Ethical growth for startups and how new businesses can apply this from day dot
If this pandemic has taught us anything, it’s that change and disruption on this colossal scale, really has the potential to highlight the pros and cons of big business vs startups. While the startup cons no doubt include a vulnerability to externalities, through factors such as short cash flows and unreliable customer books, the flip side is the flexibility with which to grasp the new opportunities.
For while the large businesses are taking a metaphorical age to turn their lumbering juggernaut organisations, the new businesses and startups are the one’s pivoting and thinking outside the box at pace.
And while this ability to react faster has shown to be true across most aspects of business, such as the shift from traditional to e-commerce and progressive HR policies like unlimited holidays and remote working, where startups and new businesses really excel, is in the big cultural and value-based conundrums, such as ethical growth.
What is Ethical Growth?
Ethical growth is tailor made for the post-COVID-19 era. At its core, it is a mindset and process, tenaciously focussed on sustainable growth, in which everybody wins. It means that the growth that is created has positive societal impacts and rather than being short lived, it creates the platform for long term sustainable growth. It places an importance on activities that are positive to humans, society and the planet, meaning that all aspects of a business, from its purpose through to its methods, partners, and activities are all ethically and socially responsible.
And importantly it does this without the need to compromise commercial growth or success. Rather it flips that on its head, making ethical business practice a positive differentiator. Ultimately, it’s an approach to growth that is Win, Win, Win. A win for the business, a win for their customers and a win for society.
Why are startups and new businesses best equipped for it?
A business's true purpose and values are not something that can credibly be changed overnight. Where established businesses classically fall down, is in virtue signalling to ethical causes, while ignoring the contrary evidence within their business, such as the much publicised putting up of a black tile on social media in a show of support for Black Lives Matter, despite having a white only Board and woefully low proportions of BAME employees.
A startup or new business on the other hand, can get this right from day one. The owners can have frank conversations around what is important to them and ensure that shines through in everything about the business going forward, from their supply chain, to their recruitment, all the way through to their marketing and comms. An approach to growth that is ethical therefore becomes core to the businesses values and at no point feels forced.
What is the case for Ethical Growth?
Globally there is a movement towards the need for all businesses to become more ethically and socially responsible. The pandemic has laid bare the faults of capitalism for all to see and shown that for the sake of our planet and for future generations, growth cannot be at any cost and only accountable by GDP. The big business case for the ethical approach to growth is ultimately happy customers, both internally and externally. Younger talent now demand that businesses act this way and will seek out employers who do good and will often be prepared to be paid less to work for them.
Consumers too are ready to reward businesses that grow ethically, with loyalty and devotion previously only reserved for the coolest lifestyle brands. In a recent global study by Forbes, it was found that consumers were four times more likely to purchase from a brand that was purpose driven, 83% said companies should only earn a profit if they also deliver a positive impact, and the UK emerged as one of the top two countries most likely to trust, champion and protect a brand with a strong purpose.
This movement has only been accelerated by the global pandemic, so while for now it is likely to serve as a competitive advantage to operate this way, it is highly likely that it will soon become a hygiene factor that all businesses need to conform to.
How to apply this from day dot?
It needs to be baked into everything from Day One. As a Founder or team of Co-founders, take the time upfront, to think about your purpose. This is not just about wanting to sell the company for £10m in Year 5 or wanting to be the Apple of the shaving world, it is about what the business is going to stand for and what good it is going to deliver. A bold affirmation of its reason for being in business, conveying what the business stands for in ethical terms. We’ve always been fond of the Start With Why approach that was made famous by Simon Sinek’s popular TED Talk and have found this to be a useful methodology to help our clients arrive at their purpose.
Next you can start to apply ethical ideas that make a big difference, with relatively little effort and which are rooted in your core purpose. It's much easier to dedicate say one percent of your time, or revenue, or product, to philanthropic causes when you’re small than it is to retrospectively do this when you’re big.
And it’s vital to realise that you alone won’t change the shape of society or the planet, but if other businesses start thinking and acting the same way, the collective difference that will make is phenomenal.