Monday, October 8, 2012

It's All In The Name - Good Incorporated

The reason this blog is called A Doctor for Good is due in part to the gentle yet persistent suggestions of my lovely wife. I was hesitant about this title because without the context it can easily comes across as arrogant on my part. The word Good, in A Doctor for Good carries a double entendre throughout this entire endeavor. I am a doctor, and with this medium will attempt to catalogue a vision for a healthier society. The project described in the first post is part of that vision. However, the roots of my passion for change run deeper than solving health challenges alone.

Below is a White Paper I first wrote as a medical student around 2006 based on an idea that I first had as an undergraduate. The white paper is an attempt to lay out a vision for a new kind of enterprise. This type of venture was a unique type of undertaking in my mind when I first had the thought in college. I later came to find out this kind of entrepreneurial arrangement was gaining wide attraction, and had been around for some time. The idea, now commonly referred to as social entrepreneurship or social business, has been implemented in the real world with notable success by the Grameen Bank and Dr. Muhammad Yunus.

The reason the project is called Good Incorporated is thanks to a good friend of mine, Joel Wright. On a laid back Friday afternoon in his dormitory room on Hendrix College campus a group of friends were hanging out. I described to them this rough idea formalized in the white paper below. After hearing my thesis Joel said, that sounds like good…incorporated. The name stuck. That has been the title of this project for about a decade.

It is important to me to include this idea up front. I see the project described in the first post is a building block in a larger economic and social pyramid. Every time I think about the title of this blog, I think about Good as noun with potential for a concrete reality in terms of the concepts and abstractions below.

White Paper
Good Incorporated
The Goal, and why the world needs us to do this

Enabling our generation to sustain its standard of living and ensuring others have the opportunities to do the same.

We live in an age of vast and ever growing wealth. The recent global economic slowdown merely represented a shrinking of overall economic growth, rather than an absence of it. Never in our history have we been so interconnected with the peoples and cultures that live such vast distances from us. Efficiencies in population and material transport have allowed entrepreneurs access to global labor and consumer markets. This shrinking of borders has been exploited in ways that take the global standard of living to unbelievable new heights. This has been detailed nicely in works such as The World is Flat and Hot, Flat, and Crowded by Thomas Freidman. The advent and propagation of information technology is further contributing to the narrowing of economic and social gaps. Unfortunately, a large number of global citizens have been “left-out” of this interconnected, rich world. This means that they have not had a similar opportunity to partake in the creation of individual or community prosperity to the same degree.

Traditional multi-national companies have not championed that neglected population because those markets, and those consumers, are not as profitable. Their business models and corporate charters are structured  in such a way to create dis-incentive towards engagement with economically disadvantaged communities.  Good Incorporated believes that the opportunity to participate in a globalized world should be offered to any individual regardless of their station at birth. We seek to do this because we believe that by sharing in the exchanges of culture, history, language, know-how, and ideas, we are in a better position to mutually enrich each other. Globalization and its contiguous economic opportunities doesn't have to be a rich man’s only party. Empowering others to take part in their local and global economies can have beneficial effects on the sustainability and promulgation of overall global prosperity. However, it will require us to muster a change in perspective. Today the traditional business world is working from a specific and one-sided paradigm. What we are seeking to do through Good Incorporated is fundamentally change the paradigm. It is the underlying belief that profit, economic sustainability, and the social good are not mutually exclusive pursuits. It is that belief which distinguishes this endeavor from the traditional conceptualization of business while at the same time distancing itself from the work currently categorized as charity/foreign aid/humanitarian.

Will this even work?
Yes, it will work. We know it will work is because the model of economies of scale has already been proven feasible as a traditional business structure. [In this context feasible = profitable]. An example business model to look at is Wal-Mart. Laying aside valid critiques of some of Wal-Mart’s policies towards its employees, the second largest grossing company in the U.S.A. was Wal-Mart in 2012. Understand that, and then consider the population that is the Wal-Mart client base? The answer: the middle socio-economic classes of American society. Wal-Mart took something: in this case household consumer goods and sold it at a price (and overall profit margin) low enough where American consumers could buy. The model works at a 3% profit margin because of economies of the scale. Those left out to globalization are the poor/middle classes around the world. Imagine a product or service that can be provided at X cost. Imagine a prime client base consisting of those currently left out from globalization. Since traditional enterprise currently are not catering to or heavily pursuing that market, there is ample opportunity for a huge market share. Based on the possible market, and the economy of scale, X would have the potential decrease to a fraction of its original cost. What we are talking about is on the scale of pennies a day. But, like Wal-Mart, if you sell enough units that it only costs you 1/2 a penny and you collect 1 penny, doing that millions of times a day you are still a viable economic entity.

Why Profit?
Profit is important because it underpins structural economic validity and sustainability. It is not the only operating goal, but it is a necessary part of operations. The way we currently structure aide to those left out of globalization looks more like a band-aid. Donated foreign aid money only goes so far as the amount pledged and the length of time it is promised. It functions, or has functioned, more as a superficial patch to the problem. Redistribution of wealth through foreign aid has been around for a long time, but is it sustainable?

Counter that image with the concept of capitalism. It is the argument of this white paper that capitalism as it is currently operationalized globally does not work for the majority of the world’s people. Bear in mind when writing about a global scale, that includes the U.S. population. Why are they left out? Why is capitalism not producing gains for a larger portion of the population? The answer to this goes back to the current world views regarding capital production and charity or social welfare, and suggests a need to a paradigm shift.

The current globalized form of capitalism could have left out many of world’s poor for 1 of several reasons: 1) It could be that capitalism is inherently an unjust system and wherever it is implemented will always proffer inequality. Or, 2) as Good Incorporated believes; capitalism leaves out many because the pursuit of profit is not currently mindful of social well-being. Additionally, socially beneficial pursuits such as those advocated by civic organizations or communities of faith are reliant on donated money, which as alluded to above, comes and goes with a whim and brings its own shackles. A Good Incorporated endeavor is pursuit of the good cause coupled with profit, however minuscule,  as a necessary requirement for the continuation of the project. Profit is viewed a means to provide feedback to the organization about the efficacy of execution of its core mission without wasting energies away from the core project in order to address fund raising or other inefficient efforts.

People who deeply care about others and want to make social change their life's work in this world don’t become CEOs and go into traditional business; they tend towards careers like social work. Pursuit of the social the well-being of your fellow man has not been a quality traditionally associated with a capitalist. It could be argued that a new word is needed for this coupled concept. We seek a new type of entrepreneurship. We seek to take our profits and feed them back into communities. Similarly, the aim is to use profit not as a means of extracting wealth-but rather creating value for people and communities. What if a global corporation acted like a mom and pop store? What if altruistic/socially minded people were at the helm of dynamic Fortune 500 companies?