Jenny is VP of marketing at a $150 million company. Each year for the last three years, her CEO has given the senior team a set of measurable goals. They get a huge bonus when they meet the goals. Every year they’ve met them.
Some of this year’s key goals:
– $30 million in new revenue.
– Double the number of small-business customers.
– Do this without impacting profitability.
Jenny is confident she will meet the goals this year.
And that’s how I know the people in Jenny’s company are passing up a huge opportunity to improve our world.
That’s right. Follow me:
Jenny’s company has a simple but powerful formula for financial success that works every year:
– The CEO sets goals that are easy to measure (all numbers).
– He fully empowers his team.
– He pays them a big bonus when they succeed.
The goals are like a puzzle – they only fit together in certain ways, and when the team solves the puzzle they get a big reward. They bring all the creativity and hard work necessary to solve the puzzle.
Last year’s puzzle included, “Do this without impacting profitability.” It would be easy for Jenny to generate the new revenue by lowering prices, or running a massive ad campaign. But the puzzle is harder than that: she has to find ways to reach new customers without spending too much or lowering margins.
Remember, Jenny told me she is confident she will reach her goal. She’s done it three times before. The team has already come up with multiple creative ways to go after new customers.
Now, here’s where Jenny and everyone else in her company is missing an enormous human opportunity.
Jenny’s company will make no measurable impact on any of the biggest challenges in our world: poverty, clean water, clean energy, conflict, education, disease. The company has no social focus at all.
Why? Because there’s no social impact goal tied to their bonus. It’s not a part of the puzzle. Jenny won’t spend any time on it. None of the team’s creative potential will go toward it.
My critic says, “But Salah, it’s not the role of a business to solve social problems. Whatever energy they would use to solve social problems could be used to make more money, which is the purpose of the business. You’re just making the business less effective by injecting extraneous requirements.”
That’s a fallacy that is preventing us from using the vast human capacity in businesses from making big strides toward solving our world’s greatest challenges.
Let me show you how:
Give Jenny this extra goal: “Reduce the number of children who are hungry every day next year by 1,000.” The last part of the CEO’s puzzle is still, “do this without impacting profitability.” Jenny can’t just donate a million dollars to meet the childhood hunger goal, any more than she could just lower prices to meet the sales goal.
The worst possible way to meet this goal is to figure out how to earn more money as a company and then donate the money to organizations that feed children. That will cost over a million dollars. If that were the only way to solve the problem, I would have to agree with my critic.
But that’s not how Jenny is going to solve this puzzle.
Jenny is going to develop creative solutions that integrate the goals – just as you would approach traditional company goals. She will use the social goal as a tool to help meet the financial goals, and use the financial goals as leverage points to meet the social goal.
She might use the requirement about childhood hunger to create new opportunities and tactics for marketing and selling. She might bring opportunity to customers and vendors around the childhood hunger goal that result in a financial benefit. If Jenny is effective, her team will develop a strategy that doesn’t treat the social goal as separate, something outside the main plan, something to figure out at the end. She will use the social goal to help solve the total puzzle.
If Jenny’s CEO will create a social goal that is measurable and clear, and make the team’s bonus dependent on it, he will find what I and other social entrepreneurs have found in our own business experience:
– Brilliant new creative marketing ideas arise from the team.
– New partnership opportunities emerge.
– New dimensions for business appear with customers and vendors.
– A new kind of passion and creativity ignites inside the organization as employees start to see that their work every day is human, not just financial.
Every day millions of people go to work to solve the puzzles presented to them by their company leaders. And almost none of those puzzles include working on the most important problems in our world, because leaders have made the mistake of thinking that the social goal will diminish the business results. That’s an error, and it’s leaving an enormous amount of positive social change on the table.
I challenge every company leader to try this experiment. At your next goal-setting time, add one measurable social goal to your puzzle. Give it teeth: make it as important to the bonus as everything else. Make it impactful: work on the most critical social problem you can. Help your team understand that this goal isn’t a tactic – it’s not a corporate sponsorship donation or a volunteer day. It’s to be integrated into the plan and leveraged, just like the financial and operational goals are.
See the results for yourself. You will never go back, and your whole business will become a part of solving the real puzzle: how our society will cooperate to address the greatest challenges in our world.
3 thoughts on “Solving The Puzzle”
Yes! Great post Salah. Once we unleash the massive power of commerce to aid the human condition our society will become healthier and vastly more stable.
A major benefit is that people will find more meaning in their daily work.
Very interesting case study, Salah. A great next step would be to identify companies that are acting on such a scenario and document their social goals, strategies and overall success at both social goals and shareholder goals.
I fully agree that a social enterprise operated to benefit a nonprofit financially should operate and compete as a business. About half of the social enterprises formed in nonprofits also make an additional social contribution in hiring or purchasing from disadvantaged populations.
Soap Hope is also a very interesting model. Would love for you to speak at one of our Social Enterprise Alliance North Texas meetings about the strategies, success and challenges of running such a business with social goals and seeking growth.