Building a Platform for Good: Creating Value While Adding Value

What if your business could grow substantially in value while also doing good for society? What if the objective of creating value for shareholders and supporting the community were not at odds but actually served to enhance each other? I believe that a business not only can be a platform for good, but its long-term value is linked to the amount of good it does. Some have referred to this as “creating shared value” or “doing well while doing good.” I refer to it as “creating value while adding value.”

My personal journey to understanding the larger impact businesses can have began prior to co-founding Benefitfocus. Early in my career I worked for a non-profit organization dedicated to helping children in developing countries. Through that work I saw how important it was to get successful businesses and business people involved in solving needs. Now, 15 years into the growth of Benefitfocus, I see how important it is for the business to have a clearly articulated social mission and framework to enable its associates to serve in their areas of passion.

 

"Above all, the traditional view of business doesn’t capture the way great companies think their way to success. Those firms believe that business is an intrinsic part of society, and they acknowledge that, like family, government, and religion, it has been one of society’s pillars since the dawn of the industrial era.”1

 

Recently I embarked on a project to complement our company’s framework for community involvement with modern research and today’s best business thinking and practices. I was pleasantly surprised to find a strong and growing body of work on the subject. Numerous studies, such as the Harvard Business Review articles “Creating Shared Value” and “How Great Companies Think Differently,” show that not only can a business do good for society without sacrificing growth, but in fact the value created over time is significantly enhanced by a clear sense of social mission, intentional community investments and enabling associates to use their careers as a platform to serve society while creating great products and services.2, 3, 4  

We organized a team to gather research on the subject, and we have included links to many of our findings as footnotes to this post. As we combed through the essays, videos, white papers and stories, we noticed a familiar pattern. We saw that businesses had a similar development trajectory as outlined in Maslow’s hierarchy of needs for the individual. You may recall that his framework taught that individuals first work to satisfy basic needs such as food and shelter. They then climb up through the pyramid and ultimately are able to achieve “self-actualization”: realizing one’s full potential and functioning with a higher purpose.

 

31% of university students emerging into the workforce say having a job where they can make an impact on causes and issues that are important to them is “essential.”5

 

In the same way people develop, transitioning from the satiation of base-level needs to the realization of their full potential, businesses also follow a similar development pattern—first focusing on survival, then value creation and ultimately reaching their full potential: to add value to society. After observing our company’s own developmental path, we have constructed a simple framework to illustrate our findings:

Business Hierarchy of Needs

 

  • Survival – Complete focus is on early customers getting benefit of new products and services and raising needed funding to cover operating expenses.
  • Create Value – After a business demonstrates its ability to survive by providing products and services for its customers and employment for its associates, it can then begin to create value for its owners. Value is created from the aggregation of groups of customer relationships, from developing reliable streams of positive cash flow and the invention of new products and services. 
  • Adding Value – In a similar way to individuals reaching self-actualizing or finding their purpose, a company becomes a platform for adding value to its associates and their families by helping people in the communities it serves and by supporting its associates as they follow their passions to serve society. 

In the early years of Benefitfocus it was all survival. Although we had founded the business to have a positive impact on the world by helping people and their families receive the best benefits, we had to make sure we could keep the lights on. We needed to create products and services that customers would pay for. We had to lay the foundation of a durable business. Yet as we grew, we knew we wanted the business to become very valuable in both terms of the products it delivered to the market and also to the owners of the business asset itself. In our third year we became cash-flow positive, and the value of the business surged. It has continued to grow in number of customers, in revenue and in overall value through our first 15 years. Along the journey we have earned the additional opportunity to work on adding value to our communities and society as a whole. It is this higher order purpose that we aspire to, and yet we do it realizing we must continue to operate a successful business.

 

“Great Companies work to make money, of course, but in their choices of how to do so, they think about building enduring institutions. They invest in the future while being aware of the need to build people and society.”6

 

We see Benefitfocus as a platform for good. Our products and services help employers and their employees provide for themselves and their families. We take waste out of the $1.6 trillion U.S. benefits system while making benefits more personally manageable for millions of people. We have created value by not only surviving for 15 years but by thriving and growing. Now we have a tremendous opportunity to add value to individuals and organizations in our communities and around the world. To help illustrate some of the ways this is happening, I asked five of the people on the research team to tell the stories of our associates and the value they have added to our Benefitfocus community and the larger community. Next week we will have a series of blog posts sharing stories of how our associates are adding value. We hope you enjoy them, and even more, we hope it unlocks something in you and your organization that inspires you to reach for a higher social mission and do it with the strength of knowledge that your company will become more valuable in the process!

I think the next few decades of building businesses are going to be incredibly rewarding. As the business community moves past the traditionally narrow view of philanthropy and into a new world of socially active and socially connected associates, we will have a collectively exponential impact on the world for good, and as you will see from the expanded resource list below, business are already reaping the direct benefits from adding value to society. They’re attracting the best talent, having more active and engaged customers, experiencing increased employee retention rates and through improved public image, gaining a significant marketing advantage. Clearly, when businesses set out to create value while adding value, everyone benefits.

 

“It’s no longer a question if consumers care about social impact. Consumers do care and show they do through their actions. Now the focus is on determining how your brand can effectively create shared value by marrying the appropriate social cause and consumer segments.”7

 


References, Appendix & Further Reading:

Tangible benefits that come to a company with a social mission:

  • Prospective employees (59% of Millenials) are more likely to apply for employment at a company with a stated social mission. Thus that company will attract the best talent, which is key to winning in the market.8, 9
  • Employees at businesses that engage their entire wellbeing (Career, Social, Financial, Physical and Community Wellbeing) are more likely to stay with the company, be healthier and more engaged.10 Specifically, one large employer was able to double their retention rate for specific employee populations through a target shared value approach.11
  • Customers are more willing to purchase from and remain loyal to a company that has a perceived environmental or societal mission, thus directly tying the brand’s success to its impact.12
  • Millennials will trade income for purpose.13
  • A healthy community makes for good soil to grow not only your business, but also supporting businesses, which reinforce your own growth, creating long-term value. By nurturing local communities, businesses can affectively create the optimal environment in which they can thrive.14
Video Resources

Nestlé’s Global Head of Public Affairs discusses how the company’s focus on needs to society is linked to their returns to shareholders. Watch

Save the Children CEO discusses finding the intersection between non-profit needs and business goals. Watch

UBS discusses how shared value is the next iteration on capitalism. Watch

Harvard Professor Michael Porter discusses shared value as a corporate strategy. Watch

Further Reading

“The New Role of Business in Global Education: How companies can create shared value by improving education while driving shareholder returns” ­–With a foreword from Michael Porter, Kramer et al. dive into how businesses can gain enormous value from investing in education.

“Measuring Shared Value: How to Unlock Value by Linking Social and Business Results” –Michael Porter et al. develop a framework for measuring the impact of shared value initiatives.

“The Economic of Wellbeing” –Tom Rath and Jim Harter at Gallup Consulting explore the five elements of wellbeing in the workforce.

“Putting Shared Value into Practice” –Best practices for implementing shared value by Rick Cadman and Derek Bildfell.

References
  1. Kanter, R. K. (2011). How great companies think differently. Harvard Business Review, 89(11). Retrieved from https://hbr.org/2011/11/how-great-companies-think-differently.
  2. Porter, M. E., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review, 89(1-2). Retrieved from https://hbr.org/2011/01/the-big-idea-creating-shared-value.
  3. Kanter, R. K. (2011). How great companies think differently. Harvard Business Review, 89(11). Retrieved from https://hbr.org/2011/11/how-great-companies-think-differently.
  4. Sustainable Life Media, Inc. (n.d.). The new financial metrics of sustainable business: A practical catalog of 20+ trailblazing case studies. Retrieved from http://e.sustainablebrands.com/resources-report-new-financial-metrics-of-sustainable-business.html.
  5. Heldrich, J. J., Zukin, C., & Szeltner, M. (2012). Net impact talent report: What workers want in 2012. Retrieved from http://www.heldrich.rutgers.edu/products/net-impacts-talent-report-what-workers-want-2012.
  6. Kanter, R. K. (2011). How great companies think differently. Harvard Business Review, 89(11). Retrieved from https://hbr.org/2011/11/how-great-companies-think-differently.
  7. Nielsen. (2014, June 17). Global consumers are willing to put their money where their heart is when it comes to goods and services from companies committed to social responsibility. Retrieved from http://www.nielsen.com/us/en/press-room/2014/global-consumers-are-willing-to-put-their-money-where-their-heart-is.html.
  8. Heldrich, J. J., Zukin, C., & Szeltner, M. (2012). Net impact talent report: What workers want in 2012. Retrieved from http://www.heldrich.rutgers.edu/products/net-impacts-talent-report-what-workers-want-2012.
  9. Millenials Survey by PWC. Retrieved from https://www.pwc.com/gx/en/issues/talent/future-of-work/millennials-survey.html
  10. Horoszowski, M. (2015, March 19). 5 surprising benefits of volunteering. Forbes. Retrieved from http://www.forbes.com/sites/nextavenue/2015/03/19/5-surprising-benefits-of-volunteering/.
  11. Porter, M. (n.d.). The New Role of Business in Global Education. Shared Value Initiative. Retrieved from https://sharedvalue.org/sites/default/files/resource-files/FSG-PrintReport-Final.pdf
  12. Nielsen. (2014, June 17). Global consumers are willing to put their money where their heart is when it comes to goods and services from companies committed to social responsibility. Retrieved from http://www.nielsen.com/us/en/press-room/2014/global-consumers-are-willing-to-put-their-money-where-their-heart-is.html.
  13. Viva, S. (2013, September 13). Never mind the chatter – What do Millennials really want? [Blog post]. Retrieved from http://www.realizedworth.com/2013/09/never-mind-the-chatter-what-do-millennials-really-want.html.
  14. Schifferes, J. (2014). Shopping for shared value. RSA 2020 Public Services. Retrieved from http://www.rsa2020publicservices.org.uk/publications/2020-retail-shopping-for-shared-value/