So, what makes a mission driven company? 14 Aug 2017 Post by: Steven Moe
So, what makes a mission driven company?
Came across an interesting report from November 2016 published in the UK called: “In pursuit of impact: Mission-led businesses”. A copy can be accessed here.
One of the most interesting parts was how they actually decided what a mission led business was and their criteria for determining that. In the introduction they note: “This report sets out an approach for defining and identifying businesses that have no legal restrictions on their profit distribution but which have a genuine commitment to wider social and environmental impact. As an emerging business trend, it is too early to describe this as a clear ‘sector’ or ‘market’. It is better described as a movement or an approach to business where social impact is seen as a critical driver of value creation.”
Essentially they had a weighting system for different components of a business and it had the following parts. I think this is helpful to analyse in order to see how businesses we may be starting, or involved in, might weigh up.
Strength of strategic commitment to a social or environmental mission
Business Model: 25%
Centrality of mission in core business activity and profit distribution
Governance and operations: 20%
Integration of mission across governance, business operations and ways of working
External perception: 15%
Public recognition for business commitment to mission
A company can get a unique rating based on an assessment of objective criteria relating to each of these component parts. They actually provide an even more detailed background on each one of those four elements as well which shows the weighting for each:
- Intent: Central Ambition is given 80% and long term commitment is given 20%.
- Business Model: Core commercial activity is given 60% while Profit distribution is given 40%.
- Governance and operations: Governance structure (20%), Mission integrated in operations and ways of working (40%), Impact related activities integrated with mission (30%) and Impact reporting (10%).
- External perception: Press reports and awards is given 100%.
I found it interesting that in undertaking their research they specifically excluded charities and community interest companies and focussed solely on profit making company structures.
One of the interesting quotes I came across in the conclusion which I agree with was: “Businesses that did not have access to quality advice often chose their legal structure randomly.” In all the report concludes that 4.3% of turnover in the UK private sector related to mission driven businesses (that’s 165 billion pounds).
Not unlike B Corp status, this way of thinking is new and challenging when it comes to how we actually define what a company is. It is one thing to claim to be about a purpose or to be advancing social good but what are the metrics that are satisfied to objectively show that? What might the impact be of thinking in this way for social enterprises and people who want to do good with their new companies (or, for that matter, with existing ones). It is certainly worth thinking through when it comes to setting up a business and working out how it will operate.