There’s an iconic line in the 1987 movie Wall Street when Michael Douglas’ character, Gordon Gekko, declares to a crowd of hundreds: “Greed, for lack of a better word, is good. Greed is right. Greed works.” The crowd eats it up, cheering and giving him a standing ovation.
That may have been well and good in the 1980s (at least before the ‘87 crash), but if he made the same statement today, he’d be run out of town.
Of course the primary objective of any business is to maximize profit. That’s a given. But in the last few years, something transformative has happened: it has become almost taboo for a business to suggest that maximizing profit is its sole objective.
The shift is here to stay
We’re witnessing a significant shift today in the desire of consumers. More and more, people are preferring — and are willing to back with their wallets — brands that are, as the saying goes, doing good. This, consequently, is prompting business owners and even large corporations to become more socially responsible… and to treat CSR as more than a passing fad.
For instance, whereas fewer than 20 percent of S&P 500 companies published a sustainability or corporate responsibility report in 2011, more than 80 percent did in 2015. What’s more, 64 percent of CEOs now view Corporate Social Responsibility as coreto their business rather than as a standalone program. Unilever’s CEO, Paul Polman, has gone so far as to describe his company as “the world’s biggest” non-government organization, noting, “The main thing we’re trying to do is give every brand we sell… a social purpose.”
Polman’s statements are remarkable, when you think about it. But other organizations may very well begin following in his company’s footsteps. After all, it is today’s younger generations that have a particular penchant for companies that say they want to make the world a better place. Case in point, three out of four young people believe corporations should create economic value for a society by addressing its needs.
Driven by youth
Why the shift? I think we can break it down into three main reasons.
- Brands increasingly reflect one’s identity
First, younger generations are engaging and associating themselves more with brands. While 36 percent of Generation X agree that “brands ‘say something about who I am, my values, and where I fit in’,” that number jumps to 50 percent for those aged 18 to 24. When consumers begin associating themselves with brands, the damage done from bad publicity becomes all the harder to overcome. To cite Warren Buffet: “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
- We’re facing a lack of trust
The PR firm Edelman found in its 2017 Trust Barometer that trust in business — and pretty much everything else — “has declined broadly, a phenomenon not reported since 2012.” We live in a world that is paying more attention to inequality, and is becoming more intolerant of greed and excess—whether from a person or business. While being socially responsible won’t completely alter how much trust consumers place in a brand, it is a necessary part of maintaining and building a positive, trustworthy one.
- The value of doing good is being taught early
Third, and most importantly, students today are learning that giving back is not a way to do business, but the way to do business. They see companies like Warby Parker and TOMS being successful by embracing this model. They see the rise of B Corporations. They even hear about established companies like Patagonia donating all of its Black Friday sales — a whopping $10 million — to environmental nonprofits. They hear vows from entrepreneurs like Bill Gates and Mark Zuckerberg, both of whom have pledged to give away the vast majority of their fortune to charity, and see others like Elon Musk building a company whose sole mission is to “accelerate the world’s transition to sustainable energy.”
Everyone needs to get on board
Given all this, it’s inevitable that doing good will become the de facto way of doing business. It will be demanded by consumers, and thus incorporated into new and old businesses alike.
But it is perhaps with new businesses that we’ll see the greatest adoption of this model. In fact, by 2020, I’m sure the majority of all new startups will incorporate a systematic, sustained way of giving back to their business. Think something along the lines of Warby Parker’s current “Buy a Pair [of glasses], Give a Pair” model.
I also fully expect that when Generation Z comes of age, the funding pitches of most startups will lead with the impact they’re making on society, much like today’s pitches emphasize cloud, big data and cybersecurity. Valuations will increase for those companies that “do good.” These companies will win the talent wars, and they will be acquisition targets as much for their altruism as for their technology.
For a preview, just watch the HBO show Silicon Valley, where entrepreneur after entrepreneur goes on stage at TechCrunch Disrupt and repeats the same line about their mission. It was done tongue in cheek, but just wait.
For Wall Street, it was greed. For Silicon Valley, it was — and will be — making the world a better place.