Episode 35 – How Purpose Can Drive Profit

Savannah Barker (00:00):
Hello! Welcome back to another episode of Change the Rules. I’m your host, Savannah Barker and I’m the Director of Strategic Programs here at Notley. With me in the studio today are two very exciting guests, Maggie Miller and Hannah Noakes of Magnify Impact. Magnify Impact is a social impact consulting firm that helps companies power their profit with purpose. Maggie and Hannah: thank you both for joining us. So before we dive into your work with Magnify Impact, tell us a little bit about your backgrounds.
Hannah Noakes (00:29):
Yeah. So I’ll start Savannah. Thank you so much for having us on today. We love the work that Notley does to inspire and empower change makers, to create value in society. And we really see that as so complementary to the work that we get to do every day. So thank you again for having us. Maggie and I come from different backgrounds, but they’ve converged in such an exciting way that we almost feel like we’re two sides of a coin. So my experience hails mostly from traditional corporate environments. I started my career at big 3m corporation, big global brand, and worked my way up through customer service, marketing, business development, did some international business development work and then a five-year stint in nonprofit fundraising, which was a really great experience, a really hard experience before I came back to a corporation. So most recently I led community affairs for EZCorp
Maggie Miller (01:28):
And to concur with Hannah, I’m really grateful myself to be working with a partner like Hannah, who brings a very distinct perspective to the way that we put corporate social responsibility into action. So my background is completely different in many ways. I hail from about 23 years in the social sector and I’ve always focused, my great love is on building and evaluating programs. So one of my greatest life work experiences was founding and serving as the Executive Director for DiscoverHope. Discoverhope was an international NGO that I started in the mountains of Peru that supported women through $150 micro-credit loans to build their businesses and to give them education on their businesses. So I’m really proud that after about 10 years of that work there were over 3,000 indigenous women who had multiple businesses who now run the actual microcredit portfolio that is over a million dollars. My love previous to that regarding stakeholder listening and being involved with stakeholders that really direct programs came from six years working in building peace education in San Diego. So just a brief couple of sentences about that. The Tariq Khamisa foundation in San Diego’s mission was to stop kids from killing kids and it was started by two incredible fathers. One man’s son had killed the other man’s son over a pizza delivery, a gang initiative to attack a delivery man. And these two fathers came together in this spirit of restorative justice and forgiveness that I’ve not witnessed more powerfully in my life, doing violence impact forums for kids who are coming from gang families. And so that was part of my background. That changed me profoundly.
Savannah Barker (03:28):
Wow, that’s great. Yeah, I’ll definitely come from from different different ends of the spectrum, but it makes so much sense for the work that you do now. So let’s get into it. Corporate Social Responsibility or CSR has become somewhat of a buzzword that we hear a lot. So how do you define or redefine CSR?
Hannah Noakes (03:49):
So traditionally corporate social responsibility or CSR was defined as a self-regulating business model that helped companies to be socially accountable if you will. So to theirselves, to their stakeholders and to the public. So to engage in CSR meant that in the normal course of business, the company is operating in ways that add to society rather than detract from society. And that was a bit more reactive than the way that we see it today. Thank goodness it was, it came up that way because it helped companies hold themselves to a higher standard. I don’t know why that makes me think of the movie Erin Brockovich, but today we’re expanding the definition to be more proactive and more baked into the culture and the business model of the company. So we believe that CSR is the integration of purpose and profit. CSR is now a really critical currency of business. When purpose and profit power one another it creates business opportunity, innovation, competitive advantage. And when you have a well-designed CSR program that is aligned with your brand and culture, it can really become an essential driver of your business success.
Savannah Barker (05:16):
Awesome. So why should companies care about integrating CSR or social impact into their business strategies? Why should they care about integrating that into their bottom line?
Maggie Miller (05:29):
So we talk a lot about being in the course of a responsibility revolution. That’s the term we use a lot. So where does that come from? The rise of social technology is one aspect. Those dependent, the dependence on those telephones we hold in our hands to run and rule our lives. And the second aspect is the changing youthful face of the workforce. And I’ll talk about that in a second, but both those things have really created a public call for companies to be involved in solving some of the world’s most pressing problems. So social technology itself has created this unprecedented voice. That unprecedented voice has created the abilities for consumers to organize themselves around shared values so they can make or break an issue at any time that they choose to through social social media. In addition, I mentioned before the workplace is really changing as employees, especially millennials or the Y generation (Y as some people call it), they are going to be 75% of the workforce by 2025 and all the research and studies show that that generation really carefully weighs the values and the culture of the companies that they work for. So those things have had a lot to do with companies paying more attention to CSR strategies.
Savannah Barker (07:01):
So what kind of business value does a good CSR strategy provide for a company?
Hannah Noakes (07:07):
So this is one of our favorite topics. So CSR is really moving from a quote “respectable to have” to mission critical. Big institutional investors are really calling for companies to pay attention to their social impact. For example, Larry Fink, who’s the chairman and CEO of BlackRock, which is the world’s largest institutional investor wrote in 2018, “To prosper over time every company must not only deliver financial performance, but also show how it makes a positive contribution to society.” And that’s not just lip service. So BlackRock and other investor groups like BlackRock are really paying attention. And it’s not purely altruistic either. These investors are asking CEOs to consider what issues are material for their business. And what that means is where are there opportunities to positively contribute to society and also reduce costs or alleviate problems that are hindering those companies’ ability to grow and prosper. So for example, if a company decides that their large print catalog might be something that they want to look at, reducing the carbon offset of printing that catalog and taking it online instead, not only are they making a better impact on the world by reducing that carbon footprint, but they’re also saving a lot of money. So it’s just really good business. It’s smart CSR to think about it that way.
Maggie Miller (08:42):
I think I would add to that around smart and CSR, when you asked the question, what business value does good CSR create? So a couple of examples: getting community buy-in is really big. So a great CSR strategy is a tool that helps companies create localized relationships with the local communities that they do business in. It’s just smart. Another example would be, as I mentioned, attracting and retaining employees. So a social shared purpose can help a company with morale, with productivity, with recruitment, with retention. Next I would say building customer loyalty. So CSR is a way to help deepen trust and relationships with your consumers. They’re your champions, they’re your bottom line, right? And then last, I guess I would mention increasing the value of your brand. So when you create a good CSR strategy and program, you can raise your company profile. You can, you can raise your profile as a global leader, as a global citizen. When you do that, you can stand out from your competitors and you can also buffer the highs and lows of your reputation at times that you need need to do so. So those are things I would add.
Savannah Barker (10:00):
Yeah, those are some great points. So on your website, you also mentioned that a good CSR strategy “activates relationships with stakeholders.” Tell us a little bit more about what that means and why that’s important.
Hannah Noakes (10:15):
So what we mean by that is when we talk about stakeholders, we’re thinking about the whole circle of all of the individuals that impact a business’s success: their leadership, investors, customers, suppliers, their local markets, and one of the most important groups, their employees. So those individuals, that ecosystem, really is where all the value comes from in a company. I mean, without customers, it doesn’t matter what you’re selling and how you’re selling it, for example. So we believe that CSR is such a great tool, maybe the best tool for engaging these groups. And you can really drive customer loyalty, brand loyalty, create engagement with your employees, mitigate risks – some of the things that, Maggie, you were just talking about in buffering the highs and lows of reputation challenges, and by energizing this ecosystem, there are long-term returns for the company.
Savannah Barker (11:20):
Awesome. So on that point of stakeholders can you specifically tell us about how employee teams can be critical to building CSR programs?
Maggie Miller (11:30):
Sure. So Hannah mentioned employees as one of the most important stakeholders and per our company name, Magnify Impact, we really love the job of engaging company culture. So we do think as, as Hannah noted that successful companies have to continuously work to strengthen and ignite the most critical part of their value creation, which is their employees. So, as I mentioned before, five years from now that millennial generation will make up 75% of the workforce and they are looking for ways to ignite and activate social responsibility. So one of our favorite company work sessions that we do is called “Spark” – it’s meant to spark employees. Our goal is that we want them as ambassadors to feel like they have ownership over some of the good that is being done by the company. And during Spark, what we do is we bring together employees to help bring together ideas that will really amp up that social impact strategy. We believe if they’re connected to the company’s impact, then they can be those strong champions for the brand and that will give them the motivation to actually advance those strategies instead of being told what they have to do or believe in.
Savannah Barker (12:52):
Awesome. So can you give us an example of a company who’s instituted some of your best practices successfully?
Hannah Noakes (12:59):
Absolutely. We love our clients. So I think I want to talk about one of our recent clients, Texas Mutual Insurance. They’re the largest provider of workers’ comp insurance for the state of Texas. They’re really big and they’re already quite philanthropic. They were giving millions of dollars a year and their employees were volunteering thousands of hours a year in their local communities. However, when they came to us, they were having a hard time getting their arms around the impact that they were actually making with all of those investments. So they were doing a lot, but they weren’t exactly sure what the end game was, right? So we helped them align towards a common vision of what they were trying to accomplish. And for them that ended up meaning they really want to get every Texas worker home safe to their family every night. It’s a big audacious goal, but they can do it. And so we created a structure for how they could assess opportunities, what kind of partners they could work with and how they could measure that they’re actually working towards that big goal. So now they have, they can leverage their relationships with their stakeholder ecosystem, with their policy holders, employees, legislators, the local communities that they operate in and all pull in the same direction towards that big, exciting goal.
Savannah Barker (14:30):
I love that. So how does a company even begin to think about building a CSR program? What are some things that they can consider or do?
Maggie Miller (14:38):
Sure. So first things first, this is going to sound really simple and you’d be surprised how many companies don’t think this way, and that would be consider what business you’re in. What do you do for profit? That would be the first consideration. So as we’ve said before in this program, the best way you can make an impact and engage your stakeholders is by looking at what you already do powerfully as a business and connecting that to purpose through your actions. So how do you connect profit with purpose? That’s sort of the bottom line here. So a simple example, I’ll give two examples, a simple one: If you’re a coffee shop, consider the source of your coffee beans and, and your choice of suppliers, and can you change something in that to create a more positive impact? And another example, one of our clients did a lot of work providing home loans as a financial institution. So their impact strategy focused solely on safety, through homes, for people who had suffered from abuse and other life threatening issues. So that concept of home tethered profit and purpose for them on both sides. Now just as a, as an aside research shows that customers reward alignment. So it makes more sense for customers to see that a company is supporting causes that relate to its business. Now, sometimes business owners worry that they wouldn’t be viewed as authentic if they were doing that. But again, the research actually shows the opposite – that it’s easier for customers to understand and support businesses in this way because they feel it’s authentic to what they do and why they exist.
Hannah Noakes (16:28):
Yeah, I absolutely agree, Maggie. And I think another element to this is considering the challenges that exist in your business and how social impact can actually make them easier. So for example, if you’re a software company and you’re having a hard time filling your need for qualified developers, consider supporting your local high school STEM program. So that over the course, I mean, this is a long-term play, obviously in that example, but over the course of many years, you’ll actually have more of a pipeline of developers to fit your talent needs if you’re really committed to the community in which you’re operating. So the idea is that you’re investing in a societal problem that ultimately benefits your business.
Savannah Barker (17:15):
Awesome. Great. And last question, what are some ways that Magnify Impact breaks the rules?
Maggie Miller (17:23):
So my, we laugh, but my business card, my official title is actually “Chief Troublemaker.” So I’m pretty much breaking the rules every day for those people that know me. Hannah will concur, but I think on a, on a more serious note, we’re not ashamed to say that social impact is a critical driver of business. Companies that do it well, we believe can outperform others. And so in our way and our own way, breaking the rules, we believe that it’s okay to make money and to contribute to society at the same time. And we want to remove that stigma that you can’t talk about profits for your company and be a great corporate citizen at the same time.
Savannah Barker (18:13):
Well, thank you so much for joining us today.That’s all the time we have. How can our listeners learn more about Magnify Impact?
Hannah Noakes (18:21):
Well, visit our website. It’s magnify-impact.com. And we’d love to learn about how we can help you.
Savannah Barker (18:28):
Great. The change the rules podcast is sponsored by Chez Boom Audio. Chez Boom Audio is the leading audio post-production company for TV, film, advertising, audio books, and podcasts in Austin. And we are so honored to work in their studio with the wonderful Shayna Brown. You can find the studio at cheyboomaudio.com. If you enjoyed this episode and want to find more, find Change the Rules on Apple podcast to subscribe, and while you’re there, make sure to leave a review. It helps us promote the show and continue sharing stories like this one. Thanks.