Beyond financial returns…
Some of you may be wondering what’s different about Firstfruits. Is it just an attempt to bring the founders as much cash as possible, a lifestyle business that ticks over?!
In a word, no.
Our vision is to create healthy and sustainable change as we serve others and grow ourselves. One way of achieving this is to experiment with business models that recognise the value of things other than money.
Monetary value and other approaches
Historically, the obsession with monetary value over other measures seems to go in cycles. In the UK, we had the Quakers and others who built profit-making businesses with consciences… many of whom continue operations today in their original or merged form (Barclays, Cadburys, Clarks, Lloyds). There was a recognition of what Paul Collier has recently called “the ethical firm”, with obligations to its workforce and the surrounding community, also picked up by Bill Gates.
On the other end of the scale, there were financial (asset) bubbles and robber barons. More recently, there was Milton Friedman, a father figure of modern capitalist theory. Many quote him stating that the only purpose of business is profit and returns to shareholders. This is not quite true. In his famous NY Times essay from 1970, Friedman stated that the firm’s sole responsibility is to its shareholders, and they can decide how their money should be spent. Usually, Friedman argues, they will want to “make as much money as possible while conforming to the basic rules of society”. The executive should not make decisions on the owners’ behalf by unduly reducing competitiveness in seeking other goals, a typical example of the “agency problem” created by the separation of ownership and decision making.
On the face of it, this all seems reasonable. Any business which dilutes its core purpose will either impose a tax on its customers or owners, or dilute its competitiveness when compared to those businesses which apply their full allocation of resource to the core purpose.
Value creation beyond monetary returns
But what if there are other measures of value creation beyond monetary returns to the owners? What if there’s a return to a recognition of value and wealth being created through a business in the areas of social (community), human well-being, environmental and spiritual? Is there a way for a business to maintain competitiveness and still deliver those returns?
This is what Firstfruits is about. We want to be a testbed, investing in ourselves and others to understand more about competitive mechanisms delivering multiple bottom lines in the 21st Century. In practice this includes:
Measuring our performance over financial and non-financial bottom lines - as directed by the owners
Delivering services which bring in cash, but also contribute to other bottom lines, with offsets in rates to reflect contribution to other bottom lines
Hiring superb consultants and change-makers, and paying commensurate salaries to those of competitors
For many, they are looking to work in a business which doesn’t just play lip-service to non-financial impact, but has a core purpose and performance, an aligned culture and acceptable personal recognition (through employee packages)
In a 2018 Populus survey of companies which purport to be purpose-led, around 50% of employees feel company talk about purpose doesn’t match reality, and would consider leaving due to hypocrisy!
Could this then become a competitive advantage over those businesses which say they “care”, but the structure does not fit and rewards short-term monetary gain?
Improving trust, loyalty and our culture through the impact we have and the way we do things
Building long-term relationships with like-minded clients - which itself brings competitive advantage
We’ll no doubt learn lots of lessons as we go forwards. But that’s fun! And we know we’re not alone. Groups such as “Economics of Mutuality” and “B Corp” are doing excellent work in bringing founders together to evolve purpose-driven business models and test new approaches.
Do get in touch if any of this resonates - whether as a client or a possible co-worker, we’d love to talk more!
