How Millennials are saving the world through business
Posted May 12, 2015, by Marni Williams
Some seven years on from the Global Financial Crisis (GFC), when we have all had a chance to get to know the ‘one per cent’ and what it means to Occupy Wall Street, it seems fair to ask: what impact has all this had on the next generation of workers?
Perhaps unsurprisingly, the 2015 Deloitte Millennial Survey suggests there’s been a serious swing towards valuing the social impacts of business, especially when choosing potential employers. To Millennials, business is all too heavy on profits and rather light on purpose. In fact, 75 per cent of those surveyed agreed that ‘businesses are too fixated on their own agendas and not focused enough on helping to improve society’.
Though making bucks while doing good will give us the warm and fuzzies, the question remains: is improving society really the role of business? There’s a fast-growing sector in Australia that would tell you that it is. And not only that, they would tell you that tying social improvements to profits is actually good business. Brands such as Patagonia, Ben & Jerry’s and Etsy have made the approach well-known in the United States, and Australia is already on its way. Jo Barraket from Swinburne University’s Centre for Social Impact explains:
‘Because of their focus on “Creating Social Value”, social enterprises are particularly resourceful and skilled in recognising latent value that is otherwise overlooked by mainstream business and/or society. This might be human resource (people who are excluded from mainstream employment), a ‘waste’ resource (recovered materials or a disused building) or a combination of resources that has not been previously imagined (creating new value chains).’
Australia is catching on
While Australia doesn’t have a widely adopted classification system for the sector, unlike the United States, we are actually a social enterprise leader. Barraket certainly thinks so:
‘Although we have had relatively weak public policy support for social enterprise development in Australia to date, it could be argued that, internationally, Australia is a leader rather than a follower in social enterprise practice.’
What’s more, Barraket says it’s growing:
‘What we do know is that the not-for-profit sector – which is an imperfect proxy for the social enterprise sector – has been increasing in terms of Gross Value Added to the Australian economy. For the International Comparative Nonprofit project undertaken through Johns Hopkins University, we know that Australia ranks relatively highly on how enterprising its not-for-profit sector is.’
While it may be growing in popularity, the sector is still little understood, and Head of Communications at Social Traders, Mark Hemetsberger, is keen to differentiate between these companies and charities:
‘It’s easy to think about it in terms of charity: it’s not. They are sustainable, trading, revenue-generating businesses. The benefit of them is that they have great social impact, they mop up social problems and fill gaps in the market.’
While a lot of existing businesses are warming up to this change, organisations such as Social Traders have been out there providing the kindling for entrepreneurs for the past few years. Hemetsberger, states their raison d’être:
‘Social Traders simply believes that the power of the marketplace can be and should be used for social change.’
Social Traders is a social enterprise development organisation that works across a wide spectrum of activities from capacity building to business development, training and investment. They run accelerator and incubator programs for social enterprises, and have so far invested in 12 such start-ups. Their platform Good Spender was launched late last year in partnership with Australia Post, and lists products and services delivered by Australian social enterprises, so consumers can find out where they can spend their money wisely.
Not only are organisations like Social Traders kick-starting businesses and rallying the troops, they are also campaigning for greater recognition by the government, and it appears to be working: the review into Australia’s social welfare system report was just released by the government which referred to social enterprise as an important factor to consider alongside Australia’s social welfare system. The report even recommended a long-term strategy be devised for the sector. This was the first mention of social enterprise at a federal level in Australia.
Jo Barraket also believes recognition is key to the future of social enterprise:
‘Social enterprises are a part of the business sector, and recognising them as such is important in recognising that the business sector is diverse (and that such diversity is important in supporting human needs and the resilience of our economy).’
Hemetsberger couldn’t be clearer:
‘One thing to learn is that the opportunities and gaps don’t have to be seen as charity: there is a culture of entrepreneurship and innovation … These are serious businesses that have the ability to generate serious money.’
Our Millennials are leading the way
Examples of Australia’s ‘enterprising’ can be found in well-known products such as Thankyou Water and the toilet paper company Who Gives a Crap, who have pioneered the concept of creating products for a purpose and have found new and loyal markets in the process.
One of Australia’s best-known social enterprises started when some university students discovered that 900 million people in the world didn’t have access to safe drinking water. They coupled this knowledge with the fact that Australians spend $600 million annually on bottled water, and decided that they would make a product to breach that gap. Thankyou Water has now expanded to include Thankyou Food and Thankyou Body Care, and customers are encouraged to track the impact of their purchases online. Managing Director and Co-Founder of Thankyou Group, Daniel Flynn, believes Millennials are playing a key role in the success of social enterprise:
‘The trend we see with Millenials (and most of our team fall into that category!) is that they’re extremely aware of social issues and very willing to play a hands-on role in instigating change – in fact, they often search out opportunities to make a difference.
Another redeeming quality found in many Millennials is that they aren’t afraid to challenge the status quo and take a risk to find a new and better way of operating, and social enterprises are just that – they challenge the norm and offer a different solution.’
Flynn’s approach is simple:
‘How it works at Thankyou is that we have one shareholder – our charitable trust – and we make our decisions with the benefit of the sole shareholder front of mind. In the nearly seven years we have been operating, our greatest criticism from financial advisors is that we have given too much. The thing is, for us it isn’t a split between impact and profit. We make every decision taking into account what will ultimately create the greatest amount of impact, because that’s what drives us.’
Thankyou is an example of an ‘innovation model’, as Jo Barraket explains: ‘Innovation models that seek to raise consumer awareness and revenue in support of social or environmental change.’
Thank you shows that a profitable business can also effect serious change, as Flynn states: ‘We are driven by our impact. At Thankyou our profit equals our impact, so our focus is 100 per cent on profit and profit maximisation. After all the costs involved in making our great products are taken care of, every cent left funds our projects.’
Such talk of profits would be out of place if we were talking about the not-for-profit sector, but this is where social enterprise is different. Profits are actually key to the success of social enterprises and therefore the sector is home to a number of entrepreneurial, innovative and sustainable organisations.
Simon Griffiths is the CEO and Co-Founder of Who Gives a Crap, another social enterprise that pairs its product with a social purpose. He keeps profits front and centre in his toilet-paper business:
‘For us, the overarching goal of every decision we make is ultimately to do good. We donate 50 per cent of our profits to build toilets in the developing world, which means that our impact is tied to our profits. As a result, maximising impact and maximising profit are heavily related.’
No matter the type of business, it appears that social enterprise is able to tap into a unique kind of success where company morale, social good and profitable business models are intertwined. Griffiths agrees that there is a generational influence at hand:
‘At Who Gives a Crap, we're all Millennials and no doubt this has played a role in the way we've shaped the business. I think it's safe to say that all of us were looking for a vocation that was driven by a sense of purpose and an ambition to change the world for the better. This may sound a tad naive, but throughout history, the naive “dreamers” have always pushed humanity forwards.’
Based on the results Who Gives a Crap has achieved so far, it appears their passion is matched by the growing number of consumers who want to make socially conscious purchases:
‘By January this year we had sold enough toilet paper to provide 46,500 people with access to a toilet for an entire year.’
As today’s professionals search for purpose, social enterprises will blossom
Once upon a time your career choice might have looked something like this: take a low-paid job at a grant-dependant not-for-profit or government department with questionable job security, or sell your soul to a shareholder-driven profit machine in return for higher wages and a clear career trajectory. After the last few years of political turbulence and volatile markets, neither choice seems quite as sound as it once did, and as we’ve seen, Millennials like Griffiths are killing it:
‘We think that social enterprise is but one example of the changing nature of business and commerce and reflects a broader shift in the social consciousness.’
The recent survey by Deloitte wasn’t a surprise to CEO Barry Salzberg who suggests the findings ‘should be viewed as a valuable alarm to the business community, particularly in developed markets, that they need to change the way they engage Millennial talent or risk being left behind.’
Head of Market Development at Social Traders, Mark Daniels, says, ‘We are seeing a growing wave of under thirties starting social enterprises. They are generally a savvy group who have a grasp of business and want to change the world. They want to do it their way though and social enterprise gives them the flexibility that they're seeking. A generation ago they probably would have run a business and done social good on the side through volunteering.’
Does your social impact mean you get better recruits?
I asked Griffiths and Flynn if their social mission helped them to attract high calibre candidates, and their responses were emphatic:
‘To be honest, as we grow more and more, we’re honoured and surprised at the calibre of people that want to leave their top jobs and join Thankyou. One of the strengths of our team is that we all come from diverse and different backgrounds, but the one thing we all have in common is our passion for global impact that changes lives.’
‘Our team is probably the most over-qualified toilet paper merchants in the world, but we all love what we do because every day is about so much more than just toilet paper.’
And if you can make selling toilet paper attractive to the next generation, and turn some serious profits in the process, then you’ve got to be doing something right.