“All Aboard” the announcer’s voice boomed as we settled into our seats on Amtrak train 130. We were leaving behind the city of Brotherly Love and heading north to the Big Apple. The “free” Wi-Fi was frustratingly slow so I shut down my iPad, sat back and gazed at the American countryside as we passed by. I started to reflect on the previous day’s events and was struck by a thought – how did I get here? No – not the physical location but to the two days of meetings Tim and I were having with the founders and employees of B Lab in Philadelphia and New York (note: ‘B Lab’ is the not-for-profit that certifies B Corporations).
The Ian Martin Group became a Certified B Corp in December 2011. As some of you may know B Lab’s founding principle is to harness the power of business for social and environmental good.
I spent a good portion of my management career driving operational efficiencies and metrics, the relentless pursuit of more: more sales, more profits, and maximizing shareholder return. Not that it was bad but I always felt something was missing.
I joined Ian Martin in September 2006. I was fascinated by how the company operated because it was somewhat foreign to me. “Fairness and integrity are the cornerstones of our company,” the literature read. Here it wasn’t just a sign on the wall it was part of the fabric of the company. The owners were capitalists and profits mattered. People were expected to perform in their jobs but it was a kinder, more gentle and respectful environment then I had been used to. After a while I started to hear the stories about how the company went the extra mile for people. How a portion of profits was donated to selected charities every year; that was a company secret not many outside the firm knew – and that was the way the owners wanted it. As I came to understand, I wholly embraced this business model: long term thinking, entrepreneurial, people oriented and caring about communities.
Then it happened – BANG. In what seemed to be an instant, the subprime mortgage fiasco brought the world’s economies to their knees. Canada was lucky – we didn’t suffer to the same degree. Then the stories started to emerge: greed, narcissism, lack of controls, corporate extravagance, executives caring more about bonuses than customers. “Too big to fail,” the headlines read – corporate bailouts in the trillions of dollars. And after the bailouts, the first thing to happen was the ‘underpaid’ executives topped up the bonuses! The great system of capitalism seemed to be broken. Now what?
Flash forward to 2011. Ian Martin had weathered the economic storm. The owners decided to step back from the day-to-day operations and asked me to be part of the executive team to run the company. One of the first things we decided to do was bring in a branding/marketing expert to give our 50-year-old company a facelift. It seemed simple enough but boy was I wrong. He started asking questions that we just didn’t have answers to. He led the whole leadership team through several sessions trying to get us to agree on and succinctly articulate our values and beliefs. Then came the big question – why are we in business? That one question consumed countless hours, thinking about, debating, articulating and asking more questions.
During that time we stumbled upon B Corporations. I watched Jay Coen Gilbert’s TED talk and was hooked. He talked about “the evolution of capitalism”, about tweaking the system away from just shareholder return to include all stakeholders. That resonated strongly but I did have questions.
“Next stop, Penn Station! All passengers must exit the train.” Startled, I snapped back to the present – February 17, 2012. The night before Tim and I’d had dinner with Jay Coen Gilbert and Bart Houlahan, two of the founders of B Lab. It was a chance for a little face-to-face due diligence.
Between the courses of Sushi and Thai Fusion, we had a great discussion about B Lab, B Corps and the Ian Martin Group. They were quite interested in our business model, how we found out about B Corps and what lead us in that direction. I quickly realized these guys live their values: Accountability, Transparency and Purpose. We heard first hand the story of how B Corps went from a rudimentary idea into the manifestation we see today. A story I’m sure they have told a thousand times, yet their passion was abundant.
Three principles for a new Wall Street.
Bart and Jay predict that in five years we will see a tenfold increase in the number of B Corporations from 500 to 5000 – curiously this represents almost linear, not exponential growth. Jay explained that he’s observed a need for some soul searching before an entrepreneur decides to certify. “The decision making process is unique to every company and not one that can simply be packaged and replicated,” he said. Although, personally, at Ian Martin, we found that the B Impact Assessment certainly helps create a standard that is clear and easy to understand for business leaders considering their decision.
Over and over they encouraged us to ask tough questions to ensure our confidence in them. I asked Bart and Jay how they might handle a tipping point where growth was 20 or 30 times not 10. I asked how they were planning on handling companies that might pass the Impact Assessment but whose products are on the ethical/morale edge; like tobacco, weapons manufacturing or fast food companies. One thing I was surprised to discover is that 10% of B Corps go out of business every year – a function of the fact that B Lab has chosen to focus on entrepreneurs as the “tip of the spear” to model the change they hope to see in the economy.
Bart and Jay talked about their efforts on the legal front – how due to bi-partisan support for their legislation, things were moving faster than they had expected.
One very interesting idea they have is to turn the B Impact Assessment inside out and make it “service-oriented”. This is similar to what Amazon.com did when they started leasing their servers to businesses so they could host websites on their massive infrastructure. The purpose of doing this would be to allow multi-nationals corporations to establish quantifiable metrics about the business practices of their suppliers – these metrics could then be used in evaluating RFP responses.
After more stories and a few laughs, three and a half hours quickly disappeared. We thanked them for their time and vision and headed back to the hotel – ready to visit the New York team the following morning.
During our trip I learned that B Lab is the real deal. They have a plan and smart, passionate people who are trying to change the world. Will they be successful? Truthfully, I don’t know … but I like what I see, our values at Ian Martin align and I want to help.
I look at the problem this way: in the Western world, companies have all of the rights of a person in law. However, being divided amongst shareholders, corporations do not have the same intrinsic person-to-person responsibility and accountability that individuals have one to another. B Lab is simply saying, “Let’s raise the bar.” I agree.