Why you should care
Because massive corporations wield enormous power.
OZY and JPMorgan Chase & Co. have partnered to bring you an inside look at how entrepreneurs are coming up with innovative methods to help the communities around them. Enjoy the rest of our special series here.
Much has been made of the rise of Detroit, just four years after the Motor City filed for bankruptcy in 2013. Yet, while the downtown area’s rejuvenation is visible — see the artsy transplants sipping craft cocktails on The Keep bar’s patio by Cadillac Square — venture outside the city’s heart and Detroit begins to look more like you expected: Vacant lots and boarded windows. To revive these outer neighborhoods, they need new businesses and jobs. And to stop existing residents from getting washed out on a wave of new prosperity, they need opportunities to create those businesses and jobs themselves.
For as long as anyone can remember, it’s been the role of government to solve problems like this. But with the list of social crises growing — unaffordable housing, vast swaths of society with obsolete job skills, an opioid epidemic and poverty-stricken neighborhoods, to name but a few — there’s growing support for the idea that corporations are better placed to take on the job.
As Alice Korngold, author of A Better World, Inc.: How Companies Profit by Solving Global Problems…Where Governments Cannot, has said: “It’s multinational corporations, and not governments or nonprofits, that have the human and financial capital, advanced technology, international footprint, market power and financial motivation to solve the world’s most daunting problems.”
Korngold isn’t the only commentator throwing around this theory. William D. Eggers and Paul Macmillan, who together wrote The Solution Revolution, argue multinationals, nonprofits and social entrepreneurs should “compete, coordinate and collaborate to solve megaproblems.” And economist Michael Porter has argued for what he calls “shared value,” where companies sell products and services that solve global issues. “If you can meet needs at a profit, you can scale,” he says.
Some of the world’s biggest organizations are now tasking themselves with solving ambitious predicaments — predicaments that, in being resolved, open new doors to profit.
Little wonder that corporate responsibility (CR) programs are moving beyond mere monetary donations, or a quick shift at the soup kitchen. Some of the world’s biggest organizations are now tasking themselves with solving ambitious predicaments — problems that, when fixed, open new doors to profit. Note that solutions aren’t always “sold,” as Porter’s model suggests; rather, by funding certain programs, or providing certain free services, companies create conditions that benefit their bottom line.
Consider the “Invested in Detroit” initiative from JPMorgan Chase. The firm is pouring $150 million into small business and jobs training in the city’s still-struggling neighborhoods. The big idea? To empower residents to save their own communities, taking ownership of building a thriving local economy. JPMorgan Chase isn’t investing in this just because it’s the right thing to do. Successful societies with good incomes need capital to buy homes and expand enterprises — and, as the firm’s global head of corporate responsibility, Peter Scher, says, that’s “a good thing for banks.”
Let’s take another industry. Microsoft’s pro bono TEALS program sends skilled staff to teach computer science classes in schools. “Computer science education is critical, as technology is a major driving force behind our economy,” says Karen Bergin, Microsoft’s director of employee engagement. ”Yet, there aren’t enough qualified teachers to teach the subject and prepare today’s students for tomorrow’s jobs,” she adds. Microsoft volunteers also teach the teachers, so they can begin leading classes too. TEALS launched in 2009 with one school; it is now partnered with 348 schools in 29 states.
True, boosting kids’ skills in computer science yields better job opportunities for them. It could also reduce the risk of a tech skills gap that would grind the nation’s economy to a halt. But it’s also not a bad idea for Microsoft to have a larger pool of skilled workers to draw from. Or, indeed, to maintain a tech-driven economy.
Similarly, Comcast, the telecommunications conglomerate, has an “Internet Essentials” scheme promoting “digital inclusion.” Internet Essentials provides low-cost, high-speed internet, affordable laptops and PCs, and digital literacy tutorials to low-income customers, under a mission statement about bridging the digital divide.
Sure, giving underserved communities the chance to take part in digitally driven prosperity is a piece of social do-gooding. But a bright future of digitally-engaged, high-earning workers is also going to benefit a business that sells broadband internet. That’s not to say anyone has ulterior motives. By “making the world a better place,” corporations also make it a more profitable one.