11 Nov The future of business is a new type of company
“Business and economic output are the largest forces in our world. They define how we organize, and are the central levers by which we can make a better or a worse society.” says John Battelle of NewCo. This is not to say that the traditional idea of business as a profit-oriented activity is wrong; but that it is incomplete. People are coming to the realisation that there needs to be a better way to organise and run business as a force for good, and not just profit.
NewCo is a new media company created by Wired co-founder John Battelle. The company organizes events in cities across the world where participants have a chance to visit and interact with ‘New Companies” that do business while making the world a better place. Claro is honored to be named a NewCo in Barcelona, and thus we had our doors open to share our work with those who are passionate about redefining “business” for the better. After the event we also had a chance to host John Battelle himself and discuss the future of business.
During our conversation, Battelle shared his perspective on how secular forces are catalysing a change in business. The key that sets the stage for a new type of company is a generational bridge bringing millenials and boomers together. Boomers, who are questioning their legacy, and millenials, who are full of enthusiasm to make an impact but lack resources, are both at a critical reflection point. Boomers, possessing most of the wealth in the world, are coming together with millenials, to pursue the idea of business as a means to make the world a better place.
Technology is a big factor that makes this change possible. Business is not the domain of the few anymore, but initiatives of any scale, and in any geography can emerge and have an impact as social businesses.
While social entrepreneurship is growing, the scale of the change we’re facing is not limited to new emerging players. “Old companies”, as Battelle calls them, are also realising the need, or in some cases are being pushed to move beyond profit. They are being tasked to prove their value to society and positive impact on the world.
Companies like Patagonia are making a genuine effort. The American clothing company has from very early on made the decision to “not give profit primacy over their other values, like building the best product or using business to implement solutions to the environmental crisis”. What’s interesting though, is that Patagonia’s decision to prioritise the environment hasn’t lead to a drop in profits, but the contrary. When Patagonia realised that it’s pitons were damaging rocks, they decided to stop producing them, which at the time made up 70 to 80 percent of their sales. They then launched a lighter and more functional gear that was harmless to rocks, which became a hit, and is now the norm in the industry.
“You can’t go to work and think that business should just be about financial profits, because you’d be serving only a very one-sided view of what it means to be a human on the planet.” – Rose Marcario, CEO, Patagonia
Patagonia has built “doing good” into their core business. Their story demonstrates how prioritising value delivery and social cause over profit in the long-term also leads to more value for shareholders. But even though this approach is becoming increasingly celebrated, most of the “doing good” from corporations still remains at the level of “Corporate Social Responsibility” projects that are directed more by marketing rather than being integrated into the company’s core strategy and value proposition. As business professor Enrique Dans put it in his Forbes article, “a head of CSR is appointed, given an air of respectability, and runs a department the job of which is to keep the company’s image clean, despite the filth it is mired in”. This will have to change very soon.
The rising consciousness around business’ responsibility to truly deliver value to the society and to the world is manifesting itself through initiatives such NewCo, B-corp, Business for Good, and many others that are championing a new type of company. We believe this new type of social purpose driven company is the future of business: a future that meets customer and shareholder expectations, as well as the expectations of the new workforce that is increasingly looking for more meaning and purpose in their work.