July 2017 – BOS

How Businesses Can Profit with Purpose

By Robert Strand.

Money helps us meet our basic needs, but what about our need for meaning? Businesses will profit — not just financially — by finding their souls.

How do you motivate someone to work? For many the response is quite simple: money. Want more work? Pay more money. Economists have long instructed us that human beings are rational self-interest maximizers motivated solely by the dollar.

The discipline of economics has historically dominated business schools and management research and, it follows, that the fundamental assumption of self-interest maximization is applied to companies. As the economist Milton Friedman famously wrote “the social responsibility of business is to increase its profits.”

A more powerful motivator
However, the view that money is the way to motivate someone to work is only half correct. And it is half terribly, terribly wrong. The research is in and it is clear: For knowledge workers, one must pay enough money to take the issue of money off the table. But beyond that, money is a terrible motivator.

In fact, money can be a demotivator as incentive plans often end up encouraging employees to think more about money than the work. Instead, purpose is increasingly recognized as the greatest motivator for employees and organizing force.

Purpose grows in importance with new generations of employees who are increasingly demanding that the organizations at which they spend their precious time connect to something much bigger. Great thinkers like Daniel Pink and my Berkeley-Haas colleague Barry Schwartz have much to say in support of this.

Can a business self-actualize?
Themes like social inclusion and climate change represent opportunities for companies to connect their employees with purpose. We recently held an event to explore how companies like Adobe and Microsoft are innovating their hiring practices to make it more possible for individuals from underrepresented populations to fulfill their potentials at their firms and, ultimately, encourage greater social inclusion.

For many large, established companies, connecting employees with a sense of purpose is remarkably challenging. This is where a corporate social responsibility (CSR) or sustainability group can serve an important role. CSR and sustainability groups can identify material issues for that company, such as encouraging social inclusion or battling climate change, and bring these issues into the company. Profits are a bit to the company like oxygen is to the body: Necessary for survival but a pretty lousy thing to live for. Companies that connect their employees to a greater sense of purpose are those that will foster healthier organizations and ultimately realize greater profits.

This article was first published in the San Francisco Chronicle Late Edition, 28 June 2017.

Robert Strand is Sustainability Professor and Executive Director at Berkeley-Haas Center for Responsible Business. Follow him on Twitter @robertgstrand.

Pic by Hamza Butt.

How the Fringe is Becoming Mainstream. Or is it the Other Way Around?

By Hans Krause Hansen.

These are indeed interesting times! as one of my good colleagues recently exclaimed over a cup of coffee. Disinformation and conspiracy theories all over the place. Obama now accused of being the founding father of ISIS. Can you believe it? Politics is definitely going berserk.

Needless to say, I happened to be in complete agreement with my colleague’s diagnosis. And of course, just as confused. A few days later two fresh pieces of research arrived on my desk, helping me to make some sense of the mess. What is disinformation today? What’s its role in the new media ecology? And what are the social and political dynamics behind and implications of all this?

Media Manipulation and Disinformation Online by Alice Marwick and Rebecca Lewis from the Data & Society Research Institute investigates the spread of radical rightwing beliefs in the US. The study shows how various subcultures take advantage of the Internet to manipulate mainstream media and propagate their ideas. Michael Barkun’s Conspiracy Theory as Stigmatized Knowledge, recently published in the journal Diogenes, explores the migration of conspiracy theory from the fringe to the mainstream. Both texts provide fresh food for thought on issues that are becoming more and more important every day.

Manipulation and disinformation online
Media Manipulation and Disinformation Online is written in the spirit of “if you wish to fight disinformation, you need to know where it comes from and how it spreads.” It explores the complicated and intersecting networks of online subcultures in the US, including how white nationalists, men’s rights advocates, anti-feminists, trolls, techno-libertarians, anti-migration activists, anti-Semitists, and bored young people, amongst many others, disseminate their ideas via sophisticated techniques and countless interlinked platforms. More than anything, it demonstrates how vulnerable the Internet and mass media are to manipulation.

But at a time when the most valued content seems to be that which is most likely to attract attention – this is what the authors aptly term the “attention economy” – it may be of some consolation that mediated disinformation is actually no novelty. State sponsored disinformation if not propaganda via mass media was commonplace in modern Western democracies during the Cold War, years before the advent of the Internet. In the pre-digital age, corporate marketing campaigns and branding efforts often proved to have a relatively tensed relationship to common standards of truth, just as they do today. Sweeping claims that we have come to live in a “post-truth” society, in part due to the Internet and social media, should be taken with a big grant of salt. Things happen to be considerably more complex.

Conspiracy theory, offline
But much has of course changed, and there is a real issue today with regard to the ways in which knowledge production and circulation is authorized and validated. Especially intriguing in Alice Marwick and Rebecca Lewis’ Media Manipulation and Disinformation Online is the observation that Internet platforms have become fertile ground for the growth and spread of conspiracy theories, including that mass media “has greatly profited off the appeal of conspiracies despite their potential for harm” (p. 19).

But what are conspiracy theories? How do they thrive in the new media environment and its associated attention economy? In Conspiracy Theories as Stigmatized Knowledge, Michael Barkun describes conspiracies as intellectual constructs, which are different from actual conspiracies: covert plots, carried out by two or more people. Actual conspiracies we find since the dawn of time. In modern times, the Watergate Affair is still the case par excellence. But all countries have had their conspiracies. High politics aside, innocent but also potentially dangerous conspiracies are natural ingredients of social life in the workplace and neighborhood.

Research on conspiracy theory has a long pedigree. It bears a lot of relevance to contemporary scholarship on transparency, secrecy and suspicion, given the fact that much of this work is concerned with invisibilities, the production of truth and the always troublesome process of holding accountable the powers that be. Research on conspiracy theories is also interesting in the context of what some writers have called the “deep state theory”, according to which networks of people within the bureaucracy are said to be able to exercise a hidden will on their own.

Inspirational detours aside, a good starting point for understanding the place of conspiracy theories in today’s rapidly evolving media ecology is the fact that conspiracy theorists typically claim to have special knowledge and to speak the truth. But their claims are at odds with some official or dominant version of truth. Barkun conceptualizes conspiracy theories as stigmatized knowledge. Ignored or rejected by those institutions that, in most democracies, commonly relied on the respect to the validation and certification of claims to knowledge – government agencies, universities and the traditional mass media – stigmatized knowledge exhibits a deep skepticism towards such institutions. These are considered power centers, each with their own secrets and deceptions, which the conspiracy theorist seeks to unmask.

Conspiracy theory, online
Until recently, conspiracy theory was a fringe phenomenon and in effect largely excluded from mainstream media. There was a relatively clear boundary between what was considered fringe and mainstream in the public sphere. Gatekeepers employed by research and educational institutions, including the editors of major media, maintained and nurtured the boundary.

This situation begins to change in the 1990s. Digitization enables people, including politicians, to create individual platforms and to communicate, bypassing established media and institutions. The public sphere, if ever unitary, transforms into a globalized hydra-faced machinery with multiple access points and dark zones. Content is no longer filtered the way it was and “fringe ideas” can more easily migrate into mainstream media subject to the ruthless forces of market competition.A proliferating public mistrust of political authority – resulting from economic and financial crises, governmental secrecy and endless cases of corruption that feed public skepticism – also prompts mainstream institutions and their gatekeepers to consider non-orthodox accounts of reality more seriously.

To cut a long story short: If conspiracy theories have always been imbricated in power relations and yet to a large extent been successfully ignored, the once clear boundary between the fringe and the mainstream has eroded. And with stigmatized knowledge entering mainstream media, a process of de-stigmatization begins to take place. Established media and political institutions begin to confer pseudo legitimacy on conspiracy theories. For example, the so-called Obama “birther” story, vividly promoted by the current president of the US, gained prominence because national media first exposed it and the White House later produced birth documents in response to pressures, all of which gave credibility to what in the beginning had been nothing more than a rumor emerging from the fringe.

Today, we know that even a modest blueprinting of conspiracy theories through established mass media can co-develop with political change that brings groups of people into formal political power that were once on the fringe producing stigmatized knowledge en masse. But now mostly mainstream. Elite or not.

What’s next? That mainstream goes completely fringe? Yes, perhaps.

What’s next for me? A damn fine cup of coffee with my good colleague, quickly, please…

Hans Krause Hansen is Professor at the Department of Management, Society and Communication at Copenhagen Business School. He teaches and researches about various aspects of public and private governance, including corruption, anti-corruption and transparency regimes in the global North and South.

Pic by The Public Domain Review, edited by BOS.

Malcolm McIntosh – Tribute to an Academic Entrepreneur

By Andreas Rasche.

Malcolm McIntosh passed away on 7 June 2017. We lost, as Sandra Waddock recently remarked, an intellectual shaman – someone who cared deeply about the state of the world and who was thinking so wonderfully enthusiastic, “wild” and unconventional about corporate responsibility and sustainability.

I first met Malcolm at the 2^nd PRME Global Forum in New York in 2010. Ever since we had many thought-provoking exchanges about academic and non-academic matters, most often around the importance of health and happiness. What always struck me was Malcolm’s desire to make a difference; he not only was an intellectual shaman but also an academic entrepreneur.

He belonged to the few of us who knew how to navigate the worlds of “practice” and “academia” (whatever these labels may mean). Malcolm recognized that good research is about creating an impact; it is about changing peoples’ behavior and making them think about whatever problem we address through our scholarly work. While the academic community has recently started to discuss impact (mostly instrumentally driven by the UK REF system), Malcolm more pragmatically engaged with impact in his own way. He founded the Journal of Corporate Citizenship which until today puts practical relevance and impact high on its agenda; he created one of the first research centers on what back then was coined “corporate citizenship” at the University of Warwick; and he collaborated early on with the UN Global Compact and thereby helped to enact a global action network dedicated to corporate sustainability.

Malcolm did all this because and despite of the omnipresent pressures that surround the academic system, such as publishing in “A” journals (which usually have a quite narrow definition of impact). He published many influential books and articles on different topics related to corporate responsibility and sustainability. He co-edited the first book on the UN Global Compact titled “Learning to Talk” (Greenleaf, 2004). The book captured very well the zeitgeist of the CSR/sustainability movement – back then, it was very much about different societal actors learning to engage in meaningful discussions. Later, Malcolm looked at macro-level change when publishing “SEE Change – Making the Transition to a Sustainable Enterprise Economy” (together with Sandra Waddock, Greenleaf, 2011). The book skillfully outlined how systems-level transformations can happen and what it takes to move from organizational-level efforts (like CSR) to a reform of the whole economic system.

Malcolm’s work lives on in the work of the many people he inspired throughout his life (including my own academic work). He worked relentlessly to open doors for new ideas to take shape. He will be missed but he won’t be forgotten, because every entrepreneur leaves a trace. Malcolm left many of them…

Andreas Rasche is Professor of Business in Society at Copenhagen Business School and Visiting Professor at the Stockholm School of Economics. He can be reached at: ar.msc@cbs.dk and @RascheAndreas

Pic by Colin Poellot.

Reward-based Crowdfunding for Sustainable Entrepreneurs: A Practitioner’s Guide

By Kristian Roed Nielsen.

In my last blog post, I offered some initial insights and ideas into how crowdfunding could be employed to support sustainable innovation. This time, having just finished my Ph.D. dissertation, I provide some hands-on advice for (sustainable) entrepreneurs wishing to succeed with reward-based crowdfunding based on mine and others’ latest research.

Reward-based crowdfunding represents a rapidly growing source of innovation funding for a diversity of entrepreneurs, start-ups and even established firms. Crowdfunding success depends on the ability to mobilize strangers to support other strangers for causes, products or services that have not yet been realized and of which they have little direct oversight or control. This trust between and in strangers is fascinating for a host of reasons – how do individuals project trust so that others believe it, why do people trust and not least how is trust maintained? Also, what happens when innovation financiers are no longer professional investors, but rather ‘normal’ citizens like you and me? This is what my dissertation tried to uncover and below are a series of Q&As with regard to the question of how entrepreneurs can successfully achieve funding.

Q&As for Sustainable Entrepreneurs Planning to Pursue Reward-based Crowdfunding

1. What is your target?
The amounts typically raised by successful crowdfunding campaigns vary greatly. However, the average funding level of fully funded campaigns is approximately $8,000. Campaigns seeking significantly greater sums should also consider alternatives

2. Have you budgeted for failure (and success)?
A large majority of campaigns fail to meet their funding goals, but the costs relating to preparation are rarely accounted for (Gerber & Hui 2013; Mollick 2014). Even when successful, campaign founders often fail to account accurately for costs associated with implementing their project plan. These include higher than expected development costs or even mailing and return costs (Blaseg & Skiera 2016). Blaseg & Skiera (2016) note that one-in-ten fully funded campaigns fail to deliver on the promised product or service.

3. Have you succeeded or failed in the past?
Past success and failure are strongly associated with the likelihood of funding success. A prior successful campaign is associated with a 173% increase in expected funding receipts, while past failure is associated with a 17,7% reduction in expected funding receipts. Therefore, at the very least consider asking successful campaigns’ founders for advice.

4. Have you prepared a dissemination strategy?
The scale, connectedness, and “quality” of your team are significant predictors of crowdfunding success (Zheng et al. 2014; Nielsen et al. 2017). A large majority of campaigns receive only small amounts of support, while a small minority of campaigns receives the bulk of funds raised. For example, in the case of IndieGoGo “the top 10% of campaigns receive nearly 80 % of funds pledged to campaigns in our sample” (Nielsen et al. 2017: 16). Most campaigns fail early and significantly below their target. In addition, the ability to mobilize female support appears to lead to higher pledging levels (Nielsen 2017).

5. Where are you located?
A campaign located in an urban setting with high median income and social capital is significantly more likely to receive funding as compared to ones located in poorer rural areas.

6. What type of product are you pursuing?
Consumer goods that are out of sight or not directly related to personal style appear to attract significant higher levels of pledges, based on altruistic and/or environmental values. Conversely, visible consumer-goods related to personal style (e.g. new headphones or fashion items) appear to attract investments based on egocentric (or hedonistic) characteristics. The product you are pursuing affects what message works and which doesn’t.

7. Finally, how easy is your product to copy?
Be aware that there are copy-cats that use platforms like IndieGoGo and Kickstarter to trawl for easy to copy ideas and products (Smith 2013). Hence before announcing your campaign try to have your supply chain as ready as possible.

Reward-based Crowdfunding: Multifaceted Challenges and Untapped Potentials for Sustainable Entrepreneurs
Aside from these areas that sustainable entrepreneurs (and others) should be aware of when pursuing reward-based crowdfunding: is reward-based crowdfunding is a good match for sustainable entrepreneurs at all? As academic as it sounds, it depends. It depends on the purpose of the endeavor that sustainable entrepreneurs pursue, the sum of money they seek, where they are located, their social capital and network, their prior experience, and to a not insignificant extend on the product they are pursuing.

Furthermore, for all these attributes outlined, numerous of others are unaccounted for. As with any other human activity, there is a complexity that cannot simply be unspun in the span of a single dissertation. Nor can we detangle consumption in crowdfunding from the larger driving forces of consumer behavior. The fact that innovation finance can now be driven by consumers rather than professional investors does not in itself change consumer demands – demands which more often than not fail to correlate well with sustainable consumption behavior (Jackson & Michaelis 2003).

However, this does not imply a lack of significant potential within reward-based crowdfunding; especially because of the increasing recognition that individual behavior is strongly affected by, for example, the choice architecture inhabited by the individual (Thaler & Sunstein 2008; Sunstein & Reisch 2014). There is thus an evident potential for utilizing these insights in online crowdfunding platforms as well. Individual behavior is neither linear nor is it written in stone. It is rather shaped by a multitude of factors as illustrated in the dissertation; hence it is a matter of constructing a context that encourages the better angels of our nature.

The message, which the dissertation then seeks to instill in the reader, is that reward-based crowdfunding is not a silver-bullet to solving the funding concerns of sustainable entrepreneurship. Yet, at the heart of what we call “the crowd” there lies a potential that remains – at least at the moment – largely untapped.

Kristian is a PhD-Fellow studying the potential of crowdfunding in driving sustainable innovation. He is home to the Department of Management, Society and Communication (MSC) at Copenhagen Business School. Follow him on Twitter.

Pic by Torsten Maue, edited by BOS.