Profit with Purpose, less Ethics

How far would you go to take credit for someone else's work and deny them a voice?

When my late colleague spoke out about organised crime and abuse of disabled children for profit, he was putting his life on the line.

He was also putting a new way of doing business for social purpose on the table and calling for the support of would be social investors to place all of these children in loving family homes. Removing children from institutions would reduce state costs. Many had died through neglect  .

"The most urgent component of the project below is relief and modern medical treatment for tens of thousands of Ukraine's children diagnosed as psychoneurologically handicapped. Many have died in state care, in primitive and inhumane conditions. Many are misdiagnosed, and end up in atrocious conditions. Following intense publicity and public discussion of the issue during final preparation of this project, Ukraine's government agreed on 5 March, 2007 to open more than 400 new treatment facilities for these children all over Ukraine. That commitment from Ukraine’s government was a major step forward, clearly demonstrating Ukraine’s willingness and ability to take initiative in childcare reform first and foremost."

It's been a decade since we introduced our working model of business for social benefit to the UK, having delivered proof of concept in Russia by sourcing the Tomsk regonal initiative in 1999.

The original concept came from a position paper for the US President. It was distributed free to use. A contrbution to the global commons.

The UK business plan shared widely with the social enterprise community and government agencies, called for profit to be deployed to tackle this issie of poverty which. we warned would inevitably lead to global uprisings.

"While the vast majority of people in poverty suffer quietly and with little protest, it is not safe to assume that everyone will react the same way. When in defence of family and friends, it is completely predictable that it should be only a matter of time until uprisings become sufficient to imperil an entire nation or region of the world. People with nothing have nothing to lose. Poverty was therefore deemed not only a moral catastrophe but also a time bomb waiting to explode."

Interviewed in 2004 about his work in Russia, founder Terry Hallman said:

"The problem is that profit and money still tend to accumulate in the hands of comparatively few people. Money, symbolically representing wealth and ownership of material assets, is not an infinite resource. When it accumulates in enormous quantities in the hands of a few people, that means other people are going to be denied. If everyone in the world has enough to live a decent life and not in poverty, then there is no great problem with some people having far more than they need. But, that's not the case, and there are no rules in the previous capitalist system to fix that. Profit and numbers have no conscience, and anything done in their name has been accepted as an unavoidable aspect of capitalism."

 

For the last decade or so, government has funded a social investment task force which recently delivered a report suggesting a new Profit-With-Purpose business model as the new frontier for the social economy..

"The report draws on legal innovations in various countries, including the Benefit Corporation model from the United States and market mechanisms such as the B Lab accreditation system. It includes a full draft of legislation for countries wishing to adopt the new model, prepared by Bill Clark of US lawyers Drinker, Biddle and Reath, who has been highly influential in these developments. It also adds a series of case studies illustrating all aspects of the new approach. "

In 2009, learning of the B Corp approach, I'd introduced our work to B Labs suggesting collaboration

Their answer was that they couldn't deal with business based in the UK  

The influence had in fact been the other way around. The argument for the needs of people over profit maximisation having rippled through B Corps, Conscious Capitalism. In nore recent times even the Vatican - we began by asking  - "".  

"At first glance, it might seem redundant to emphasize people as the central focus of economics. After all, isn't the purpose of economics, as well as business, people? Aren't people automatically the central focus of business and economic activities? Yes and no.

People certainly gain and benefit, but the rub is: which people? More than a billion children, women, and men on this planet suffer from hunger. It is a travesty that this is the case, a blight upon us all as a global social group. Perhaps an even greater travesty is that it does not have to be this way; the problems of human suffering on such a massive scale are not unsolvable. If a few businesses were conducted only slightly differently, much of the misery and suffering as we now know it could be eliminated. This is where the concept of a "people-centered" economics system comes in."

This New Bottom Line has proven to be a popular topic on Mckinsey's Mix Market initiative on "Long Term Capitalism" It seems to be alone in describing what has been done rather than what might.

To illustate what we've been up against I share my experience of trying to engage with the "experts" on the Guardian, responding to Mark Kramer's assertion about Creating Shared Value, that business could profit by solving social problems. I was censored:

"Profits can be directly applied to help resolve a broad range of social problems: poverty relief, improving childcare, seeding scientific research for nationwide economic advancement, improving communications infrastructure and accessibility, for examples – the target objectives of this particular project plan. The same financial discipline required of any conventional for-profit business can be applied to projects with the primary aim of improving socioeconomic conditions. Profitability provides money needed to be self-sustaining for the purpose of achieving social and economic objectives such as benefit of a nation’s poorest, neediest people. In which case, the enterprise is a social enterprise.

"In this case, for the project now being proposed, it is constructed precisely along these lines. Childcare reform as outlined above will pay for itself in reduced costs to the state. It will need investment for about five years in order to cover the cost of running two programs in parallel: the existing, extremely problematic state childcare scheme, and the new program needed to replace it for the purpose of giving children a decent life. The old program will be phased out as the new program is phased in. After this phase transition is complete, the state will from that time forward pay out less money for state childcare. Children will have a better life, and will be more likely to become healthy, productive assets to the nation rather than liabilities with diminished human development, diminished education, and the message that they are not important – the basis for serious trouble. There is no need whatsoever to give these children less than a good quality of life as they grow and mature. The only problem is reorganization of existing resources.”

Soon after, from the editor. we were introduced to the suggestion that values like love might be embedded in the business model 

"What is perhaps most interesting is that the call for a return to a values-based approach is coming not only from those at the edge of business but also from those at its very centre.

Business leaders, in fact, are increasingly recognising that we need to develop a new form of capitalism where doing good and making money are not seen as polar opposites, but as conjoined."

No shit?

When I'd approached B Labs, I referred to my experience of unwillingness to collaborate. There was a vigorous discussion 5 years ago on Skoll Social Edge about building a more efficient social marketplace, to which our founder and I contributed on the issue of "turf war" over collaboration. His words resonate:

"So, if we're inventing projects that we know will be stolen, there are at least two problem areas.

First, if stolen, it's stolen. It's not unlike an architect having a building design stolen. The architect/designer is in best position to understand exactly how it works and how to assemble what they've designed.
If someone wants to use a project design, it's the same as any other project design. The design comes after an in-depth research phase, which in my experience tends to be extremely difficult not least from danger involved in shining light under rocks where the core problems are to begin with. That is, corrupt bureaucrats and officials. When I finish the research part -- which I always do so far (Russia/Crimea/Ukraine) -- I know exactly what the problems are, what solutions are needed, and how to navigate. Possibly someone else could take over and manage things from there on -- implementation. I have no problem with someone else implementing a project, and usually prefer that. Even if they do, it's still a matter of stolen property in which we've invested unilaterally to produce. Almost always, however, there may remain critical components that the implementer just doesn't want to bother with. Maybe it's too dangerous. Maybe there are political considerations and conflicts. In that case, the designer is likely the only person(s) to know how to get those done. That's when it's time to consult with the architect.

Second, even if the project outcome, after theft, is what was envisioned by the designer(s), how does the venture qualify as a social enterprise? Sure, we can slowly design projects one by one as income from our funding side permits. We can do it a lot faster if we get paid for our R&D output, just like any designers.

Finally, is it acceptable to build projects with stolen property? What sort of results would that lead to? Can be build an ethical system based upon unethical behavior (such as violations of Intellectual Property Rights)?

If we invent such a system, is it anything new? Or is it just a twist on the old system?

One thing that can be collaborated openly is this: a Code of Ethics. But, whose ethics? What org(s) will enforce them, and how? Who decides who gets in, how, and why?"

His concerns were justified. Within a year we's learn that those we introduced our social enterprise proposal to, were launching one of their own which avoided the "too dangerous" issue of childcare reform. Rather than us, they determined to partner with some of Ukraine's most predatorty oligarchs who'd been seen as the root cause of the problem of Death Camps. For Children

"Excuses won't work, particularly in light of a handful of oligarchs in Ukraine having been allowed to loot Ukraine's economy for tens of billions of dollars. I point specifically to Akhmetov, Pinchuk, Poroshenko, and Kuchma, and this is certainly not an exhaustive list. These people can single-handedly finance 100% of all that will ever be needed to save Ukraine's orphans. None of them evidently bother to think past their bank accounts, and seem to have at least tacit blessings at this point from the new regime to keep their loot while no one wants to consider Ukraine's death camps, and the widespread poverty that produced them.. "

What kind of ethics is it that pushes others aside to establish a "new business model" . We may see the example of David Cameron who tells us how he's come up with an idea to place children in loving family homes.   

 

 

To create the impact on childcare policy in Ukraine cost us considerably, including the cost of our founders life  He was acknowledged for his efforts by a leading civic action organisation in Ukraine, but of course not here, where many would prefer that he had never existed

"The author of breakthru report “Death camps for children” Terry Hallman suddenly died of grave disease on Aug 18 2011. On his death bed he was speaking only of his mission – rescuing of these unlucky kids. His dream was to get them new homes filled with care and love. His quest would be continued as he wished."

Notably when I introduced our approach to UNLTD in 2009, I had once again been censored on their public forum. It was at the time they sponsored a conference about a new form of capitalism.  A few weeks earlier the practitioners had been presenting to an international conference on Economic for Ecology. .

So how would you sell the concept of business which ignores the vulnerable and voiceless to death?. Of course, it's the Invisible Heart.

 

"If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools: " - Rudyard Kipling