Byrne: Profit and purpose have always been a part of business, but it seems today, those two goals are more intertwined than they’ve ever been before. Do you agree?
DeRue: I do agree with that. I think we’re living in an age, and it’s accelerating, where profit and purpose are coming together. I think that was always true to varying extent. If you go back to the Civil Rights Movement in the late ’50s and ’60s, companies like Johnson & Johnson and Xerox and others were on the leading edge of integration and social issues that were defining our time. I think that is true today in what we’re seeing around, say sustainability. If you think about profits, if you think about people, and you think about the planet, those three Ps we often talk about at business school, we’re seeing fewer choices between these three and more integrative solutions where we can do what’s right for people, we can do what’s right for the planet, and in doing so, it’s actually right for profit. That’s what gets me really excited.
Look at renewable energy in the Midwest. In Michigan alone, there are over 120,000 renewable energy jobs today? If you look at coal mining jobs in the United States, it’s roughly 50,000 jobs. So, we’re seeing huge growth in areas of the economy that are going to have a positive impact while they provide wonderful employment and long-term sustainability.
Byrne: So, Cynthia, you’re living this now in a great job with a great title, Global Director of Sustainable Communities at mckinsey.org. I bet you, Nathan wants that job.
Shih: It’s a pretty dream job, I got to say.
DeRue: Succession planning happening right here.
Byrne: Cynthia, I am sure a lot of people would want to know how you get a job like that?
Shih: Mckinsey.org is an independent non-profit separate from McKinsey & Co. but founded by McKinsey & Co., and we do apply a lot of the human resources, expertise, and way of thinking about problems. So, our mission is to tackle complex social challenges, and we do that by trying to look at things from a whole system perspective.
Byrne: Give us an example of a project you’re currently working on.
Shih: One of the programs we have now is called Rethinking Recycling. We looked at a lot of different areas where we can bring the McKinsey way of approaching problems to a distinctive new solution. In recycling, we realized that there are really innovative players all along the recycling value chain, but no one had really connected all the dots and tried to figure out how do you help these players work together to create greater value and greater impact. So, we’re working with everyone from community players to recycling operators to companies like major consumer brands that really have made huge commitments to increasing the amount of recycling coming through the system. They are now trying to figure out how to translate that into impact on the ground, and so, we’re connecting those dots together, which is a great vantage point from which to be tackling these issues.
Byrne: Stefanie, at Impact America Fund, how do you bring together profit and purpose?
Thomas: We really look at what is the sort of inherent driver of impact within the business models that we look to invest in. Those drivers have to be tied to overall business performance. So, as a company is able to scale, that impact scales with it. Some of it is just thinking who are all the stakeholders around the table, who are the stakeholders impacted within a community that a business sits in or in the community that a business is going to impact in some way, and how is that company taking into account the value that is inherently there within those stakeholders to not only drive the company to scale but also make it uniquely beneficial to those individuals as part of that overall community.
So, what does that look like? It looks like having a company that we’ve invested in our portfolio that is essentially creating a lending platform for Hispanic small business owners, understanding that these owners are driving economic benefit to their local communities, they’re creating jobs, they’re creating access to products and services. Yet, they don’t have access to capital. So how you do fund companies that will allow these small businesses and smaller enterprises to get access to funding that will allow them to drive economic opportunity? That’s how we look at it. Is what the company building inherently focused on creating more opportunity for more people who’ve otherwise been overlooked or marginalized outside of traditional banking and funding systems.
Byrne: There’s a lot of that going on in the world today.
DeRue: There is. Absolutely. We’re actually creating what we’re calling our Impact Studio, and it’ll bring together students and faculty from across campus this fall. The reason we’re creating it is exactly this, that there’s so much of this going on, so much opportunity to have an impact through business, and we want to bring faculty and students together and say, you pick the challenge that you want to work on, and then, let’s put the right people in the room and develop market-based business solutions so that they can scale. We’ll marry that with the education so that students who graduate leave with the business tools and an understanding of what business can do like Stefanie’s describing. She is working to have that impact whether it’s a community that’s been marginalized and hasn’t had access to financial solutions in the same way that other communities have had or smart cities and the sustainability challenges that they face. Whatever the issue might be, we have an opportunity at this moment in history to come together with all of this diverse talent and really make an impact. All of you are walking testaments to the power of business and what can happen.
Byrne: Scott, that almost sounds like an extension of your experiential learning opportunities because if you bring people in this Impact Studio and they’re going to work on a challenge together, that’s the essence of experiential learning.
DeRue: That’s exactly right. We’re piloting it right now, and the pilot project is based on the Flint water crisis. We used some faculty and students who got together, including Eric Schwartz who just was named one of your 40 under 40 professors. He and some students got together and built an algorithm that allows us to identify which houses are most likely to have lead pipes. Now, cities like Flint are able to use these algorithms to prioritize their investments in infrastructure. The question now is we’ve got great intellectual property there. How do we scale it? How do we actually take it to market? Those are fundamental business questions, and through this Impact Studio, we can create these action-based experiential learning opportunities that not only accelerate student’s development as business leaders but actually elevate the impact that business, and in our case, the University of Michigan, is having in our communities. That’s really exciting.
Thomas: I also think the experience itself allows for a broader or wider conversation around what are the right problem sets to tackle. I think the issue has been that you haven’t had as diverse a group of folks talking about the issues that they want to solve. Although we have the technology, the know-how, the business acumen, the intellectual property, we really need to bring the conversation into the mainstream. The big complex issues before just were not being addressed, identified, or analyzed from a business context, from a technology context, from an innovation context, so, that’s what impact really is about. How do you broaden the conversation and diversify the problem sets that are really worth tackling?
Byrne: Another big trend that makes this necessary is the limits of big government. Governments have been unable to deal with many of these big challenges, and if people and companies and organizations don’t do it, it’s not going to get done.
Stefanie, you had a really formidable experience during your MBA here when you actually went on the road with an organization that was called MBAs Across America and you gave free consulting help to small businesses. Tell us about that experience because now Ross has Open Road, which does a similar thing every single summer.
Thomas: It goes back to taking the time within an MBA program to really figure out what motivates you, and then being willing to do experiments, take risks, get exposed to a lot of different opportunities and ways to really be out of the box in order to shape a career that you want and that you love. For me, that summer between first and second year allowed me to do that essentially with my network. People knew that I was looking for pretty interesting things to attach myself to and especially in the entrepreneurial space. So we heard about some crazy Harvard kids including Casey Gerald, one of the original founders, who launched MBAs Across America. We were the first class to do it. So, myself and a few other Rossers got a team of four together. We hopped in two Chevy Volts at the time, and thank you GM for that. We did a 6,000-mile road trip, and it was pretty incredible. We really set out to make an impact to really support these entrepreneurs, but they really had an impact on us. It was really transformational in terms of how you engage with organizations that have been in a community or been in an industry they know really well, but they may just need a little bit of support to get to that next level and to grow. So, it really humbled me in a lot of ways, but it also just offered me one of the most real-world practical experiences I could ever imagine. It was awesome.
Shih: Maybe to build on that a bit, I think some of the most powerful experiences I’ve had have been created by fellow students. When I was at Michigan Ross, there was a group of students that started a whole conference around making people aware of what was happening in Detroit, which focused on some really exciting trends that tend to get lost in the national news headlines. These students were really passionate about it came together and created the first conference of its kind and launched a whole bunch of impact projects for organizations in Detroit.
I’m not from Michigan. I came from California. I’ve lived in New York, and I didn’t know anything about it. Then, by my second year, I was co-leading this group that had become a student organization with an impact projects program and a leadership challenge and all the rest of it. It all started with students who felt like something should happen here. I think it’s the energy of a business school that is situated in a university with all that energy from other schools and other disciplines that really made that possible.
Byrne: In fact, for many years, during your MBA orientation there has been a leadership challenge, and it’s always been directly connected to some sort of community need.
DeRue: Yes. As far back as I can trace, every year when our MBAs come on campus as part of the orientation, there are all the standard things that you would do as part of orientation. But there is also a three- to four-day challenge where our students are working in teams to take on some big issue that we may have. It’s usually social in nature tied to a community, often Detroit, and it’s a great immersion into not only our community, but it also builds the social relationships among students that you would want as part of an onboarding process. It connects our students to the potential and the promise of business to have an impact in really fundamental ways, even if they don’t recognize it at that point in time. You’re planting a seed that, over time, will be watered and will grow. We’ve always had, as part of our imprinting process here, something connected to the impact of business in society.