Can sustainable business and economic development work together?

Can sustainable business and economic development work together?

Human chain image by STILLFX via Shutterstock.

Studies from the likes of Harvard, MIT and the HIP Investor demonstrate the positive economic impact implementing environmental and social innovation programs have on corporate market value. We also know the importance social programs have in providing service and financial health to our communities.

The studies quantitatively show the corporate financial impact of doing well by doing good. Yet when economic development agencies enter this conversation, social entrepreneurial program viability is dismissed as trivial or some form of ersatz nonprofit charity. One reason is the absence of direct studies of the relationship between social innovation and economic development in the United States.

When my book, "Creating Good Work – The World's Leading Social Entrepreneurs Show How to Build a Healthy Economy," came out, we thought the concept was something akin to a warm puppy -- something everyone wanted to hold.  

But what we encountered from the traditional business economic development agencies came as a bit of a shock: "We don't care if we're creating good work or bad, we just want to create work."

When I assured them that they might not want anyone to hear what they were saying, they recognized the potency of their declaration. However, when I mentioned The HIP Investor's statistics to these mavens -- that companies with a higher ratio of human impact to profit (HIPness) than other companies outperform the market by 4 to 5 percent -- they visably recoiled.

The notion of social good that makes financial profit was tolerable, if it were true. Well, the statistics don't lie but they also don't tell the whole story.

The only studies about the impact of social innovation on economic development I could find came from Italy, in which flourishing economic nonprofit organizations played an increasingly central role in the economic and social growth of the northern Italian region of Emilia Romagna.

Not coincidentally or without significance, this region also was home to the largest manufacturing output region in Italy. And while these social cooperatives never returned vast wealth to their owners, they proved more than apt at producing enough wealth over a sustainable period to play "an important role in the national economic system."  

The intention is not only to improve the understanding between economic development agencies and social innovators, but also to provide EDCs with a banner under which they can proclaim that they are indeed creating good work and building a healthy economy.

That requires three key ingredients:

1. An ability to nurture resilience: Being able to change personally, allow that others change, too, and making sure the system within which you operate can accommodate change and adaptation without blowing out its boundaries.

2. The creation of work that is meaningful and purposeful: Work that is generative and benefits others.

3. A focus on lifting all boats: A willingness to establish wealth for 100 percent of the population, as opposed to establishing work systems that produce vast wealth for the few and less for the many. This is also about recognizing the commonwealth we share together, not just our parks, roads, lakes and trees, but our expertise, knowledge and wisdom, as well as our compassion and generosity.

So, how do we put this into action and build the relationships necessary to satisfy the needs of both our economic development agencies and our social enterprises?

The process begins by initiating the conversation. Sit down and start talking about the economic needs of the community. Establish what you share in common -- a better and healthier economy in the community in which you live.

But before you define what you can do together, it's best to have your facts and figures together. Studies demonstrate that when any business operates with a healthy cultural relationship to the society within which it exists, it outperforms the market. The more businesses focus on human impact, the better they do, the better the community does and the better the economy does.  

Now, imagine the impact on the economy of social businesses dedicated to creating good work.

So how do we work with those who don't care if they are creating good business or bad? One way is to engage them in the process. Remind them that you are aligned in what it is you both are after: a healthier local economy.

If they are still unwilling to shift their perspective, you marginalize their indifference. You don't try to go through them or fight them. You go around them, over them, under them or you simply ignore them. Sometimes you have to go outside of the system and show success in order to be brought back in and bring the old system along.

It begins by taking action that will influence the economic development perspective. When I met California Business and Economic Development Agency's Louis Stewart, who leads a series of innovation hubs around the state, we began discussions around operating a pilot program with one of the iHubs to see how infusing ideas of creating good work and building a healthy economy could inform business as usual.

At the same time, a university credit union and CDFI decided that they could work together to bring more business loans to enterprises creating good work. And now it appears the local iHub is about to relocate onto the campus the credit union serves. Suddenly a model is in place that would benefit all the players -- and especially those businesses not interested in equity financing.

With these partnerships in place, now there is an opportunity to create an innovative program that could be a model used, in this case, statewide.

The message: To take their rightful place in the economic community, social enterprise and businesses must model the behavior they want others to emulate by building the collaborations and demonstrating the partnerships in action.

The real test is action.

Human chain image by STILLFX via Shutterstock.

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