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Not All Social Investors Are Tree Huggers (And Vice Versa)

27/12/2016 19:35
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tech for good

Investing in social businesses isn't about hugging trees. Having run several 'for profit' digital businesses over the years, I'm an unrepentant capitalist who recognises that whilst money doesn't grow on trees, nothing is more important than sustainability

My biggest company was IRIS Software, which I grew from £30m to £500m and from 100 to 1,200 employees, (most of whom became shareholders, which is pretty rare for a Private Equity backed business). However, the growth journey made me aware that while institutional investors obsess over the hard numbers, too often their short term focus means they forget or ignore the softer, harder to quantify factors that are crucial to success.

I know as a social investor, I can enjoy returns that are at least as good as those made by venture capital and private equity companies - and what's more, deliver a real difference to society. That means satisfying the needs of all stakeholders: shareholders; employees; community; environment.

In my experience high growth businesses, regardless of sector, have some similar characteristics - the most important being a clear sense of purpose and an outrageous "stretch goal" growth ambition.

I also see organisations as shaped a bit like an ancient Greek temple.
The foundations are a clear sense of direction and strong, genuine employee values, cemented by teamwork. The pillars which hold the roof up are the areas of core competency and differentiated expertise. The roof is tiled with testimonials of customers delighted to recommend the business to others. They understand their core competencies, which are generally built upon a true understanding of market/customer needs and the agility to respond over time as those needs transform.

Theresa May wants to build a "country that works for everyone" and a key foundation to achieve this is mission led businesses that have a positive impact on society. This is absolutely achievable.

This idea isn't new. During the industrial revolution, the likes of Wedgewood, Cadbury and Lever knew that looking after their workers, housing them and building communities was good for business. They recognised the direct correlation between social purpose and profitable growth.

Moving forward a couple of centuries and demand for businesses to have a social focus is growing. Three quarters of millennials now actively research the behaviour and policies of the brands they buy - and the majority want to work for a company that makes a positive impact and are willing to work harder if it does.

Whilst the best examples of mission led businesses are the likes of Unilever and Patagonia, even some of today's best know digital 'villains', Google and Facebook, are having a positive impact by trying to bring free WiFi to all seven billion people on the planet. This would revolutionise advances in areas like healthcare, trade and education. The direction of travel is positive.

In the Information Age, if you're not authentic it doesn't take long to be found out. A lack of credibility and integrity is destroying trust in brands, charities and more recently governments, as witnessed by the political upheaval of the US elections and Brexit. Think VW on emissions, John West on dolphins, Charity Chuggers and Kids Company.

As a society we're facing significant challenges - economic inclusion, vocational education, shortages in healthcare to name but a few. A sizeable and growing gap exists in supplying solutions to these problems as governments are too short term / out of touch - and NGOs and charities aren't self sustaining and don't have the capacity to address these issues alone.

It's here that scalable social digital businesses can make a significant - and profitable - difference. Technological development is accelerating, disrupting, democratising and converging so fast.

Just blink and driverless cars, artificial intelligence, virtual and augmented reality will be mainstream. They will have a crucial role to play in delivering impact.

On a personal level, I'm very interested and involved in two key areas.

The first is finding ways we can use technology to provide more cost effective medical solutions to support our ageing population. Successive Governments just kick this healthcare can down the road and pretend the NHS can cope - it can't.

Another theme close to my heart is finding and mentoring companies helping get more people into employment and self-employment. To date I've backed three businesses in this sector - Latimer Creative, Policy In Practice and Digital Mums.

In summary, I believe it's crucial we work together to widen the appeal of social businesses and a more collaborative partnership between business, government and the third sector which can demonstrate that business can be a force for good and crucially, that you can do well by doing good.

That way we can go viral and create an epidemic of for profit mission led social businesses.

HuffPost UK Tech is running a two-week focus on our Tech For Good campaign, which aims to highlight the technology that is driving social change and making a positive, long-lasting difference to our world. If you'd like to blog on our platform around this topic, email ukblogteam@huffingtonpost.com with a summary of who you are and what you'd like to blog about.

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