Do Good, Make money & Change the World?

As we, at Hatch, started designing our Beyond Good Business conference in May, we had to ask ourselves what is ‘Good Business’? And what would we like the future of business to look like? Through reflection and research, we found three main indicators of good business that are particularly relevant in today’s environment. Good business provides supportive workplaces for employees, values purpose as well as profit and is inclusive and innovative.

Workplace wellbeing is an idea that has gained significant traction and importance over the past few years. Traditional large businesses are facing higher levels of competition from disruptive startups and scale-ups, such as Airbnb, which are known for their collaborative workplace culture among other, non-financial benefits to employees (flexible working, health, travel and holiday benefits).

We’ve also noticed a shift in millennial workplace expectations, which businesses must adapt to if they expect to retain top talent. Generation Y, those born during the 1980s and early 1990s, are increasingly placing more value on a company’s mission and workplace environment than on salary and pension alone. According to the Deloitte 2017 Millennial Survey, 38% of millennials would still leave their jobs within two years if given the choice of working for a purpose-driven business. The survey data showed that businesses that “engage in issues of [social and environmental] concern relevant to millennials are more likely to gain their trust and loyalty.” (Deloitte).

This desire to combine purpose and profit is not a new concept. Even old industrialists realised that more has to be done than just making money.

“Business must run at a profit, else it will die. But when anyone tries to run a business solely for profit, then also the business must die, for it no longer has a reason for existence.” – Henry Ford

Considering the various societal challenges we are currently facing, business should, no – business must do more to address these. Especially larger organisations that control much of what we eat, drink and consume in our daily lives. The 2016 report released by the Advisory Panel to the Mission-led Business Review (MBR) highlighted the importance of purpose in business, claiming current societal challenges are too big for the government or the social sector to tackle without the help of business.

Purpose is not only important to employees, but is also reflected in consumption patterns. Consumers are increasingly willing to pay more for ethical products. Without profit however, business growth stagnates. Making money is a necessary condition for pursuing the higher purpose of the business. It is therefore important that companies find the right balance between profit and purpose to optimise their business.

We already know that innovation and inclusivity are not only key to ‘good business’, they are essential for sustained success. But corporates are newly waking up to the reality that startups are disrupting entire industries from the bottom up. Those that are innovative see them not as a threat, but as potential partners who can add great value to their business.

Corporate-startup collaboration has benefits for both sides. Startups acquire market knowledge and experience, develop economies of scale, gain established networks and brand power, along with other considerable resources. Corporates can develop and test new technologies with less costs and risk when working with startups.

We are enthusiastic about exploring the intersection of passion and profit, and more specifically, how societal challenges can be addressed by collaboration between large corporates and mission driven businesses/ startups.

Our upcoming conference Beyond Good Business 2017 will allow attendees to engage with successful examples of startup-corporate collaboration. We will explore contentious topics to find the right balance between profit and purpose, and our amazing speakers will offer deep insights into national and international best practices on the topic.

This is a conference not only for practitioners, entrepreneurs and innovators but also for those interested in finding out what policies are driving more mission-driven business.

 

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Is startup-corporate collaboration working?

It’s been a longstanding fascination with social enterprise that has led us, here at Hatch, to support business models that achieve a dual purpose. We meet and work with entrepreneurs on a daily basis and consistently find that they don’t just want to start a business to make money, but to contribute to more sustainable and equitable communities as well. Generally, we would call these businesses social enterprises, but the definition is becoming increasingly too narrow.

Instead, we are expanding and are reaching out to those entrepreneurs who want to derive profit, while producing mission-related benefits. This spectrum ranges from for-profit companies that give back through corporate social responsibility programmes to social enterprises that earn a profit through tackling social and environmental issues. For these companies, both profit and purpose play an integral role in the success of the business.

These days, every organisation needs a clear and visible reason for existence, especially as our world becomes increasingly noisy and complex. Understanding the organisation’s purpose provides a true north, a guiding light for the company’s culture. People will work harder and smarter when they know their efforts are not only serving monetary goals, but are contributing to something bigger.

While Hatch supports a whole range of entrepreneurs and startups, including mission-driven businesses, it was our contact with larger corporate partners that made a lasting impact on how we work, and on our business model. Thanks to our collaboration with Deutsche Bank and their Made for Good Programme, we were able to support over 50 mission-driven startups in South London, whilst building a strong employee engagement module to further assist these startups through mentoring and financial coaching. For some of these startups, the relationships that they could foster through our corporate partner would not have been possible in isolation. It was an active process of brokering connections that advanced the entrepreneur’s professional relationships, and provided them with the knowledge and expertise to help best run their business.

By facilitating connections between these corporate partners and startups, we get to share valuable resources with small businesses, whilst at the same time, enabling the large businesses to engage in social or environmental issues that they wish to address. We’ve also seen and worked with similar ecosystems that are growing here in London and in places like Rotterdam (Enviu) and Berlin (Social Impact Consult). It’s not easy to instigate systemic change, of course. In fact, it’s really quite difficult. But there are so many good examples around that we simply cannot ignore the benefits of bringing together mission driven-businesses, large corporate partners and intermediaries and support agencies.

Take for example Dell, who’s CEO Michael Dell, claims working with startups is a key strategy to “building a more entrepreneurial and innovative corporate culture” (Nesta, 2016). Or, Rabobank, whose startup programmes allows them to “establish a culture of constant internal learning about future trends and technologies”(Nesta, 2016).

With Beyond Good Business, our conference taking place in May, we want to explore the potential for established, large companies and startups to work together to address specific challenges we face, whilst building thriving businesses. It’s not only us who are obsessed with building bridges between newly and long-established businesses. We have met friends and partners from all over the UK and Europe who are on a similar mission. By bringing together players from the different groups, and showcasing cases of successful collaboration, we hope to foster meaningful connections for potential partnerships.

Building and sustaining purpose-driven businesses is one of the most fundamental shifts in the enterprise support sector, alongside commercial, often venture capital, backed for-profit businesses. We believe there is a real opportunity here to address society’s problems, share innovation, achieve faster product-market fit, increase workforce engagement, and deploy capital with sustainable returns.

 

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The National Lottery Community Fund are invested in helping civil society organisations to develop their resilience so that they are in a stronger position to pursue their goals.

One way of developing that strength is to build financial resilience through generating unrestricted income.  Social Investment – the offer of repayable finance for organisations delivering a social purpose, from an investor who is looking for both social and financial return – can help.  It is especially useful for civil society organisations who struggle to access high street loans and, for those who are looking for investors who share their values.

Social investment can also be structured so that it is useful for commissioners and civil society organisations who are working together on early action and innovation around complex social issues; it can help by covering costs until preventative outcomes have been achieved, which in turn release funds – that may otherwise be locked up in acute care services – to repay the social investors for the preventative intervention they have financed.Since the Fund’s work in social investment began in 2010 they have commissioned a number of evaluations and research studies.

These include some in-depth, long-term evaluations which will generate a number of reports between now and 2023. You will find the reports here: https://www.tnlcommunityfund.org.uk/insights/social-investment-publications