Why integrate a social mission into your business?

You’re an entrepreneur with an idea and maybe a business plan, a small-business owner or the head of mid-sized company.  To expect you to add social purpose to your business just because it’s a good thing to do, is foolish.  You have a bottom-line and other obligations to meet.  You don’t have extra resources to allocate to ‘doing good.’

But doing good is a business strategy, not merely a moral argument or trend.  Businesses with a strong social mission have a competitive advantage.

1. People will talk. consumers, competitors, investors, suppliers and the press.
2. Increased productivity and employee morale.  People want to work for a greater purpose and want to know that their work makes a difference. Employees who are happier work harder and smarter because the work has become personal.  These type of employees are advocates for your company, not just employees of it.
3. Consumer preference. Consumers prefer companies that make a positive impact on the world.  Eighty-three percent of U.S. consumers want more of the products and services they use to benefit causes (2010 Cone Causes Evolution Study) and 62% of global consumers will switch brands if one works with ’good causes’ and the other does not (Edelman, 2010).
4. Innovation.  More companies like Nike, GE and Interface are using sustainability to drive innovation. Seventeen years ago, the late Ray Anderson, who served as Interface’s CEO, committed to becoming a zero-waste company by 2020. Since then, Interface has eliminated hundreds of millions of dollars in resource and waste disposal costs, increased sales by more than one billion and changed the way the entire carpet industry does business.
5. Influence.  Your company’s initiatives will be modeled as more companies realize the benefits of having a social mission.
6. Lower marketing costs.  Your mission will help your marketing. A line of grocery products founded and once produced by Paul Newman (Newman’s Own) is a somewhat banal story that merits only a mention in the press. The fact that the company donates 100% of profits to charity is a story that sticks, intrigues and encourages participation through purchase.
7. Talent recruitment.  People want to work for employees that care; a social cause is indicative of a favorable workplace.
8. Attract talent for less. Kevin Jones of Good Capital calls this “meaning premium.”   People want to work for a company that allows them to contribute to a greater purpose and are willing to be paid less for the opportunity (NB: this isn’t an argument for underpaying employees).
9. Attract young talent.  Teach for America is a top employer of exceptional college graduates. Last year 12% of  seniors at Ivy League schools applied to work with Teach for America, vying for one of the most challenging and low-paying jobs out there.
10. Talent retention.  When employees are part of a larger mission and feel their contributions make an impact in the world, they’re engaged, proud and motivated.
11. Savings in resource and disposal costs. You’ll save money by reducing energy, water and material consumption. Producing less waste and reusing water or materials costs you less to purchase and less to haul away.
12. Supplier advantage.  Stonyfield Farm pays its organic suppliers a floor price that won’t ever drop, protecting its suppliers from market swings and production hiccups. In return, when supply for organic milk or sugar outpaces demand, Stonyfield is first on the delivery list and is guaranteed a fair price because it’s built a relationship with its suppliers.
13. Risk management. Being in tune with your stakeholders alerts you to potential risks and helps you safeguard against them. An offshoot of this is that your company is better informed and positioned to identify new business opportunities.
14. Future-bound company.  Successful companies that others evangelize and model represent more than just a product or service. They represent a philosophy, culture or experience. When you channel this back into your business, you’ve made your competitive edge that much more edgier.
15. Fun.  Science proves what most of us know–making a difference feels amazing. We feel happy, enlivened and creative.

Your company (1, 5 or 200 employees) is the ideal size to run a purpose-driven business. Although larger brands get more attention for the resources they can bring to their campaigns your company holds an advantage.

1. You’re more agile. You can plan, execute, track and revise nearly on-the-fly. Less memos, less approval, less internal politicking diluting the programs.
2. You can take more risks with your social mission. You have less of a reputation to uphold. You can be a renegade, a heretic, recognized for your commitment to social change and your willingness to try new ideas.
3. You face less financial accountability. Smaller companies aren’t held to the same monetary expectations as larger ones. Your programs’ strength lies in their impact and effect rather than your company’s financial commitment.  A big brand cosmetic company’s one-time campaign cost $500,000 in an upfront investment to its partner charity, the cost of a micro-site and prize expenses, and delivered just a luke-warm impact. Your cosmetic company can affect people more directly by offering products and makeovers to women re-entering the workforce in partnership with a workforce re-entry program and your local Dress for Success chapter. Cost? In-kind only.
4. You have a fresher slate. Small companies are often seen as more personal, less greedy and less noxious. There’s less initial cynicism of your motives and choices.
5. You entice stronger non-profit partners. Smaller companies are rarely able to attract (nor should they try to) the top crust of non-profits.  With fewer wooers and less brand value, a regional non-profit will be more willing to commit time and labor to the project, as opposed to just a sliver of its name recognition.
6. You can galvanize your employees around your mission more easily. As companies need to convince consumers of their sincerity, they also need to convince their own employees. The smaller a company, the shorter this process. Employees help determine the social mission, shape it and execute it.
7. You have more of your customers’ attention.  Generally, the larger a company is the more we view it as a commodity and the less likely we are to see it as an educator or driver of good. Would you be more willing to support a pin-up campaign at Walmart or your neighborhood cupcake bakery? One of your advantages as a smaller business is the frequency of touch points that you have with customers. Use these opportunities to bring them into your mission through storytelling, contribution and advocacy.

Having a social mission is not a drain on company assets or a tangential program, it is a business strategy that yields a competitive advantage, which smaller companies can better leverage.

How to let your mission guide you:
Your mission should guide your decisions, but sometimes you’ll have to prioritize long-term mission over short-term consequences as Organic Valley did when it shipped milk from Ohio to North Carolina to help farmers there start a local business. The short-term compromise was the environmental impact of shipping milk so far. However, this decision empowered a new region of family farms which advanced Organic Valley’s mission to “support rural communities by protecting the health of the family farm.”

No, you don’t have to be a socially driven company to lead with mission and other myths:

1. Mission as your primary product is not just for socially responsible companies. Virgin Atlantic’s rock and roll irreverence drives its brand and distinguishes it from a homogeneous fleet of airline carriers.
2. Mission-based decisions don’t just apply to cause marketing or employee volunteer programs. They impact every angle of the business, from market expansion and labeling to recruitment, employee training and compensation, to investor and supplier relationships.  
3. Your mission doesn’t have to be sexy to be successful. My favorite example of a company that’s turned an unsexy mission and service into a paragon of business done well is the online shoe retailer Zappos. With exceptional customer service as its North Star, Zappos has grown into an innovative and extremely successful company.
4. Your mission is not immutable. You can upgrade it. Interface’s mission didn’t always begin with ”Interface will become the first name in commercial and institutional interiors worldwide through its commitment to people, process, product, place and profits” and end with “We will honor the places where we do business by endeavoring to become the first name in industrial ecology, a corporation that cherishes nature and restores the environment.”  The company’s products, values, resource use and profits-base shifted 16 years ago when Interface’s CEO Ray Anderson committed to changing the way the company did business.

During an interview last week with enlightened entrepreneur Chip Conley he mentioned that his company, Joie de Vivre Hotels, focuses its investments in culture rather than marketing.  As I love culture (both the corporate and international strains), this appealed to me and set me to wondering if we’ll someday have Chief Culture Officers.

I did some digging and found a video clip of Chip talking about why his company decided to invest in company culture (specifically employee training) rather than in advertising during the travel industry recession in 2001.

Instead of spending big money to sell customers the comforts and unique delights of Joie de Vivre, the company decided to invest a much smaller sum into staff training.  Chip anticipated that imparting service-level employees with “a sense of calling” for what they’re doing would translate into great service experiences and lead to long-term profitability rather than an advertisement-induced uptick. He was right.

Housekeeping and front desk staff, bartenders, etc., were taken off-site for a day (employees from the nearest JDV hotel covered their shifts). They were given information about the company and asked to create a strategy for the hotel. Bringing all employees into this information and creation process yielded tremendous results for the hotel chain.  During the recession, 2001-2003, employee turnover rate dropped to 24% (the industry standard is 70-100% turnover in one year) and employee satisfaction scores “went off the charts,” says Chip.  Employees felt more connected to their work and its purpose, which reflected clearly in customer satisfaction scores and loyalty.

Like Chip’s approach? You can read more about these service retreats and their impact, as well as other initiatives in PEAK: How Companies Get Their Mojo from Maslow.

Click the player to listen to my 20-minute conversation with Chip or right-click and save for the MP3.
Download audio file (Cause-Capitalism_Chip-Conley.mp3)

Maslow’s theory is represented in a pyramid that ranks human needs in an ascending order from base (security, food) to love and esteem to self-actualization.  Chip applies this framework of human needs to create employee, customer and stakeholder satisfaction, ultimately strengthening a company.  His book PEAK: How Great Companies Get Their Mojo from Maslow is an operating manual for businesses and an account of how JDV pulled ahead during an industry-wide recession.

While company profits were bombing post-9/11, Chip worked to stabilize 80% of Joie de Vivre’s (JDV’s) workforce, the line-level employees, by forgoing layoffs and maintaining salary levels. Having job security and their financial needs met, freed employees to focus on their work rather than an anticipated loss of income.  This feat wasn’t without sacrifice, however.  Chip didn’t take a salary for three years and for two and a half years senior executives took a 10% pay-cut and all managers took a pay-freeze .  ”It was a great lesson for me to see how we [as a company] can actually adjust to meet [people's] higher needs,” says Chip.

When I asked him how he persuaded management to accept the cuts, he pointed to the strength of JDV’s culture.  ”If you have a great culture, it leads to people being willing to do things they might not be willing to do in a different environment.”  For this reason, JDV invests much more in company culture than in marketing.

In PEAK, Chip talks about how he cultivated the company’s culture and how its nearly 3,000 employees, from maids to bellhops, see the purpose and impact of their work.  ”I think great companies are able to move their employees up the pyramid so that more of their employees are living a calling [rather than a job or career],” he says.

About Chip Conley
Chip is the Founder and CEO of Joie de Vivre Hospitality and author of PEAK: How Great Companies Get Their Mojo from Maslow and The Rebel Rules: Daring to Be Yourself in Business.  He founded The Phoenix hotel in 1987 at the age of 26, naming it Joie de Vivre because he was looking for joy in his own life.  JDV is a collection of 33 small, upscale hotels throughout California annual revenue near $250 million. Last week John Pritzer of the Hyatt Hotel family bought a majority stake in JDV Hospitality, which will allow the company to expand nationally.

Like this interview? You can thank Chip on Twitter like this and follow him at @ChipConley.

A year ago NetApp was working to build employee awareness around green transportation choices, but lacked the budget for hybrid credits or comped metro passes.  A lack of C-level funding pushed NetApp’s green team to get creative and draw on an intern’s skills in programming and gaming.  Said intern wrote an application to facilitate employee carpooling by matching people based on where they live, time of day preferences and days of the week.

Doubtless, this solution is less glamorous than doling out car credits and premium parking spaces for hybrids, but it’s still effective at tackling the company’s and employee’s goal of reducing their transportation footprint.

If you can’t (or don’t care to) replicate Clif Bar’s hybrid rebate programs, for example, the alternative isn’t nothing. It’s coming up with something new. In the case of NetApp, it was first bringing employees into the dilemma, and second  leveraging an intern’s skills and passion.  Cost?  Free.