Raising Social Capital: Book Excerpt

Gregg Feistman:

The following is an excerpt from Raising Social Capital: Corporate Advocacy and Impact in a Time of Social Change.  

The business environment is changing at a rapid pace. Whether it be the speed of information or the public calls to “do better,” the global pressure on businesses to re-think their socio-political role is simply undeniable. The political landscape is no different, with sweeping changes in policy and regulatory environments brought on through elections and global social movements. Change is upon us. Change is hard. Change is risky. More importantly, change is manageable. 

This book provides a 360-degree look at how global social change trends are affecting today’s businesses and offers a set of effective management tools for creating a successful “profit plus purpose” roadmap. As any successful founder or leader will tell you, staying ahead of the curve is key to mitigating risks and maximizing returns. With this in mind, we take a deep dive into the risk-reward ratio as it pertains to what some call purpose driven business and others refer to as “stakeholder capitalism”. We take a broader view of these terms and situate them under the umbrella of a company’s “business social purpose.” From this perspective, we look at the rise of corporate social advocacy, employee and consumer activism, the battle for sustainable business practices and how senior leaders can effectively manage competing interests while maintaining a profitable business strategy.

As we examine the rise corporate social advocacy and business social purpose, we dive into controversial topics such as DEI and ESG, offering cautionary tales of boycotts and buycotts. We explore the treacherous waters of polarized media and warn against the dangers of CEOs going rogue on social media. We look beyond the messaging and examine how companies are making real social impact. In the final chapter we include a roadmap, offering tools and strategies for creating a profitable yet purpose driven business strategy. Simply put, this book is about re-thinking the way we understand the modern business environment from a business social purpose perspective. 

We invite you to think differently about the nature of businesses in today’s society. Specifically, we call for a movement away from competitive “shareholder versus stakeholder” and “profit versus purpose” modes of thinking, arguing instead for an integrated understanding of profit with purpose. Moreover, we integrate contemporary research and expert advice from business management, communication, social psychology, and organizational leadership to formulate a set of tools for raising social capital and developing an authentic business social purpose. 

Business Social Purpose

Business social purpose broadly refers to a company’s primary social identity and how it integrates seamlessly into their business strategy. As with people, businesses project multiple identities. Stakeholders such as customers, employees, investors, suppliers, regulators, and the media tend to focus on the identity most salient to them. For example, consumers tend to see brand personalities (aka, brand identity) while activists and advocacy groups might focus more on their philanthropy or sustainability identity. Take a company like Patagonia for instance. Customers might identify them as an outdoorsy brand, while environmental groups see them as a green company. Investors identify Patagonia as innovative while financial markets see a profitable organization. Employees identify with Patagonia’s inclusive work environment, while media highlight their status as a pro-social business icon. These are all dimensions (or identities) of the same company and they can move seamlessly between them. It is incumbent upon businesses to integrate these identities into a cohesive strategy that serves their core constituencies (including shareholders) while effectively (and profitably) delivering their core products and services. 

Historically, companies have largely been identified by their primary profit purpose such as technology, energy, finance, durable goods, etc. We invite business leaders to think more about their social purpose and how that aligns with their profit purpose. Much in the way people fulfill multiple roles to multiple people (e.g., parent, sibling, coworker, teammate, neighbor, pet owner, customer, community member, etc.), businesses can (and routinely do) fulfill multiple roles for various stakeholder groups (e.g., supplier, employer, client, community member, tax provider, philanthropist, innovator, etc.). Likewise, they can – and should- fulfill both the core business and social purposes to their clients, customers, employees, communities, etc. 

While an organization’s primary role should remain their profit objective (i.e., in the Patagonia example it would be outdoor apparel company), this does not preclude them from integrating a secondary role aimed at achieving social good. This is known as their business social purpose. 

While some still subscribe to the 1970s profit is the only thing that matters philosophy, we contend the time for a shareholder only business strategy is obsolete. 

For the businesses pulling back or continuing to stand on the sidelines waiting for the perfect moment to enter (or re-enter) today’s playing field, opportunity is passing them by. As social capital continues to decline in a polarized, digitized society, companies have the unique opportunity to step into the void, raise our collective social capital, and be rewarded for this.