Raymond Smithberger February 05, 2020
Throughout my 20-year corporate career, I was
often asked to step into complex situations and help fix what was broken. Most
of the time, I followed a simple formula: Break down the problem into smaller
pieces, focus on the pieces with the greatest impact, talk about the problem in
terms that were understandable, and solve the parts of the problem with the
biggest impact.
What I often found was that we, as humans,
tend to make things more complex than they need to be. We use acronyms, create
new buzzwords, and add extra steps to give the perception of creating value or
doing work. Most of the time that added complexity creates confusion which in
turn diminishes the effectiveness of the organization and can lead to more
problems.
I’m approaching my one-year anniversary with
seedership. During the past year, I have talked to hundreds of community
leaders, small business owners and employees of those small businesses and I
have found a problem: Our society has made the simple act of making a
difference in the community difficult to understand. Let me share why.
Take for instance these buzzwords:
“Philanthropy,” “Corporate Social Responsibility (CSR),” “Triple Bottom Line,”
“Conscious Capitalism,” “Social Enterprise,” “Cause Marketing.” These are all
terms and theories used to describe business involvement in the community. When
done right, it’s simply showing that you care in an authentic way.
This type of corporate jargon can create
confusion for small business owners. So, I looked at this situation similar to
how I looked at the problem during my corporate career and broke it down to
smaller parts so I could better understand. I found there is a common theme and
it boils down to one simple formula.
The Evolving Focus In
Business
There is a heightened focus on how businesses
operate and the impact they have on the communities in which we live, work and
play. Last year, the Business Roundtable issued a statement signed by 181 CEOs
of major U.S. corporations - including Apple, Coca-Cola, FedEx, JPMorgan, and
Walmart, modernizing the definition of their purpose to work for the
benefit of all stakeholders – customers, employees,
suppliers, shareholders and the communities where they operate. This is a huge
philosophical shift away from the age-old notion that corporations exist
principally to serve shareholders.
In January, the CEO of Blackrock, the world’s
largest investment firm, shared in his annual letter that the company is
overhauling its investing strategy to make sustainability the “new standard for
investing,” which will include launching new active and passively-managed funds
that focus on socially responsible investing. Recently at the World Economic
Forum, the CEO of KPMG, one of the ‘Big Four’ accounting firms announced they
are building an accountability tracker to help Fortune
500 companies measure and prove how much good they are doing.
THE RESULT: This change in focus is not a
trend. In fact, 85% of the S&P 500 and 90% of the
largest companies in the U.S. are now filing sustainability and CSR reports. It
will not fade away in the coming months or years. More importantly, it is just
not for big business. There are significant changes in society that will
require small businesses to respond in the same way as large corporations.
Three Important
Societal Shifts
Consumer Market Impact
The way in which consumers are purchasing is
shifting. According to a 2018 Cone study, 66% of consumers would switch
from a product made by a company that shows a strong focus on charitable
giving. Further, the study found that 78% of American consumers believe
businesses must do more than just operate to drive profits, they must make a
positive impact on society as well.
Generational Impact
Millennials (born 1981 - 1996) now
represent 56% of the national workforce and 30% of retail sales. Generation Z,
aka zoomers (born 1996 - 2010), is following close behind. According to the
2019 Gallup How Millennials
Want to Work and Live report, these generations are
motivated by more than just a paycheck, they want to feel like their careers
and purchasing decisions are important in the larger picture. This marks a
significant generational motivation shift from the previous generations.
Consumer Trust Impact
Each year, Edelman produces a Trust
Barometer study. This study has found that people today grant their
trust based on two distinct attributes: competence (delivering on promises) and
ethical behavior (doing the right thing and working to improve society). The
study encompasses four types of organizations: Businesses, Non-Governmental
Organizations (NGOs), Media and Government. This year’s study found that
Businesses rank highest on the scale of competence and second-highest, behind
NGOs, on the scale of ethical behavior. This further demonstrates that society
is losing faith in the institutions historically relied on to improve society
and are looking for businesses to step in and make a bigger impact.
The report also finds that trusted companies
have stronger consumer buyers and advocates and that trust drives workplace
recommendations by employees. In fact, 73% of respondents believe a company can
take actions that both increase profits and improve conditions in communities
where it operates.
THE RESULT: More and more consumers are voting
with their wallets. They are searching for and supporting businesses that are
making a difference in the community. Equally as important, how a company gives
back to the community is a key factor for employees when determining where to
work.
The Convergence and Importance for Small
Business
The changing focus of business and shifts in
society all point toward one common factor: a requirement for any business to
take on a role in improving their communities. Businesses that do not respond
in this manner to the changing environment will undoubtedly feel pressure to
grow in order to maintain a vibrant workforce.
A survey by the Better Business Bureau found
that 84% of consumers trust small businesses more
than large businesses. Additionally, the Edelmen Trust Barometer found that
family-owned businesses are the most trusted type of business by a large
margin, followed by privately owned businesses. This indicates that established
institutions like publicly lead corporations and government organizations are
losing trust, while more intimate and grassroots-level small businesses are
gaining traction in their place.
Small Businesses Have Bigger Community Impacts
One of the greatest advantages small firms
have over their larger competitors is a more emotional connection to the
community. The visibility of small business owners and their employees in the
local area shows that you care about more than just dollars and cents. You care
about the community and the community cares about you because to you it’s more
personal.
THE RESULT: Small businesses have an advantage
over larger corporations when it comes to gaining the trust of customers and
employees.
A
Simple Formula For Small Business
My interaction with small business leaders
showed that they understand being part of the community is not only about
providing a product or service, but it is also about taking a leadership role
and supporting the community to help it thrive and grow. That is why a SCORE study found that small businesses
give 250% more when compared to larger corporations. Businesses of all sizes
recognize that in today’s shifting landscape, the best way to succeed is by
building a community of supporters and advocates. And for small businesses, the
best way to build that community is through kindness.
When you take all of the various ways in which
we try to categorize how businesses are responding to the changing societal
needs, it can be simply explained by being kind across all stakeholders to
build a stronger community. Building that community does not happen overnight
and it is not easy. It requires organizations to spend time, energy, and
resources to show that you care. And this is not about one-off projects
or holiday giving traditions, you must show that
you care about the people in the community or something they care about
consistently. That will, in turn, build trust which leads to deeper connections
with your customers, employees and the community.
This model © 2020
Seedership, LLC
But showing you care is not enough. With the
continuing change in business focus and shifts in society, small businesses
will need to adapt in order to grow. Customers are using their purchasing power
to support companies that do good, and employees want to work for these
companies. So don’t make it difficult for them to find out what you are doing
in the community. It should be as easy, clear and accessible as you make
finding information on your products and/services, their attributes and
pricing.
What you do in the community must be visible,
transparent and authentic. If it is not visible, when customers and employees
are looking for businesses to support and work at, you are being passed over.
If it is not transparent and authentic, you will quickly lose trust.
THE RESULT: The simple formula: use kindness
to build your community and, in turn, grow your business. And, small businesses
are uniquely positioned to use kindness to build deeper connections with the
community.
Summary
While there are many complex terms and
theories to address and discuss the changing focus of business and shifts in
society to address many of the world’s largest problems – at its simplest form,
businesses must consistently be kind and use transparency when addressing
important issues in the community. Small businesses have a significant
advantage to build trust by spending time and energy showing they care about
the communities in which they operate. But in order to capitalize on this
advantage, they must be visible, transparent and authentic.
Interested in learning more about the ABCs of
Doing Good and why it’s important for your business goals? Join us on Thursday,
February 20 at 2 p.m. (EST) for an exclusive seedership webinar. Sign up to
RSVP now: https://event.webinarjam.com/register/ry87osp.
https://www.seedership.com/blog-post/the-abcs-of-doing-good-a-simple-formula-for-growing-your-business
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