Last month, I wrote that your company’s response to the coronavirus might redefine your brand. We know from experience that nothing defines a company, its culture and its brand more than its response to a crisis.
For corporations, crisis response has gotten a lot more complicated as information has become democratized. With internal and external social media tools, today, sensitive and detailed information a company would prefer to keep isolated to internal, “need to know individuals,” routinely become known to larger audiences. This can be deeply revealing of the stuff of which a company is made.
This transparency, plus consumers’ and workers’ heightened expectations that companies “do good” have helped usher the rise of the “social enterprise.” This is a business that has pro-social objectives integral to its purpose. Rather than seeking to maximize profits and shareholder value, as has been the unbridled number one priority for many companies, a social enterprise seeks to optimize or balance profits with societal and environmental benefits.
It has been argued that corporate focus on driving investor value above everything else has dimmed the American dream for average workers: earning enough to buy a home, to educate and lift their children above their own station, and to save for a comfortable retirement.
The social enterprise seeks to take better care for workers, as well as suppliers and the communities in which they operate. This goes well beyond corporate social responsibility — a “do-no-harm” or “leave a small footprint” position – to putting positive social purpose at the core of the business. It is also not the same thing as brands using marketing and PR to weigh in on social issues in the public zeitgeist, although a social enterprise is arguably best placed to do so.
Deloitte has studied the social enterprise over several years. In their 2019 Global Human Capital Trends report, they highlighted CEO survey results that found “impact on society, including income inequality, diversity, and the environment” reported as the CEOs’ most important success measure in 2019. CEO awareness is a good first step, but as Deloitte summarized… companies with the ambition to become a social enterprise must embrace broad reinvention.
There are encouraging signs. Last August, members of The Business Roundtable, an association of CEOs from some of America’s leading companies whose focus is to promote a thriving U.S. economy and expanded opportunity for all Americans, announced a redefinition of corporate purpose to benefit all stakeholders: customers, employees, suppliers, communities and shareholders. Signed by 181 CEOs, their statement affirms, “Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”
Currently, the COVID-19 crisis is testing all companies’ commitment to social purpose, and the stakes are high. Fleishman-Hillard published findings from a new six-country consumer survey (US, UK, China, Germany, Italy & South Korea). Eighty-nine percent of consumers said they expect employers to be generous and creative in mitigating the impact of the pandemic on their workers.
Perhaps the massive disruption caused by the pandemic and the attention to how companies are responding will see more rethink their purpose. And for startups, embracing the ethos of the social enterprise early is a business opportunity. This could be one silver lining to all of this.
However, companies are facing incredibly difficult decisions — right now — and without social purpose already at their foundation, some leaders may find themselves without a much-needed North Star.