Monday, October 26, 2009

Creative Capitalism – Are You Buying It?

In 2008, Bill Gates coined the term “creative capitalism”, which he defined as combining the pursuit of profits with the desire to serve the needs of those less fortunate. A new catch-phrase, perhaps, but not a totally new concept. What is new is the visibility of corporate philanthropy, social responsibility and creative capitalism. There is an expectation that any business, regardless of size, will have some sort of social responsibility policy in place.

The companies with the most successful strategies (highest return-on-investment) are those that don’t just show up at the annual fundraiser with a giant check made out to a charitable organization. They are engaging consumers to literally buy-in to their cause. They are the true “creative capitalists”.

One of the best known examples is the (RED) campaign. Gap, Hallmark and Dell sell (RED)-branded products and donate a portion of their profits to fight AIDS. The (RED) brand recently expanded to include (RED) concerts. The campaign has raised hundreds of millions of dollars to fight AIDS, tuberculosis and malaria.

My favorite “creative capitalist” is Blake Mycoskie, founder of Tom’s Shoes. (Although Blake refers to himself as a “conscious capitalist”.) He founded his shoe company in 2006 on the One for One model. For every pair of shoes he sells, he donates a pair to a needy child. Tom’s Shoes are not inexpensive, yet his product line and company continue to grow, even during difficult economic times. Check out this video and you will understand where Blake’s passion for his company and his cause come from.

We all learned in geometry that the shortest distance between two points is a straight line. I think the reason that Blake has been such a success is that he has shortened the distance between the consumer and his cause. So the question is: are you more likely to support a business or buy a product if you know that the product or proceeds support a good cause? Will you pay more if there is a shorter line between you and that cause?

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