We've talked about cultivating your purpose and testing your assumptions. So what's next in becoming a purpose-driven leader and, specifically, a purpose-driven leader in business. What's next is finding the win-win. And by win-win, I mean finding the opportunity to create a profit and fulfill your purpose. There are few other terms that you may have heard of when people talk about the win-win. They'll talk about hybrid organizations, for example. What's a hybrid organization? It's an organization with a social mission that also has or pursues commercial activities. Social mission combined with commercial for profit activities. You may have also have heard the time shared value. Shared value is a term that comes from Michael Porter and Mark Kramer. They've written a lot about this concept. Shared value is a management strategy in which companies find business opportunities in social problems. Shared value focuses company leaders on maximizing the competitive value of solving social problems. So the idea is that companies can solve social problems, and get a competitive advantage by perhaps gaining new customers and markets, or achieving cost savings, or doing better at talent retention. The win-win is obviously a great place to be, but it can be a hard place to be. It can be hard to achieve the win-win. And let's talk about why it's hard to achieve this win-win of profit and purpose. One reason is that it can be confusing to your funders. Donors, philanthropic folks, people used to giving to charities, they may know what to give to a profit seeking organization. They may not think its appropriate for a charity, a social mission driven company, to actually make money. Investors may not want to invest in organizations that are not designed solely to maximize profits. They may think, hey, if you're trying to pursue a social mission, my profits, my investment, is not going to make as much money. So it can be confusing to be in this win-win space for funders, both from donors and investors. The win-win objective can also be confusing to employees. They may be confused about what's the top priority of the organization. Is it to the achieve the social and environmental purpose or is it to make a profit? Customers even can be confused. They may be wondering, well, am I a beneficiary and I should be grateful for what I'm given or am I I a customer? And I'm paying and therefore I should be able to demand and push for what I want. So, for all these reasons, it can be difficult to optimize profit and purpose simultaneously. Finding the win-win can be challenging. It may be difficult to optimize profit and purpose. It's not automatic that when you pursue profit, you also get purpose. It's not automatic that when you pursue purpose, you also get profit. I want to suggest that it's possible to find the win-win, but it can be difficult. And I should be clear when you don't find the win-win you're in this position of trade-off, where maybe you're having to forfeit profits or maybe you're letting your mission drift. You're kind of weakening the social purpose or environmental purpose. Perhaps, for example, you're serving richer customers, not really serving the poor people you wanted. That would be an example of mission drift. So it's perhaps so obvious, but I think worth explaining why this win-win strategy is so beneficial, what you get out of it when it works. So one thing you get out of it is you actually get ongoing sustainable social impact. You have a scalable model. It's not dependent on donors, it's not dependent on charity. You can continue and grow your positive impact. You can fulfill your purpose. A second benefit is that this process of pursuing the win-win may lead you and others in your company to create innovations that are really valuable for the company. You reach new customers and markets, for example, or you achieve cost savings. And a third reason is when you pull off this win-win, it's really meaningful and valuable for employees, for customers, and for stockholders. This is a very admirable way to run a business. So how do you find the win-win given that it can be challenging to do this. I think what we see and I have been able to interview lots of purpose-driven leaders and I see this in them. I think one of the key things that distinguishes leaders who are able to pull off this win-win, is they have both real business acumen, business expertise and experience, and they have a deep commitment to purpose. So they're focused on both sides of the win-win. They're paying attention to the business fundamentals but they're absolutely refusing to give up on their larger purpose. So mindset. This mindset of valuing both parts of the win-win profit and purpose is really key. Keeping in mind both the goal of achieving financial returns profit and fulfilling the larger purpose of the company. That mindset is really important, and so is asking the right questions. So let's talk about what are those questions that you could ask that might help you find this win win. And here, again, I want to say Porter and Kramer who've written about shared value and suggested that this question can be helpful in finding the win-win or what they call shared value. So you might ask questions about your product design. Could our product design incorporate greater social benefits? Could we make our products to help people in poor communities, for example? You might ask questions about customers and markets. Are we serving all the communities that would benefit from our products? Is there a way to reach a larger market, a different market, markets in developing countries, perhaps? What about the supply chain and production? Do our processes and logistical approaches maximize efficiencies in energy and water use? You might be able to save water, you might be able to save on the cost of packaging. That was better for your environmental footprint. And a final question, what about the community? Could our new plant be constructed in a way that achieves greater community impact. For example, we're building a new plant, maybe we should build a community center in the plant. We have space and money to do that. So those are the examples of the kinds of questions you can ask. What else do you do to pursue this and find the win-win? Well, what we see from these great purpose driven leaders is that they articulate and embody this dual commitment to profit and purpose. One way people talk about this is they speak to and unite capitalists and idealists. Bringing together capitalists and idealists, they are in fact, idealistic capitalists. They'll also strive to build conversations and connections between those in the company who know the social mission best, and those in the company who know the business side best. And in that way, they're creating an understanding and appreciation of the issues. So the people who are really passionate about the social mission, they understand something about the business constraints. And the folks who are really passionate about the business and making money and staying profitable, they understand the social interest or the environmental interest. And certainly last but not least is, great purpose-driven leaders as they pursue a win-win are experimenting and monitoring all the time. And we'll talk more about that in subsequent lectures. Finally, to achieve profit and purpose, to get this win-win, great leaders are going to challenge two assumptions that others may have. So one assumption that others may have when they hear about a company pursuing this win-win, they'll say I don't believe it. I don't think you can make a profit if you're a purpose driven company. So that's one assumption that great leaders will challenge. They challenge the assumption that you can't make a profit if you're also pursuing a larger purpose. That's one assumption they challenge. A second assumption that great leaders will challenge is the assumption that making a profit is inappropriate for a purpose-driven country. Great purpose-driven leaders who are finding the win-win believe that it is possible to make a profit when you're leading a purpose-driven company, and they believe it is appropriate to make a profit when you're leading a purpose-driven company. To learn more about what great win-win leaders do to actually achieve profit and purpose, I encourage you to check out these videos. I was lucky enough to interview Chad Dickerson, CEO of Etsy. And also Bobby Turner, an Impact investor and Founder of Turner Impact Capital. In these interviews, you'll see from both Chad Dickerson and Bobby Turner, the passion and the creativity that they've shown in pursuing this path of profit and purpose.
