend the eyewear business. They were successful in large part because they had done a good job of identifying a very specific problem to solve, focusing just on making stylish glasses at low cost; they recognized and capitalized on the cultural shift of growing consumer demand, at all levels of the economy, for well-designed products; and they built on the solid foundation of the knowledge Neil had learned and their collective business school training.

Recognizing the Right Problem for You

Many aspiring social entrepreneurship don't gain clarity about what they want to create until they have a first-hand experience of some particular tragedy that sparks their passion. Both Jane Chen, one of the founders of Embrace, and for Scott Harrison, the founder of Charity: Water were catalyzed by personal experience. But they each took very different routes to that “aha” experience. Their stories are both great cases of how circuitous the journey of discovery can be.
When eight-year-old Jane Chen saw that her lemonade stand sales were not meeting her projections, she did what any good entrepreneur would do. She pivoted. Instead of sitting behind a lemonade stand all day and hoping for customers to wander by, she decided to take the lemonade to the customer. Jane Chen went mobile. Door-to-door, neighbor-by-neighbor, Jane knocked and made her pitch. Her pivot worked. Jane saw the sales of her lemonade skyrocket.
Jane is a born entrepreneur, but that didn't seem to be in her cards. As with many immigrant parents, her dad wanted a different path for his daughter than his own. His dream was for her to grow up to be a doctor. He was so focused on that dream that he would ask her again and again “What is your name?” to which she had been taught to respond “Dr. Chen.” Jane ended up going her own way, though, and getting a business degree, becoming a consultant. Nonetheless, she would go on to save the lives of people all around the world.
While she was working in consulting in Taiwan, Chen happened to read an article in the New York Times about the AIDS crisis in central China. She couldn't believe what she was reading. Sixty to eighty percent of adults were HIV positive. The infections were not due to drug use or promiscuous behavior but to the government's shoddy blood-donation system, which wasn't sanitary. People were being exposed to infected blood.
Chen became obsessed with the issue. She would try to find any information she could about the crisis. She would talk to colleagues at work about it and friends at cocktail parties. Eventually she felt she had to go see for herself. She made a few trips to the region and finally met up with a nonprofit working on the problem, helping to care for the AIDS victims and their children. She discovered the non-profit was only allowed to operate on a promise of complete confidentiality. If the government found out that the group was spreading any word about the issue, the work would be stopped.
Jane began volunteering with the group, and she found that she loved the work. Though her management-consulting job was challenging and interesting, she realized she didn't feel an authentic sense of purpose in it. She also found that her skills from consulting were tremendously helpful in the nonprofit sector. She was able to bring rigorous business expertise to the organization and contribute to its growth.
Before long, she decided she wanted to move fully into the non-profit world so that she could leverage her skills to maximize her impact. When she was asked to come on full time at the nonprofit, as program manager, she took the leap. She felt she had found the perfect marriage of meaning and talent. In the next few years, the nonprofit made huge strides on ...

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