In Part 2 of this series, Hunsicker's CEO and co-founder, Wes Murry, shares his thoughts on the role impact has to play within the ever-shifting battleground of business. Part 1 on why Impact Needs Profit can be found here.

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The preconceived beliefs of a business were etched into stone tablets in my mind. Nowhere in those doctrines was the word “impact” or the phrases “social good” or “collective gain.”  Business is about making money.  Using “impact” in the same sentence as “business” would relegate me to bleeding heart status among my entrepreneurial peers.

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As a card-carrying MBA, serial entrepreneur, and investor, I know the tenets of competitive venture well. I know we aren’t supposed to care about what others think. It’s cutthroat culture, do or die.  Yet, as we age, this wains.  We get more comfortable in our own skin.  For a topic as central to my life as “business,” however, this would take some courage.

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Alongside my for-profit pursuits, I have been fortunate to lead a foundation that makes grants and investments to causes of all kinds.  Through that experience, I have learned about and witnessed the challenges individuals and families face in accessing fundamentals that I take for granted. It’s a world that can remain hidden from many of us unless we make a conscious effort to get beyond our own insulated communities and engage with others.

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As I straddle these different roles, it’s impossible for me not to compare the sectors and how they operate. Fascinatingly, some innovative nonprofits I have met through the foundation’s work are attempting solutions that look more like a business than not.  What’s missing, though, is a mindset for growth and scale. Funding for nonprofits is sporadic.  Fundraising is exponentially more distracting in social services than it is to a founder of a for-profit.  Lack of consistent funding has cascading impacts from operations to talent.  The conditions these innovative nonprofits operate under restrict the impact they could potentially create, and that is a damn shame. And it planted a seed that took root and germinated in my mind. 

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Social value is, in fact, a competitive differentiator.  So why aren’t we seeing a new generation of real companies offering needed products whose mission is the impact most consumers want?

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Could we build companies around a set of core challenges that find themselves, in part, relegated to nonprofits or government unnecessarily?  Could we leverage learnings and experiences from nonprofits to build sustainable for-profit solutions addressing the same problems?  Could we make money for investors while building products and services that served the collective versus a popular customer segment?

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Even more than these theoretical questions, there’s consumer science that backs up these musings. Nielsen reports that 56% of consumers are willing to pay more for products and services from companies committed to positive social and environmental impact.  Social value is, in fact, a competitive differentiator.  So why aren’t we seeing a new generation of real companies offering needed products whose mission is the impact most consumers want?

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I believe part of the reason is that we have been fooled into believing we are already positively impacting society.  ESG (environmental, social, and governance) related funds will exceed $40 trillion by the end of 2022.  This is the investment world’s response to consumer demand.  Their tool for change is allocating the money they manage to companies with higher ESG scores.  Despite this massive allocation of capital, does anyone feel like this is making society better or our environment cleaner?

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What defines a company or product as impactful or socially good?  How do we compare one to another? Do we want to leave this distinction to a corporate scorecard?  How do we separate the good actors from the charlatans?  The options available to us today lack a human connection.

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There is a saying that people don’t mind changing, they just mind being changed. A business is no different. At the core, this is why ESG-based scoring solutions fail to meet the call.  It’s a tool for compliance only.  Compliance is very different from commitment. The social impact we seek is personal. It’s what happens to us in our everyday lives.  If the best large-scale response we have to improve society is ESG asset allocation, we will wait a very long time for those “impacts” to trickle down to our day to day.

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The social impact we seek is personal. It’s what happens to us in our everyday lives.  If the best large-scale response we have to improve society is ESG asset allocation, we will wait a very long time for those “impacts” to trickle down to our day to day.

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To get where we need to go, we need more approaches. That’s the basics of problem-solving. Given my penchant for building, I’m especially eager to participate in solutions that engineer from the ground up.   But don’t get me wrong - profit must play a central role.  Our society is based on capitalism, and that will not change.  But capitalism can and must serve the collective.  If it fails to do so, government will need to continue to grow in response, which is a woefully ineffective and inefficient method of making our society better.

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Business needs to embrace the challenge of collective gains.  It’s what customers demand today and going forward, it will become the de facto expectation.  Meeting the demands of customers is to win at business now and in the future, especially when the customer market is enormous.  These changes won’t happen through a scoring system or governmental program alone.  Instead, they will occur and sustain when a company commits to making the impact we need as part of its mission.  It chooses that strategic direction because it believes it has a better chance of winning against its competitors.

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Change will occur and sustain only when a company commits to making the impact we need as part of its mission.

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I believe the approach I’m following embodies the quintessential “rational actor.”  Building companies that serve society and make money is the new battleground of business.

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Pt. 1 on why Impact Needs Profit can be found here.