Many businesses are thriving in spite of the major challenges presented by the COVID-19 pandemic through increased stakeholder connections that strengthen worker and customer commitments, resulting in greater company performance. One common thread among companies that are weathering the storm most successfully is an authentic and integrated commitment to purpose larger than profitability or growth. Indeed, in the last financial crisis, Certified B Corporations were 63% more likely to survive than other businesses of similar size.
As a longtime operator and investor in socially responsible businesses, John Replogle knows a lot about running businesses with purpose. A recommendation on his LinkedIn profile recalls his role — then as CEO of Burt’s Bees — in a recycling audit. This participation was not calling for the audit or designing it. He joined colleagues to go through trash bins in the office and confirm that waste was being properly sorted.
This level of authentic commitment to the business’s impact on the people and planet around it drives positive results can help mitigate the risks of a crisis, whether financial or public health-related. Another B Corp CEO, Jessie Gould of Ox Verte, said her food company’s successful pivot was guided by the company’s core values, as with everything it does. And this time, “because of the stakes involved — our company’s very survival — and the level of uncertainty” related to the COVID-19 pandemic, those values were even more tangible as she and her team designed a way forward that included stakeholder connections and made the requisite changes.
How exactly are these purpose-driven companies outperforming their peers in this difficult time? Four themes emerged that might entice other business leaders to do the work of connecting to purpose as the way to survive this pandemic rather than a “nice to have” if and when they do survive.
Fast and Effective Innovation
“When you put constraints around a situation creativity actually goes up because you’re trying to innovate within a limited space,” says Joey Bergstein, CEO of Seventh Generation, a B Corp that makes nontoxic and low-waste personal and home cleaning products. As demand for Seventh Generation’s products multiplied this spring, its R&D team’s focus shifted from new product development to qualifying new materials that could maintain its standards while providing continuous supply at triple and even quadruple normal production levels. The team’s commitment to “providing home and personal care products that are better for you, your family, and the world around you” made this transition seamless.
When the Leesa Sleep team heard there was a potential gap of a quarter of a million hospital beds, they realized that they could be of real assistance as a mattress company. Of course, hospital beds are different from Leesa’s commercial offerings. The company’s fastest product launches take about nine months from idea to customer delivery. This spring, their team designed and shipped a complete hospital bed kit—with a newly designed mattress, as well as a cover, pillow, and wedge to provide suitable elevation for COVID-19 patients—in less than three weeks. The learnings from this accelerated process already have carried over to Leesa’s core business, with a new at-home mattress developed in just four months, less than half the normal timeline.
When the demand for a product is as tangible as sick patients needing hospital beds, a values-driven team can rally to the cause and outperform all expectations.
Flattened Hierarchy and Flexible Roles
Replogle, now CEO at Leesa, credits some of the speed of the company’s product launches this spring with the barriers that were removed in the decision-making process by flattening the company’s hierarchy. The company’s daily all-hands Zoom meetings enable a higher level of transparency and participation. “We have a lot of people leading who would’ve never had the opportunity prior,” he says, because of the company’s functional team divisions and operational processes.
Pressure to Do the Right Thing
In the anxiety-producing environment of a global pandemic, Bergstein says, “people are more and more conscious of the things they buy and the companies behind them. They’re looking at what companies do through this crisis, and they’ll support the companies that do the right thing.” He hopes this crisis will encourage people to shape a more sustainable future because of the light it has shed on the fragility of our survival on this planet.
Consumers’—and employees’ and investors’—demand for companies to address all stakeholders’ needs was already on the rise before COVID-19. When lives are at stake, corporate indiscretions feel particularly distasteful. Having been deep in the responsible business community for decades, Replogle saw the return of federal Paycheck Protection Program funds by large, publicly traded companies as an indicator of a new climate. Martin Whittaker of JUST Capital suggested that the pandemic will put shareholder primacy and profit-maximization to rest for good.
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Engaging stakeholders Makes Work Human Again
The human-ness of the risks related to COVID-19 has changed our perception of work that is more human, from health care to meal and package delivery. The illusion of workers as high-performing machines without the needs or nuance of living creatures has been shattered, as we hold kids and dogs on laps, stay mindful of the well-being of ourselves and our loved ones, and pay more attention to procuring basic goods. This has forced a much-needed re-examination of working conditions for people in all roles and industries.
As one example, Gould of Ox Verte highlights the damaging expectation of free delivery created by Amazon and other investor-funded companies choosing to take losses to win market share. “The end of the line is always human, with a few drone exceptions,” she says. “And there is there is never anything free about human labor, and it’s devaluing to say otherwise.”
At Seventh Generation, Bergstein has made sure that all of his employees are able to put their families first, which means increasing flexibility and re-examining priorities and deadlines in recognition of the fact that 70% have children who are now at home all day.
Leesa has a midday embargo on meetings so that parents have a midday break to make lunch, check in on home schooling progress, or take care of other family commitments. Thy are encouraging employees to include kids and pets in meetings, and holding virtual meditation, yoga, workouts, and happy hours (with or without alcohol) to keep employees connected.
It’s not that these businesses aren’t challenged by the restrictions, economic contraction, and uncertainty of today’s reality. Leesa had to reduce employees’ salaries by 20%. They set very clear and transparent benchmarks that would enable them to get back to full pay, and are well on the way. Ox Verte’s business volumes in the new home delivery model is also not what it was pre-pandemic.
But having a reason to get up in the morning larger than enriching their shareholders or shipping another pallet of mattresses or paper towels sets these companies up for success, no matter what comes next. They are finding ways to achieve their purpose and maintain, or grow, their profits. In Replogle’s words: “Enduring institutions will become masters of the ‘and’ — figuring out how to care for people AND their shareholders.”
about the contributorS
Jesse Kerr – Creative Commissioner | Sandbox Centre
Jesse is always multitasking.. . . and seems to thrive when juggling priorities and deadlines. He’d tell you he’s adaptable because he builds in room for error, adjustment, improvement, alteration and mitigation of foreseeable road blocks into his vision. However, anything that falls outside of this range of acceptability is quickly dispatched because “ain’t nobody got time for that”! He’s not good at collaborating in large groups – but he sure is good at entertaining them! We’re pleased to offer you his perspective that includes his margin for error; alongside an imagineered vision of greatness. Question is – are we going for good, better or best? Cheers!