For a long time, social impact was an add-on, or nice to have. In the 1990s and 2000s, it seemed enough for a company to have a corporate social responsibility program and do some good, typically in their geographic backyard.
That is no longer true. The bar has moved much higher, and customers want the companies in their lives to be aligned with their values. We live in a very different world today, where those customers – along with employees, partners, and investors – have much higher expectations of businesses.
What has changed? The answer is all around us — and in our pockets. In our mobile-first, digital age, people entrust companies with enormous amounts of personal data. That data can be used to help and empower people, but it can also be used to harm them.
For any business, the first step towards promoting social good is doing right by their customers. And to know what “doing right” means, you must first understand your target customers. The most important thing is to put the customer at the centre of all business processes.
In a recent survey of 350 different financial technology companies, we found more than 80 were making strategic decisions – from the time they launch – to align their revenue models with positive financial health outcomes for consumers. They are moving towards making their value clearer to consumers, so their fees are fair; and from ad-supported models to more carefully curated partner “advising” intended to truly benefit consumers.
You do not have to look far beyond your core business to create a positive impact and attract like-minded customers. For example, Tom’s is a shoe company that donates a pair of shoes whenever a consumer buys a pair. Patagonia is an outdoors company that foregrounds its sustainability practices and conservation advocacy. In financial services, Aspiration attracts customers interested in sustainable investing and offer a “pay-what-is-fair” account.
For tech companies, that means using technology purposefully. Silicon Valley has been defined by the ethos “move fast and break things,” but we see the mindset slowly shifting to “move purposefully and fix things.” The idea is that entrepreneurs must start by trying to solve a real problem and build in consumer safety features from the outset.
Pula, for example, is an all-digital crop insurance provider for smallholder farmers in Africa. It uses real-time satellite imaging to measure rainfall during the planting season and make rapid digital payments if weather fails, so that farmers can replant seedlings still in the same season. Scripbox is a digital brokerage for first-time investors in India, with costs so low, savers can open an account with a minimum balance of less than $10.
In the United States, Propel, through its FreshEBT app, helps food stamp recipients check their balances, get discount offers, and better manage their benefits from anywhere, at any time. The product is designed around solving a real pain point for their customers: getting to the supermarket checkout without knowing if you'll have enough money to cover the groceries bill. This relentless focus on making their customers better off brings more than 1.5 million users to the app every month.
Investors are more and more interested in backing entrepreneurs who have built purpose and value into their business. The rationale is that if you put consumers first from the get-go, you will stay on track and succeed. If you try to introduce alignment with what is good for your customer later, after your business is already moving in the wrong direction and at high speed, it will be extremely difficult to correct your course.
But if you solve a real problem in people’s lives, and do amazing things with technology, the rest will take care of itself. Those are the businesses of the future.