Create equitable impact and harness the true potential of your business
In my latest book, The Social Impact Advantage, I talk about how businesses need to shift their focus from short-term profit maximization to long-term value-generation and increasing overall well-being. Today business leaders can easily get distracted by a “winner take all” mentality and miss out on important opportunities to do well BY doing good. Achieving the true potential for your business, and all businesses, requires us to shift our mindset to think about profit and value in this way.
Easier said than done, right? Taking these steps is hard work, but necessary. With this changing sociopolitical environment, businesses ignore engaging in social causes at their peril. Sooner or later, they will be pulled into some social discourse, either by their consumers or their employees. The past few years, with our increasingly fraught political environment around racial justice, climate change, voting rights, and other activist causes, show that companies need to be prepared.
We know that inauthentic, performative, one-time statements aren’t enough. This work needs to be embedded across a company, encompassing all stakeholders, including the broader community. These changes need to be long-term and sustained.
For example, the Dove “Campaign for Real Beauty” turned traditional beauty advertising on its head to highlight “real” women and their bodies rather than photo-shopped models representing unrealistic standards of beauty. The campaign began in 2004 and has been massively successful (I am sure you have seen some of the ads), helping to shift industry standards, elevate different types of beauty, and increase engagement with customers in an authentic way. The Campaign for Real Beauty was one of the first ad campaigns that benefited from social media and the desire of people to share the content themselves because it aligned with their identity and values.
Nevertheless, this campaign and the broader body positive movement has received some sustained criticism. Namely, as the writer Amanda Mull laid out, it shames women for feeling bad about beauty standards that companies like Dove and others behind those ads helped create without the companies acknowledging their own part in creating those unreasonable expectations and the pain that goes along with them. On the other hand, it also shows the potential for what a business can achieve when it thinks differently and works to integrate social causes across its operations.
Contrariwise, what does this look like when the commitment is performative and not sustained? Well, you may remember some big news out of the Business Roundtable a few years ago. The Roundtable, an association for the executives of some of the country’s biggest companies, released a statement in 2019 with over 150 cosigners that “redefined the purpose of the corporation to promote an ‘economy that serves all Americans,’” and said “we share a fundamental commitment to all of our stakeholders,” not just shareholders.
Well ok then! Problem solved, right? Not so fast. When put to the test, many of these companies went back on their commitments and suffered as a result. As research from Wharton Professor Tyler Wry found, when the COVID-19 pandemic hit, the stakeholder pledge signers gave 20 percent more of their profits to shareholders as compared to companies who did not sign the pledge. This led them to be “almost 20 percent more prone to announce layoffs or furloughs. Signers were less likely to donate to relief efforts, less likely to offer customer discounts, and less likely to shift production to pandemic-related goods.”
We can’t know for sure why these companies did not follow through on their pledge, but, in an interview with The Atlantic writer Jerry Useem, Professor Wry suggested that it may have a fundamentally psychological reason: “If people are allowed to make a token gesture of moral behavior — or simply imagine they’ve done something good — they then feel freer to do something morally dubious, because they’ve reassured themselves that they’re on the side of the angels.”
It is easy to make a quick promise and put out a statement, but it’s harder to stay committed and follow through. It requires taking a hard look at your practices and considering your business practices differently. If you can’t do that and be committed to the equitable impact you want to create, you will be seen as inauthentic and won’t be able to engage with your customers in the way they want you to. Your “authenticity” has to be real, not performative. In many cases, achieving this authentic, long-term engagement means overhauling of certain practices or developing a new operating philosophy.
Defining the authentic, unique equitable impact your company can create is both very simple and incredibly complex. You find it at the intersection of three elements:
- Your organizational passion and values;
- The root cause of the issue you are trying to solve; and
- The assets you can bring to the issue.
These are the components of the “Equitable Impact Venn Diagram” I use to help clients find their sweet spot for equitable impact.
Looking at this Venn diagram, you probably could come up with a statement off-the-cuff about each of the elements and the equitable impact you could create. Your root cause issue might be a lack of good jobs in a community; your passion and values might be creating a welcoming and inclusive workplace; and your assets might be a franchise business model that creates entry-level job openings. Your equitable impact would be something around investing in the communities in which your business operates.
But the process for creating and defining what this equitable impact actually looks like is where things get complex. You can very quickly feel as if you need to do everything! Your business touches so many aspects of society, it’s hard not to get overwhelmed by the scale of the problems.
But, not to worry: There are simple steps you can take to help you respond to the shifting nature of your customer base, the need to be authentic, and generally the desire to do well BY doing good, and this book is all about meeting you where you are in your process and giving you a place to start. Actually, you are probably doing some of these things.
Want to explore what you are already doing to create equitable impact and how you can leverage those things to unlock the full potential of your business? Check out The Social Impact Advantage and read on!
