For entrepreneurs, impact is less about something sudden and forceful (an asteroid slamming into earth) and more about creating positive, healthy and sustainable change for people and the planet. It’s a gradual sort of impact that requires deep thought on the what and the how. This kind of impact approach is what leads to innovation and revenue in a growing company.
It’s the type of innovation that matters.
It’s not just about saving the world
Often companies that are focused on environmental solutions like cleantech or people focused solutions like healthtech are considered to be impact companies. And they should be. But creating impact with your company should be about more than just what you’re doing.
True innovation takes the usual way of doing things (the status quo if you will) and pulls it apart, examines it and puts it all back together in a completely new way. And sometimes the innovation is throwing the old way out entirely and building something entirely new.
Take for example, the companies creating (or trying to create) impact with their product and service but doing so with a homogeneous leadership team. The intention to innovate is there, but without re-evaluating what must change within their team e.g. incorporating diversity of voices and perspectives, that company may end up perpetuating harmful practices that are counter to the conditions needed for innovation.
Tesla is making a name for itself as a sustainable, eco-friendly option while also paying out legal settlements to factory workers for racial bias. Then there are companies like Nestlé who are recognized for their diversity and inclusion efforts, but they’re making their money from products or services that are harmful to humans and/or the environment.
Both companies have a good side to what they’re doing, but the downsides prevent them from maximizing their potential impact.
To be truly impactful and reap the innovation that meaningful impact generates, it needs to be embedded both in the what of your business and the how. The “what” is all about the impact your company aims to make—the positive change you're working to create for people and the planet. The "how" is just as crucial, focusing on the methods and processes you use to achieve that impact, making sure that every step of the way aligns with your values and drives meaningful change.
The more that we endeavor to create companies that do the healthy thing in a healthy way, the more innovative–and financially successful–your business can become.
The proof is out there. Research and studies conducted by McKinsey & Company, the World Economic Forum and Deloitte all found a correlation between diversity and inclusion and innovation and increased revenue. While some out there are vehemently anti-DEI and trying to shut down “woke” initiatives that support creating belonging and inclusion for all, the evidence shows this would be the less prosperous path for innovation-seeking businesses.
It’s hard to really understand what a diverse marketplace needs or wants if everyone around the table looks the same, has a similar upbringing, worldview and set of experiences. Diverse teams can generate a wider breadth of better ideas because they have a larger scope of knowledge, skills and experience from which to draw.
Caroline Criado Perez’s book “Invisible Women: Data Bias in a World Designed for Men” does a fantastic job of articulating what happens when the people you’re trying to serve have been left out of the conversation. One question she explores in the book is what happens to everyone else when the crash test dummy is sized to test the effects of a car crash on an average male body?
Diversity and inclusion isn’t just a box to check; it’s a proven driver of innovation and success that leads to impact for all, instead of a select few. Diverse perspectives—whether through mentorship, collaborations, customer feedback, an established team—helps put the people you serve at the center of your products and services..
Creating innovative spaces
Knowing the benefit of investing in diversity can lead some companies to focus on hiring diverse people. But simply hiring a diverse team isn’t enough to activate innovation. Everyone needs to feel a sense of safety in order to be able to show up fully and share their perspectives, ideas and concerns.
Inclusivity starts with every interaction, on teams big and small. In large organizations, leadership must cultivate an environment that allows people to participate without barriers, bias or repercussions based on their differences.
In a small business, cultivating inclusion and a deep sense of belonging are even more essential, as they create the space for people who are in frequent contact to express themselves and feel heard.
Safe, inclusive spaces are innovative spaces because when people speak up, ask questions and take risks, you can try new things. And sometimes, those new things lead to profitable product lines, company-wide personal development and early adoption of sustainable development goals.
Take The Ingka Group, owners of IKEA, for example. Well ahead of the DEI surge in 2020, Ingka dedicated itself to having gender parity throughout its company more than 10 years ago. This was part of a multi-pronged approach to diversity and inclusion, in which they rolled out gender neutral salaries, integrated DEI into their key performance indicators (KPIs) and built succession and mentorship plans. In late 2023, they announced that they had increased revenue and were expanding their renewable energy targets.
Connecting with who’s next
The younger your target market gets, the more likely they are to want to buy and work for brands that are socially and environmentally responsible. Deloitte’s 2024 Gen Z and Millennial Survey articulates just how much these younger customers and employees value sustainability and impact. More than half of Gen Z respondents said they are putting pressure on their employer to take client action and will spend more on sustainably-made products.
Making the what of your business more purpose and impact-driven will be essential to attracting and retaining this generation. And they’re smart, so impact-washing (similar to greenwashing) won’t cut it. Fortunately there are many ways that companies can explore how to innovate and make each element of their products or services less harmful and more impactful.
A great way to start thinking about impact in your own business is to explore the United Nations Sustainable Development Goals (aka the Global Goals).
Another strategic way to carve out your company’s path forward is to test drive B Lab’s B Impact Assessment. The free assessment tool encompasses the what and how of impact. Even if you don’t pursue the full B Corp certification, which measures your full social and environmental impact, just taking a look at the assessment can be a good start to see your business through a new lens and inspire innovative changes.
Sustainability or bust
Whatever stage you’re at in your journey, creating meaningful impact within your company isn’t just about developing products or services that benefit people and the planet. It’s about embedding that ethos into every facet of your business operations. EY’s report on why sustainability has become a corporate imperative charts a clear trajectory between the clusterfuck that is the here and now of our world and how this ongoing WTF-ery is “a catalyst for innovation.” Rather than seeing impact and sustainability as a nice to have, it might be time to innovate through the chaos as a must-do.
As we face an ever-evolving world, businesses that prioritize both sustainability and inclusivity will not only contribute positively to society but also thrive financially. Embrace the challenge, innovate with purpose, and watch your company transform into a beacon of positive change.