How Cause Capitalism Helps This Underdog Lead the Pack

Cause_Capitalism_Lead_PackHow many Staples do you have in your neighborhood? I count three of the ubiquitous office supply stores within a 2.5-mile radius of my place. I’m about to introduce you to a man who doesn’t just provide an alternative experience to the titanic chain, but runs an incredibly successful business.

But first, let’s understand how big Staples really is. As the largest office supplier in the world and pioneer of the office superstore concept, Staples netted $23 billion in sales in 2008, or twice as much as Office Depot.

So how does one man earn a chunk of Staples’ market share by doing good and earning a profit?

I interviewed Mike Hannigan who founded Give Something Back with Sean Marx in 1991.  Give Something Back is now the West Coast’s largest independent office supplier with corporate offices in three cities and 12,000 clients and 40 distribution centers nationwide. You’re reading about Give Something Back now, not because of the company’s overnight delivery or tremendous selection of recycled products, but because it donates all after-tax profits to nonprofits through a balloting system that involves its customers and employees. Based on Newman’s Own business model, Give Something Back has donated more than $4 million (80% of its accumulated profits) to nonprofit organizations in the last 18 years. In 2007, Mike and his team did $26 million in sales.

If you’re inspired by Mike’s success in running a profitable business and doing good in the world, I offer some guiding principles to get you started:

Stand for something beyond profit.

Mike and Sean were successful salesmen in the office product industry. When the company they were working for sold, they decided to channel their rainmaking skills into a business that provided a level or satisfaction (or challenge) beyond money. Their plan was to make a profit on behalf of a new set of stakeholders, which included their community, the environment, employees and customers.

Offer your consumers something your competitors don’t.

When customers choose Give Something Back they are getting the same prices, selection and service as a Staples or Office Depot and the opportunity to help others. “That gives us stickiness with our customers that I think other companies don’t have,” says Mike. “We have better customer retention than Staples, for example.” As increasingly more research suggests that consumers prefer to do business with companies that have an identifiable impact on their local or global community, Give Something Back has a competitive advantage by doing just that. Imagine your monthly routine of ordering copy paper, pens and Post-It Notes.  Now imagine the perk (small perhaps, but experienced through a mundane task) of knowing that your order will directly fund nonprofits in your community. Given that prices are competitive, Give Something Back’s model is a alluring, and presumably addicting.

Bring others into your mission.

Give Something Back involves you in its mission by granting you equal participation. As a customer, your experience only begins when you order toner and paper clips. You engage in the balloting system to choose which nonprofits receive money and how much they get. Now imagine passing your local Boys and Girls Club on the train to work every day and knowing that you are a contributor to the organization and its boys and girls.

As key stakeholders of Give Something Back, employees are equally involved in choosing which nonprofits to support. Worth noting that founders Mike and Sean get the same one vote as everyone else.

Practice transparency.

Share your successes and be open about and accountable for your mistakes. People will be curious (at best) and skeptical (at worst) about your do-gooding intentions. The more transparent you are, the less room you allow for skepticism. Mike also cautions that “as the social ethic begins to demand more responsibility and transparency on the part of businesses, those business that don’t accommodate this new customer need will suffer a competitive disadvantage.”

As more consumers and employees expect companies and employers to make a social or environmental impact, in addition to profit, Give Something Back provides some persuasive areas of inspiration for where to begin–be it as a consumer shopping for office supplies, an employee or employer or a seasoned CEO or colt entrepreneur.

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  1. Sloane Berrent August 17, 2009 at 6:09 am #

    Excellent points Olivia. Each one of them – you have to be doing something for the right reasons, you have to convey that to your base, you have to follow through – and if you mess up – you have to talk about it.

    It seems so simple – yet so few companies get it – so few consumers ask for it. I’m glad you’re talking about this subject, it’s crucial for the future of capitalism in our country.