Doing business and doing good at the same time
by Kate Pavao, November 2013
The English language has grown a few new words in the past years: Ridesharing. Crowdfunding. Microfinance. Triple bottom line. These terms reflect new ways of doing business and doing good at the same time—what William D. Eggers, global director at Deloitte Research and coauthor of The Solution Revolution (Harvard Business Review Press, September 2013), calls the “solution economy.”
“Players from all across the spectrum—business, government, philanthropies, social enterprises—are all converging to solve problems and create value,” Eggers tells Profit. “The list of problem solvers, finding and designing creative new solutions, is long and growing rapidly every day.” He explains how IT is helping a large number of players—including everyday people—participate in creating life-changing projects, and why executives who stay focused on win-win solutions might have the biggest impact of all.
On technology’s impact: What’s happening now just wouldn’t have been possible 15 years ago, or things would have taken so much longer. What we are seeing is an example of positive supply shock, which is when new disruptive technologies drop costs and boost output and consumption.
For the solution economy, analytics, cloud computing, collaborative technologies, and mobile have dramatically reduced the transaction cost of scaling up.
For the solution economy, analytics, cloud computing, collaborative technologies, and mobile have dramatically reduced the transaction cost of scaling up—and made it possible for regular citizens to participate in all these different ways, from crowdfunding to ridesharing to impact investing.
On breaking down silos: Most very complex problems are too big to be solved by one entity. You need help. You need an ecosystem with people focused in different areas. This allows you to specialize, scale up with what you’re particularly good at, and then partner with a lot of other entities.
On different models: In this economy, you’ve got startups that strive to both make a profit and solve a big problem. Then, there are social enterprises, which are focused on their mission, and subsidize that with other businesses. Also, there are big companies engaged in solving really big problems and asking “How do we solve this by using the core of our business?”
number of crowdfunding exchanges in operation worldwide at the end of 2012 (Source: The Solution Revolution)
On win-wins: Executives at Coca-Cola identified a big problem: Too many people are dying every day from a lack of clean water. They also need clean water for their product so they can expand their markets in Africa. In 2005, they started Safe Water for Africa as part of their clean-water initiatives.
Wal-Mart is playing a major role in Michelle Obama’s fight against obesity by building stores that provide produce in food deserts around the country, where there are no fresh fruits and vegetables. These stores solve a big problem and help Wal-Mart expand its business into new areas they hadn’t been necessarily before.
We’ve moved beyond corporate responsibility to how do we actually solve problems. It’s not enough to write a report anymore. When executives at these companies use the core of their business to solve problems, it’s actually sustainable over time.