The Business of Giving

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A Good Card is a gift card for charity that you can redeem for any charity in the United States. An idea that came to Bill Strathmann ten years ago was inspired by two concepts. The First was an idea that you could ‘give’ the ‘gift’ of charity to someone, and the second was that you could put a new twist on traditional gifting by making gifts more socially relevant. This was something already pioneered by organizations such as Heifer International which brings your donation to life by allocating a llama, cow or chicken to an impoverished family to promote sustainable living.

But now, instead of receiving a card for your birthday which says, “I got you a llama for your birthday, but I sent it to a poor family that needs it more,” you can simply add cash to a credit card, to be spent on any of the 1 million charities Network for Good now has listed, after ten years of existence.

They’ve also processed a staggering US$700 million over this period. “We basically joined the two ideas of giving charity and direct gifting to come up with the idea of the Good Card,” says Strathmann. He’s had a few insightful moments, too, on his journey to help unlock generosity on a massive scale. For instance, a non-profit organization once complained that the Network for Good donation button on its website was not getting any hits. After explaining to the organization’s director that it was not a magic button, Network For Good went on to launch a massive online training program which taught non-profits how to raise money online.

Network for Good now provides kits and training to more than 200,000 non-profit professionals, which includes webinars, where well-known personalities give an hour of their time to offer advice. “Realizing our clients needed more than just the fishing rod, we taught them how to fish, too,” Strathmann explains. It’s worked so well that companies are starting to adopt the idea by giving it to their employees as a reward, rather than cheesy, meaningless corporate gifts.

Whereas before you might have been given a Clinique ‘Happy’ cosmetic bag for the holidays with a US$10 charity voucher inside, you can now brand a Good Card for your business for year-round giving. The entertainment factor of receiving a Good Card is also important in helping turn wasted consumption dollars into dollars that are helping resolve social causes.

Next time you’re about to turn your company assistant loose on a gift-buying spree, for Yahoo towels or hats with your logo, which inevitably end up in a spare drawer, think of how much more appreciated this purchase might be if put to work in society. “Saying to someone that you care about what they care about makes this gift all the more personal and meaningful,” explains Strathmann.

“We view charitable giving as a utility, we don’t pick favorite charities or choose sides when it comes to charities we support. As far as I’m concerned, any charity that is in good standing with the IRS should be able to receive a charitable donation, either online or digitally.” While Network for Good is U.S.-focused for now, international donations can be done via U.S.-based charities who work globally. With the company’s revenue growing more than 35 percent a year, the business of giving has become a healthy venture, despite the recessionary years since 2007, which interestingly had no effect at all on this growth.

While the credit card format of Good Cards is novel and certainly fits into a recognizable way of consumer spending, the organization also enables donations through social media, mobile and websites, such as Capital One’s website where you can redeem your credit card rewards for charity. With an array of channels to choose from, there’s now no excuse for not giving.

Of the US$300 billion Americans pledge to charity every year only 5 percent, or US$15 billion, is actually done digitally. “We’re starting to see a massive migration to digital payments, much like we’re seeing with music. The paperwork involved in sending checks is cumbersome for both the donor and the charity and we’re hoping to see the end of this payment method in the future.”

With Network for Good now a sustainable business model, it no longer requires charitable dollars to fund itself. Run like a mainstream business, it has earned the revenue that ensures long-term survival. Most donors have modest expectation when it comes to an acknowledgement of their donation or how their money is being spent, but unfortunately many charities cannot even meet these modest expectations.

Some sense of tangibility is also important, where someone can grasp the detail of their giving. The reason the Heifer International model works so well is because a donor can say, “Oh, I bought a llama for a family, I get it.” They can actually see the result of their donation. Network for Good automatically sends a thank you to donors, something charities often forget about.

“We’re very aware of delivering both the tangibility factor and the thank you message to donors. This results in  the ‘helpers high’ syndrome, always good for return business. There’s a very good reason why our motto is ‘Do good, feel good.’ But most importantly, if you can solve a social problem with a market-based solution, you should take this approach,” says Strathmann.

 

The Challenge of the future: A letter to an unborn son

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There are now over 7 billion people on the planet. If we are to survive as a species, then innovative and brave solutions must be found. 

As expectant father, Markus Dietrich of the Philippines faces the questions that millions of other soon-to-be parents are asking, he writes a letter to his unborn son…

Dear Son, As your mother Suncheon and I eagerly await your arrival on earth, we are heading towards exciting times which will turn our lives upside down. That’s at least what everybody’s promising us. So before you take over our days and nights, I have sat down quietly to reflect on your childhood and what kind of leader you might become. I look forward to sitting down with you one day, once you have grown up and taken on leadership roles yourself, and have a conversation to compare notes.

Looking back at my own childhood I’ve come to realize that even back then I already had the attributes of a leader. This was not because I was special in any way, but rather through the attitude I had towards life. All children have this within them. Without any learning and studying, all children are born with empathy, creativity, unreason, curiosity and an eagerness to explore new and ever-changing worlds. In today’s management and leadership language we call it “emotional intelligence,” “innovation strategies,” “lifelong learning” or “blue oceans” – and we pay dearly for regaining them later in life.

So how do we lose this natural leadership along the way? Thinking back to where this loss occurred, I remember a few events distinctly, yet their importance is only obvious to me now. “Now they destroyed your creativity,” my father exclaimed, as I proudly presented to him my latest piece of school artwork, a watercolour painting of a balloon flying over a rural landscape. I didn’t understand what he meant, as I had just received my highest grade ever from the teacher. “But dad, look at the minute details in my painting, it looks just like a photo,” I pleaded. He pointed sadly towards my wild, free-flowing drawings from the past and said, “This is what I meant.”

As well as being one of my favourite bands from the 90s, Curiosity Killed the Cat is also an adage that being too curious can be dangerous. As a child, I asked my parents hundreds of questions around “what?,” “why?,” “how?” of life, the universe and everything else. I only learned later that the answer (according to The Hitchhiker’s Guide to the Galaxy) is “42,” but at that time my parents patiently gave me answers I was looking for. I lost this unbridled curiosity during my adult life, too busy managing day-to-day business, while innovation was outsourced to the research and  development department.

It was only at age 40, after much soul-searching, that I realized what I had lost and have since worked hard to regain it. I now consider curiosity to be one of the most important drivers in my personal and business life. When I learned about Chinese culture as a teenager, I became fascinated by the ancient Chinese proverb: “May you live in interesting times.” Thinking this was a blessing, I went around telling all my relatives and friends that I hoped they lived in interesting times. I was sternly reprimanded and told that this phrase is actually a curse, as peace and tranquillity is preferred over upheaval and change.

But is change really a curse? For most children, tranquillity is not really an option and change is a given. Furthermore, we all live in interesting times nowadays, so this proverb has come true for all of us. As a leader in a prominent position, I am confronted with change all the time. I even generate it myself through disruptive innovations.

The darker side of the proverb become obvious to me when I experienced the loss of my first marriage and job within a few days. Embracing change in those moments was much more difficult and painful. However, it can also be much more rewarding, as profound change has turned out to be a blessing for me. I’ve always prided myself in an  ability to adapt as it’s helped me tremendously in achieving success in international business.

Only during the last three years, working in social entrepreneurship and at the base of the pyramid, have I discovered that an ability to adapt has some major drawbacks. It made me “reasonable” and  accepting of a situation, which worked best within my framework. However, being “unreasonable” is a major driver in my quest for social innovation and better suits uncharted territories which need to be conquered and where other approaches have failed before.

Over the last few years I have unlearned “reason” and now embrace my childhood genius of “unreason.” So, dear son, what took me 43 years to realize is – becoming a leader is to stay a child. I had to unlearn many things to reveal my buried childhood abilities. That is not to say you shouldn’t learn, your mother is a teacher and she will make sure you learn!

I will rather encourage you to nurture your natural childhood leadership so that you may carry this over into your adult life.

PS: While researching the origins of the Chinese proverb mentioned above, I discovered that none exist that correspond to the English phrase. I traced it back to 1930s England, from where the ‘curse’ spread to become a household phrase. Lesson: Don’t take anything at face value.

Planting Corporate Seeds for Social Good

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Over the past few decades, many corporations have learned to tap into the expertise of social workers by creating roles for them within the corporate hierarchy. The infographic below shows how social work plants the seeds for corporate good and describes the varied roles that social workers fill within corporations.

Some companies have initiated CSR programs of their own, such as Target’s Bullseye Gives program or Pepsi’s Refresh Project, while others partner with nonprofit organizations like Habitat for Humanity or No Kid Hungry. This graphic brought to you by USC School of Social Work.

Social Work: Planting Corporate Seeds for Social Good infographic

Free download: Guide to Understanding Sustainability

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Download our free guide to sustainability and understand the origins of this crucial concept, how it creates and maintains the conditions under which humans and nature can exist in productive harmony and how a sustainably-minded future can help fulfill the social and economic requirements of present and future generations.

Click on the link below for your free download:

The Real Leaders Guide to Understanding Sustainability

 

 

What’s Your Blue Ocean Strategy?

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In today’s overcrowded market, companies compete head-on, resulting in bloody “red oceans” of rivals fighting over shrinking profits. Professor Renée Mauborgne and  W. Chan Kim, founders of the blue ocean concept, argue for creating uncontested market space. We asked Mauborgne about the benefits of this approach.   

How exactly did your Blue Ocean Strategy come about?

We have always shared an intellectual curiosity in understanding what it takes to stand apart and create strong profitable growth. In search of this answer, we looked back more than 100 years and across more than 30 industries. We asked ourselves which industries exist today that were prominent in 1900? It turns out that apart from basic industries such as cars and steel, there’s very few. Big growth industries in the past 30 years have included the computer industry, software, gas-fired electricity plants, cell phones and the café bar concept. Yet, in 1970, not one of those industries existed in a meaningful way.

The pattern continues as you dig further into the past. We have a hugely underestimated capacity to create new industries. It’s commonly assumed that the number of industries stays the same over time, but it doesn’t. If this is where the bulk of wealth has been created, then shouldn’t the field of strategy systematically explore and understand the path to new market space creation, what we call blue oceans? While our analysis did not reveal any permanently great companies or industries, what we did find is that companies, like industries, rise and fall based on the strategic moves they make. The strategic move that we found matters most is the creation and capturing of new market-space.

In industry, after industry, we observed high performing companies that did not compete – they made the competition irrelevant. They were not focused on benchmarking competitors and striving to beat them. Instead of accepting existing conditions in their industry, they challenged them and created a new demand. These insights did not square with the red ocean paradigm, which views industry conditions and demand as beyond a company’s influence. The current strategy paradigm failed to explain how to create and capture this lucrative and growing part of the market universe. This central void in the field of strategy inspired our research journey leading to the idea of “blue ocean strategy.”  

Is this business strategy sustainable? For instance, would you need to repeat a Blue Ocean Strategy every time the competition catches up with you?

Creating blue oceans is not a static achievement but a dynamic process. Once a company creates a blue ocean and its powerful performance consequences are known, sooner or later imitators appear on the horizon. However, a blue ocean strategy brings with it considerable barriers to imitation. The first barrier is often cognitive. Competitors are often blocked from imitating simply because of brand image conflicts, or the blue ocean strategy does not fit conventional strategic logic. As an example, for many years CNN was ridiculed by the industry as chicken noodle news by the established players.

The second barrier is organizational. Because imitation often requires companies to make substantial changes to their existing business practices, politics often kicks in, delaying for years a company’s commitment to imitate a blue ocean strategy. The third barrier includes the economic forces of blue oceans.

The high volume generated by a value innovation leads to rapid cost advantages, placing potential imitators at an ongoing cost disadvantage. The best way to defend blue oceans and to block new entrants into the market you have created, as long as possible, is to heighten these barriers with a constant improvement of your initial blue ocean strategy of value, profit and people.  

“Create companies that make a difference, where customers, employees and society wins.”

You suggest that organizations align these three strategy propositions – value, profit and people. How can this be done in a socially responsible manner?

First, let me back up and define what strategy is. Strategy is essentially the development and alignment of three propositions that seek to either exploit or reconstruct the industrial and competitive environment in which an organization operates.  For any strategy to be successful, an organization must develop a value proposition that attracts buyers; it must create a profit proposition that enables the company to make money out of the value proposition; and it must offer a people proposition that motivates the people working for, or with, the company to execute the strategy.

While the value and profit propositions essentially set out the content of a strategy – what a company offers to buyers and how it will benefit from that offering – the people proposition determines the quality of strategy execution. In this way, blue ocean strategy is about creating a win-win strategy where buyers, the company, and people win.

On one level, you can say that a company that offers a leap in value to buyers, rewards its shareholders through profit, and provides conditions for employees and partners to be inspired to execute the strategy, is being socially responsible, as it’s bettering all those who come into contact with that organization.

However, if an organization has a mission, beyond this, where it wants to be socially responsible in the sense of serving the community, then this could be built into its value, profit, and people propositions. With more and more buyers and employees caring about the socially responsible nature of companies, creating a blue ocean strategy that explicitly addresses this could help to make a strategy even “bluer.”  

How do businesses and individuals overcome a fear of the unknown in order to innovate their products and services?

They need to have confidence that there’s a systematic process for creating commercially compelling blue oceans. However, when most people think of creativity, imagination or innovation, they tend to feel threatened because all these require risk-taking. What blue ocean strategy set out to do was to de-risk the process of creating new markets, what we call “blue oceans,” so executives can responsibly engage in these actions in an opportunity-maximizing, risk-minimizing way.

To achieve this, during our research, we asked whether any systematic patterns existed in the way companies create new markets. This was key, because if there were patterns, a theory, tools and framework can be built which allow for the systematic pursuit of blue oceans. Our database of over 150 blue ocean strategic moves over the past 120 years confirmed that there are indeed patterns.

Based on these patterns, we developed the theory of blue ocean strategy and a set of tools and methodologies that executives could  apply in a systematic way to create blue oceans in an opportunity-maximizing, risk-minimizing way. While creativity has generally been thought of as non-systematic and unstructured, blue ocean strategy challenged that. 

The focus of our study is not on creativity by genius or of random occurrence, but on creativity that can be inculcated with a set of systematic tools and methodologies found through research. I believe that is one reason that our book Blue Ocean Strategy has had the impact that it has and has become a bestseller across five continents.  

With seven billion people on the planet by year-end, how will your business ideas influence the world at large?

I believe the power of blue ocean strategy ideas can only take on more salience as increasing numbers of these seven billion people enter the global economy and strive to have the same standards of living, and level of prosperity, as the people in the West have long enjoyed. At a most basic level, there is simply not enough water or energy to go around, and the pollution that this will unleash on our already fragile planet will wreak havoc on the environment. 

Without creativity in strategic thought and fundamentally new thinking on how we address the challenges this poses to the planet, we’re not going to overcome these strained structural conditions. I believe a blue ocean way of thinking offers the perspective, tools and framework that leaders of industry, and governments alike, can administer to address these challenges.  

Is prosperity attainable by a wider majority in the future, without being at the expense of some?

The future is something that only the heavens can answer. But if you asked my opinion on the ability of the world population to attain greater prosperity, my answer is yes. We need only to look at history to see this trend.  However, as history also reveals, those whose prosperity was based on exploitation lost in the long march of history, while those who helped create and raise the standards of living and pushed the boundaries of what was possible at the time were the greatest winners over an extended time.

To ensure you’re not a loser in the march to the future and will enjoy rising prosperity, you need to have a keen focus on how you and your organization will offer a leap in value to buyers, citizens, or people in general. Something that enriches their lives. That is what blue ocean strategy is all about.

How can you do well by doing good?

Too often those who attempt to do good, haven’t done well in economic terms. But it doesn’t have to be that way. I have seen countless occurrences in which breakthrough technologies have been created to solve major challenges in the developing world, such as brilliant innovations in health, but have never taken off. Why? The developers were so excited about what they were developing, which would solve some major need, that they failed to address what it would take to make it commercially viable in the market.

Their cost structure to produce it was either too high to make it viable, or its strategic price to recover costs was set well beyond what the market could bear. Local barriers to adoption also existed, such as distribution, refrigeration or financing that blocked the product from being successful in the market. Does that mean a gap between doing good and doing well need always exist? The answer is no. We precisely address this challenge through our blue ocean idea index.

The blue ocean idea index provides executives with tools to assess whether their idea to do good also aligns with what it takes to do well.  Through  it, executives can test if they have successfully addressed what it takes to offer a leap in utility, create a strategic price accessible to the target market, build a business model that generates profit at that strategic price, and addresses potential adoption hurdles in advance. I have faith that with blue ocean strategy, doing well and doing good can move in sync.  

Renée Mauborgne is co-director of the INSEAD Blue Ocean Strategy Institute and a professor and distinguished fellow at INSEAD in Fontainebleau, France. She is the co-author, along with W. Chan Kim, of the international bestseller Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant (Harvard Business Press).  

 

Jeff Skoll on Social Enterprise

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The first president of eBay explains why he believes both social enterprise and impact investing provide the best model to deal with global challenges.

You are clearly a man with a vision – what makes you tick?

My vision was something that started when I was a kid. I used to read a lot, and by the time I was a young teenager, I started to realize that the world of the future might be a pretty scary and unsustainable place and even back then fears of new weapons, wars and diseases were top of mind for me. So my goal as a kid was to try and make a difference to the big issues facing the world, which I thought I would do by being a writer, writing stories that would get people interested in these issues and react accordingly.

As I grew up and became more immersed in business, I started to realize that I could not only make a contribution by writing stories about people making a difference but that I could also invest in people who were making a difference in the world, hence the Skoll Foundation. I could do more than just write stories, I could find writers, and help them tell their stories through different types of media, hence Participant, my media company.

I also learned that it made good business sense to invest in companies that were making a difference in the world, hence Capricorn, my investment management arm. Through all of this, my vision is for a peaceful, sustainable world… a world of prosperity. All the organizations that I’ve helped set up are working towards this aim.

Is there a right time to start “giving back”?

As a kid growing up, our family never really had a lot of money, we weren’t poor but philanthropy wasn’t really a concept that featured in our daily lives. But, things changed very quickly for me, thanks to eBay. From the time I started eBay with Pierre Omidyar to the time we went public was only two years.

To be honest, we didn’t have much time to think about “giving back” during those two years. So my “giving back” only really started after eBay. I do however believe that you don’t have to wait until you’ve done well before you start doing good. People should consider adopting a “doing good while doing well” theme into the way they run their businesses right now. It’s OK to do both at the same time and, in fact, it makes good business sense.

How do you see social enterprise evolving and what role do you believe it can play in addressing the many challenges and threats that we face?

The last nine years have seen a meteoric rise in social enterprise. If you were to do a Google search on social entrepreneurship seven  years ago, you would have had 10-15,000 hits. Now its more than 16 million. It’s grown considerably, and the number of NGOs being registered around the world is accelerating. I think this is because the traditional institutions of the world – government, church, business, traditional NGOs – haven’t been able to solve all the issues facing us as a planet and as a society… and the world gets more complicated every day.

Social entrepreneurs are one great vehicle for solving the problems that fall through the cracks of these institutions. Their growing importance in society from a “nice thing” to have to a “really important thing” to have is proof of the emergence of this sector. For example, in the United States a Social Innovation Fund has been set up by the Obama administration, and this shows the kind of progress that is being made.

When you hear the term “social entrepreneur” being described by the likes of Bill Gates, President Obama and Oprah Winfrey as “the next great thing,” you realize that in the next seven years the conversation around social enterprise will be elevated. I really believe that the social enterprise model has the potential to become the new normal.

“I realized in my thirties that I couldn’t wait until I was sixty before trying to make a difference”  

Impact Investing – investing for financial as well as social and/or environmental returns – seems to be gaining popularity as a new investment model. Do you believe it is possible to achieve financial and social and/or environmental returns?

All investing is really impact investing because it has an impact on our future in one way or another – for good or not so good. On the day that Lehman Brothers collapsed, we got word from one of our micro finance funds in Gambia that they were returning 28 percent so the contrast was incredible. With the Skoll Foundation we do these things called PRIs (Program Related Investments) and often these investments are as good, or better, than the traditional type of investing one does.

With Capricorn we invest in a number of companies that are oriented towards social good. The reason why investing in this idea makes sense is because you are investing into a growing consumer sentiment and awareness about these things. In the long-term, just by the definition of sustainable, these things will probably be around when others are not. Measurement is important – like any kind of investment, you need to be ruthless about what you are trying to achieve.

It’s more difficult to measure a social return on investment but if you set out with some metrics in mind, you are better able to assess how you’ve done and they provide an important benchmark. There’s a different conversation going on around investment right now, than there was, say, two years ago, when it was all about riding the financial engine.

The financial collapse over the last few years has got people thinking about how sustainable that model is and my experience has been that businesses rooted in addressing the bigger social issues do in the long-run outperform those that aren’t.

How do you believe Impact investors can achieve the greatest impact through their efforts?

It is a bit tough being an expert on all things. When you’re doing impact investing, having some areas where you are more knowledgeable can be helpful. For example, in the case of Capricorn, there’s a certain amount of environmental investing that we do that has run the gamut from palm oil in Tanzania to sustainable salmon farming in Scotland to solar and alternative power-oriented projects.

It’s helpful to have something in which you are personally interested or knowledgeable about. We start with a screening process that we have developed which includes major world issues, such as pandemics, water, nuclear and climate change. Then, other things come along that you wouldn’t normally expect.

For example, a deal on waste biomass conversion or some new kind of water transport. In short, you should be as entrepreneurial in impact investing as you would in any other form of investing – but it doesn’t hurt to have some kind of paradigm vis-à-vis the issues you are trying to impact and focus on those.

 eBay Foundation, Skoll Foundation, Participant Media, Skoll Global Threats Foundation …what’s next?

All of the organizations in the Jeff Skoll Group are at different stages – Participant alone is growing like crazy. We have 70 people there and have released 23 movies in the last five years. Right now, we have more than 40 in production. Trying to work out how we integrate these different entities so that each reinforces the other is important.

So, for Larry Brilliant at the Skoll Global Threats Fund to be able to draw on Capricorn to do due diligence on certain deals relating to climate change is invaluable. To be able to tell stories about the various social entrepreneurs we work with, and then through Participant build these into the campaigns we run, is important. For now, to be smarter and more collaborative in what we do as a group is the next challenge.

 

People, Planet, Profits

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We need leaders to come up with ridiculous ideas and impossible solutions, says Mark Van Ness, the founder of an innovative real estate company.

We need, Mark Van Ness believes, greater synergy between people, planet and profit, and it is clear old ideas are simply not working. He’s in good company as a recent Harvard Business Journal and the book Megatrends 2010 share this view.

The world has reached what Malcolm Gladwell would call a ‘tipping point’ in many areas. There is the global financial crisis, the rapid melting of polar caps, increasing rates of cancer at earlier ages and politicians globally who seem frozen by a paucity of new ideas. A tipping point, in case you never read Gladwell’s best-selling book, is an epidemiological term “given to that moment in an epidemic when a virus reaches critical mass. It’s the boiling point. It’s the moment on the graph when the line starts to shoot straight upwards.”

It’s the moment when what has always worked develops terminal failure syndrome.

It’s early in the morning, and property tycoon and social entrepreneur, Mark Van Ness is sitting talking, he is wearing a casual jersey and his hair is slightly ruffled. When he feels an idea is important, he leans forward and frowns slightly. As he is now. “When I was growing up I was exposed to silly ideas. I remember my father coming home for dinner; he said he had a meeting with someone who said they were replacing cash with blue plastic cards. At the time everything was either cash or check.

You should have heard the laughter at the dinner table. My mother said there is no way I will have a card with my money in it, it is absurd. Within 10 years it went from being a silly idea to the norm.” He gives another example. “My school did a field trip to my dad’s data-processing company, and a kid asked, can you program a computer to play chess? He said, technically you could if you had enough money and time, but there is no building in the world large enough to house such a computer.

The impossible soon became a common toy!” Crazy brilliance most often comes when we have our noses to the wall and adversity baying at our back. It happened with Winston Churchill when he became prime minister of Britain during the Second World War; he was the man for the moment, he was able to navigate through crisis in ways he could not quite achieve in peacetime.

FW de Klerk did it in South Africa when the economy of the country he was president of began splintering under sanctions pressure. He did the unthinkable, he released Nelson Mandela and not only brought previously unimaginable prestige to a pariah nation, but also became a model of how to avoid war. Van Ness has had to find the resources adversity impels in small and large ways. He was booted out of home at the age of 17 by his Catholic parents for not going to church one Sunday.

Fortunately he had been working three jobs a day after school since he was 15: working in the stock room of a tool manufacturing company when he wasn’t going door-to-door as a Fuller brush salesman or working in the evenings at a drive-through mini-market. By the age of 18, he had already saved enough to make his first real estate investment! Looking back, he is sanguine, “Growing up, one of the basic values we learned was self-sufficiency.

As the sixth of eight children, I knew that if I wanted a car when I turned 16, I had to start saving from the age of 11.” But finding himself on the street was, not surprisingly, a life-defining moment; faced with adversity, Mark began scanning his environment. “I had a friend whose father was a property investor. I liked his lifestyle – one day I would see him taking golf clubs out of his car in the middle of day and another day he helped paint one of his buildings, whereas my dad worked very long days.”

And so Mark went into real estate and after a few years formed Sperry Van Ness with a colleague, whom he later bought out. The business grew rapidly, and today its 150 offices transact several billion dollars a year, but today’s success cloaks an important story of challenge, setbacks and a process where shared values helped create value. In 1990, three years after Sperry Van Ness was formed, Mark decided to enshrine company values in what he called a Core Covenant.

“Initially we didn’t need to write our values because we were living them every day. Then when we expanded outside our region I hired someone else to manage it; I noted after some months that it did not convey our company values. So I pulled together senior advisers, managers and staff and had them define the values of the organization.

Today, the Core Covenant enhances our culture of collaboration, attracts and retains people in the organization and also helps resolve disputes. It is the basis of our competitive advantage.” He believes that companies that lack active values “will go the way of the American car companies that ignored the quality management movement. This time it’s about social and environmental sustainability.”

And investor attention has shifted to it: “Oil and tobacco companies, as examples, may appear great investments but are really very risky. In 100 years, oil will not be our primary source of fuel. There is a trend now for investors to gravitate to renewable energy, as an example.” Real leaders can inspire businesses and NGOs alike to operate more financially sustainable operations.

For example, is it more worthy to donate food to people or to teach them how to plant and harvest crops? One enslaves societies into dependency, the other transforms and liberates. Real leaders, he says, are operating in a way that is wise and sustainable for people, planet and profits. But even that is not enough to weather economic storms; only ‘absurd’ ideas do that. Sperry Van Ness quintupled in size from 2001 to 2007. And then the storm clouds of the global financial crisis began gathering and Sperry Van Ness was struck by lightning. Volume in the industry dropped 80 percent in one year.

“The challenge was to restructure enough to be profitable, with only 20 percent of the volume. Two presidents insisted it was impossible. Finally I sat down with the executive team and a white board and said we need to start a new company, as if the old one went out of business.

“We started with a clean slate and the only member of the executive team to get the vision was promoted to president. Kevin Maggiacomo implemented the vision and restructured the company to be profitable at 10 percent of the previous volume and yet provide more value than before!” Yet again adversity presented a door, and Mark Van Ness saw it as an opportunity and had the courage to turn the handle.   axis   Mark suggests that the way to optimize the success of any individual or organization is to use a basic axis (pictured above). “Be on a path where you are moving toward the top right quadrant, where you are prospering by doing good for people and the planet. This is where life works with much less effort and the only place that is sustainable.

The (top left quadrant) traditional charity model has great intentions, but perpetuates dependency and is not financially sustainable. “Some (bottom right quadrant) are living in the old world that justifies short-term profit at any cost, and may be producing that which is unsustainable or profit while harming society, like tobacco. “Look at educational systems (bottom left quadrant) that are losing money and failing society; globally we are failing children with educational systems.

But what if we had video games that assisted with basic math, calculus or problem solving? In Los Angeles, ‘The Entertainment Capital of the World,’ there are more than 100 languages spoken in the failing school system. If the local entertainment talent was redirected from violence (to the top right quadrant), they could produce non-language based video games that are edutainment, done in a way that kids enjoy learning.

This could be transformative for education globally! “We are still trying to teach kids in conventional outdated ways. What if we transformed education from boring to fun and easy to learn?” Radical = transformative. The need to strike a better balance between people, planet and profit is everywhere, and it is compelled by population growth.

“Look at the population graph for the last 10,000 years, it is a vertical spike, but for the first time ever, populations have doubled in our lifetimes and will treble before we die. That’s another six billion people this one little island we call earth has to support. Imagine the impact of adding two more Chinas, two more North Americas, two more Indias, two more Europes all in your lifetime!

“Think of the earth as an organization that plods along with low growth for years and then suddenly triples in size; it puts tremendous pressures on employees, leaders and existing systems, which become ineffective under the added strain. That is what the human race is looking at; if we don’t rethink and restructure all our systems and way of leading with an eye toward long-term social, environmental and financial sustainability, we will go out of business as a species.”

 

Why the Corporation is Failing Us and How to Restore Trust in It

Posted on by Real Leaders

Trust and confidence in our economic and financial institutions has collapsed. The last few years alone have witnessed accounting, banking and corporate tax scandals; environmental disasters; financial crises, fraud and money laundering at unprecedented levels. The pace and scale of the failures is intensifying and look set to increase in the future. Colin Mayer, Professor of Finance at Saїd Business School, University of Oxford, has published an outspoken book Firm Commitment on the breakdown of trust – its causes, consequences and what we should do to fix it.

He places the corporation at the centre of this failure of trust and at the heart of our current problems. He argues that the corporation is no longer serving the interests of society at large and has been hijacked by one particular interest group, its shareholders. ‘The corporation is arguably the most important institution in the world – an institution that employs us and invests our savings, and is the source of economic growth and prosperity around the world,” explains Mayer.

“Yet the corporation has lost its purpose and become dominated by short-term financial concerns to the exclusion of all others and to the detriment of us as its customers, employees and communities.” This is not a theoretical debate but one of urgent importance for economies around the world and Mayer calls upon policy-makers and senior business figures to reform the corporation and he sets out a practical programme of measures focused on its ownership, values, governance, regulation and taxation. Some of the solutions he argues for are:

  • that corporations take responsibility for the consequences of their own conduct and to place control in the hands of long-term committed shareholders;
  • clearly articulated values with truly independent boards of directors responsible for ensuring that those values are adhered to;
  • tougher enforcement of regulation where corporations breach laws and threaten systemic stability but less intrusive regulation elsewhere;
  • the use of the corporate tax system to align the interests of corporations with those of society at large.

Many of the most successful corporations in the world today already display these characteristics. Tata, the Indian conglomerate, owner of Jaguar Land Rover and Corus Steel, is controlled by a foundation that is responsible for ensuring that its operating companies abide by the group’s principles and values. Bertelsmann, the media company, Carlsberg, the brewery, and Robert Bosch, the automotive components company, have similar arrangements.

“We can no longer look to regulation as the sole instrument to control the corporation’ says Mayer.  “Instead, re-establishing trust in the corporation is one of the most important policy issues of the 21st century.

Without it, economic policies will fail, environmental degradation will continue and financial systems will collapse. With it, we can achieve far greater levels of economic and social well-being than at present.”

Colin Mayer is the Peter Moores Professor of Management Studies at Saïd Business School at the University of Oxford and is a leading expert on issues of corporate governance and regulation. Mayer’s research is currently concerned with international comparisons of financial systems and corporate governance and their effects on the financing and control of corporations. Established in 1996 the Saïd Business School is one of Europe’s youngest and most entrepreneurial business schools with a reputation for innovative business education. https://www.sbs.ox.ac.uk/research/people/Pages/ColinMayer.aspx

 

From Financial Success to Significance

Posted on by Real Leaders

As leaders, many of us think that we’ve already succeeded in one or more aspects of our lives. And we have. Many of us have been blessed with the opportunity to create much financial success for ourselves and those around us. Yet, how many of us will be able to say that we’ve achieved significance when we look back on our lives? As you reflect on your life, what do you want to accomplish?

Have you achieved some life goals beyond financial success? Most of us have developed business plans but very few of us have life plans. Do you feel that you’ve succeeded in areas that are meaningful? Have you left the mark that you would have liked to, in a significant way? Beyond your children, what is your legacy? These might seem like a lot of questions, but asking them now, and setting life goals early in life, is much more empowering than saying on your death bed one day, “If only I’d done more with my life…” after all, we all know that we won’t be saying, “I wish I’d spent more time at the office.”

After many years of sharing ideas with fellow CEOs on life planning, and based on my own personal experiences, I’m convinced that the progression from financial success to an increased focus on significance strikes a true chord with many of us. We all have dreams and goals that are significant on a personal level.

Defining these as part of a life plan that gets revisited often is a process that can help make your dreams a reality, much the same as a business plan helps organizations stay focused. On a broader, global scale how do we, as business leaders, take our time, skills and talent and become real leaders – truly making a difference? Setting personal goals and giving back have been so compelling to me as a father, son, husband, philanthropist and businessman that when I founded my current (and last) company – STS Capital Partners, an international, strategic mergers and acquisitions firm – this was at the core of our mission; that is to help families and entrepreneurs on their path from Success To Significance.

I wanted to start an organization that would help position families directly with strategic investors, resulting in them having the flexibility and liquidity to work more on charitable and other missions; becoming catalysts for the creation of new philanthropic endeavours. There are many successful leaders and consultants available to help others create value and significance, whether it’s maximizing financial assets to enable funds to be channeled to family foundations and charitable causes, or simply accomplishing objectives that are more personal.

Imagine not having any regrets when you reach the end of your life. I have compiled my personal list of best practices on life planning over the years and compiled this into a presentation called Everyone Has Their Own Everest: What Is Yours?. The presentation is not about me, but rather about you. If you had all the time, money, freedom and energy in the world, what would you set as your stretch goals? Why not set them now?

You can achieve almost any goal if you actually re-program your subconscious mind by believing that you are limitless and you can achieve anything you want in life. When I established the goal of climbing the Seven Summits, I had never climbed a single mountain before – that didn’t stop me from setting an ambitious goal.

Doesn’t it seem a lot more prudent to ask the question “what if”, today, and in so doing expanding the view of your life to achieve these goals? Doing this now means you begin to act on them, rather than leaving them floating around as dreams. A practical way of making this happen is to spend a weekend, with your partner, making a list of everything you really want to do before you die. Put a five year deadline on achieving these goals, with a deadline in year four that sees your action plan ready for launch the following year.

This is how you will achieve your goals, and how my partner and myself made it to the top of Everest. It’s hard… but it’s also exciting, empowering and energizing. We have been so conditioned as humans to resist change and not stretch ourselves beyond our comfort zone that we forget what we are capable of. Integrating your life goals with solving some of the world’s problems around us is the next step for many of us.

Many charities and organizations that serve the less fortunate have huge mountains of their own to climb. Helping them reach their summits can often be an important step in creating a lasting legacy for yourself. Everyone has their own Everest, what’s yours?

Rob Follows is CEO and founder of STS Capital Partners.  www.stscapital.com

 

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