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Auren Kaplan

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Capitalism You Can Fall in Love With

Posted: 12/10/2011 2:09 pm

Capitalism has changed as we know it, for good. Make that, for the good. You see, the big shift has occurred at multiple levels, with CSR departments getting serious and with consumers clamoring for change -- not like in 2008, when we voted for change -- but in 2011 and coming into 2012 -- as we express our preferences to business and wait, less patiently than ever, for business to follow suit.

Companies already know that consumers favor companies that imbibe purpose into their business models. Corporate citizenship is now a must for any company serious about maintaining a healthy emotional relationship with its customers. But corporate citizenship is where this shift begins, not where it ends. The consumer-driven big shift is upon us, and companies are about to be tested by consumers. When it comes to integrating cause with business, how far will the pendulum really swing?

Companies hoping this whole cause meme will go away are obsolete. Even the corporate behemoth Wal-Mart, representative to many of serious capitalist excess, has committed $2 billion to fight hunger in the U.S.A. What Wal-Mart has tapped into, and what studies are starting to bring to light, is that consumers will shop at the companies that support causes. In other words, when the purchase of a product comes down to a cause, the consumer sides with the cause, and therefore the company, every time.

The statistics are in. As I wrote to you last week, 94 percent of you would switch brands in order to support a cause. This trend isn't just in the U.S. It's global. A full 83 percent of consumers in a global study said they would change their consumption habits to make the world a better place. But the implications of this fact are just now beginning to be seen.

Companies are now associating their brands with causes. They know that customers like this, and will therefore shop with the brand. Becoming better corporate citizens, companies know that they are contributing toward a more positive world through their actions. That's something that a company's employees, shareholders, and customers all mutually feel good about. But capitalism is changing. The world we live in today, replete with non-profits fighting poverty, still leave us with a world where over 3 billion people -- nearly half of all of us -- live on under $3 per day. So increasingly, business is stepping in to fill the shoes that the rest of us haven't yet been able to fill.

Social entrepreneurship is a big part of that shift. Companies like TOMS Shoes and Warby Parker are starting to form for the purpose of leaving a positive mark on the world in addition to making a profit (each company gives away a unit of product for every unit sold, buy one give one style). I'll let you investigate those two companies more on your own, especially with Christmas around the corner. But what those companies are demonstrating to mainstream capitalism -- and what capitalism is going to experience in short order -- is that instead of imbibing cause into a brand, the cause is now the brand. This is the big shift. Consumers are flocking to companies where the cause is the brand -- and they want more of it.

Think about it: how many corporations do you know that are founded on the principle of a cause? I'm not talking TOMS or Warby Parker any more, now I'm talking about the Wal-Marts and Proctor & Gambles of the world. How many of them exist for the purpose of a cause... not one. The movement of cause capitalism, or benevolent capitalism, let's just call it an evolved capitalism and move on -- it hasn't reached corporations yet. Business is still run to make profit first, and yes sustainability is being built into the fiber of companies nowadays -- consider Patagonia and even Pepsi -- but no major company has taken the leap and built a brand whose reason for existence was a cause.

When will a corporate titan emerge who exists to end poverty? That one for one, gives a dollar of its profits to end poverty just like TOMS Shoes and Warby Parker give their product away every time somebody buys? This is not a question of if, it is clearly a condition of when.

Capitalism is changing. It is evolving, becoming more inclusive and fluid. And big companies are going to start to realize that when the cause is the brand, the consumer cannot get enough. That means two things: 1. More profits and 2. more good. When the cause is the brand, that's when we'll have capitalism we all can fall in love with.

 

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