Peace and Commerce
The Value of Capital and Resources for Real-World Solutions, Insights on For-Profits Solving Social Issues
An Interview with Grant Elliott, by Rebecca Paul
Issue 12 Summer | Fall 2013<
Conventionally, the advancement of social good is a function of non-profit and governmental institutions, but an increasing number of for-profit entities are challenging this paradigm. Organizations like Voxiva take an unapologetically capitalist approach towards solving social issues and addressing social problems. They are challenging common perceptions of both the limitations of corporate integrity and what it means to reinvest in a cause.
Voxiva is an international pioneer in the production of interactive mobile health services. Its programs address a variety of health concerns, including maternal and child health, smoking cessation and diabetes self-management. In early 2010, Voxiva launched Text4baby, an award-winning educational service for pregnant women and new moms. Today, Text4baby is the largest mobile health service in the United States.
Former Voxiva’s Director of Operations, Grant Elliott, has watched the company mature from a struggling start-up into a global success. This background has reinforced his belief that commerce (along with the capital and resources it makes accessible) is essential to the evolution of great ideas into tools, products, and services that offer real-world solutions. Catalyst’s Rebecca Paul, recently sat down with Mr. Elliott to discuss his insights and experience. To Elliott, revenue is more than a signifier of capitalist achievement – it is the lifeblood of any enterprise that seeks to make an impact, deliver the best products, or even design peace.
Catalyst: In your opinion how is the idea of creating a “sustainable” business connected to designing peace?
Grant: When you start working in developing countries, you realize that there are three areas of focus that will improve the quality of life for the people living there: agriculture, education and health. If you can develop a country where the majority of the population is well-educated and has access to basic nourishment, its people will be able to feed themselves and achieve some wealth through trade and agriculture. That will stimulate economy, and subsequently stimulate (sensibilities) that are more aligned with the Western world.
Catalyst: What are some of the challenges that you face working to provide social services as a for-profit organization?
Grant: The challenge with trying to save the planet, feed starving children, eradicate disease or solve global warming is that it is difficult to develop a business model. Everyone agrees that these are noble causes, but what’s the best approach to championing them? Traditionally, most funding to support social development is provided in the form of government aid. Either domestic governments fund local aid programs, or international aid is provided by rich countries to developing ones. For example, in 2013, the U.S. Government will spend over $40 billion in foreign aid alone.
At Voxiva the problem is that, as a for-profit organization, we are competing against non-profits. Unfortunately, common perceptions regarding the integrity of for-profit companies (versus non-profits) may prevent social entrepreneurship and social innovation from developing, in the areas of public interest or social service.
Catalyst: How do outside perceptions of “for-profit” vs. “non-profit” companies influence Voxiva’s success?
Grant: It is hard for people to feel comfortable with proceeds going towards higher salaries, glitzy marketing events or shareholder dividends, instead of being reinvested into “the cause.” This is why government and NGO’s typically pay lower salaries than “for-profit” companies, and can result in the best talent going to the “for-profits.” In most developing countries, the smartest people invariably work for mobile network providers because they pay the highest salaries.
Clearly, people want to support organizations that have the most impact. But the problem is that, as a society, we look at that and say, “well, I don’t like to donate a dollar to something when I know fifty cents is going to administration.” Even if that fifty cents goes to the administrative costs for the salaries of highly-talented people, money for the marketing and PR campaigns that get the message out, and investments in technology that provide more efficient means to collect money.
Of course there has to be balance, and as like anything else, there are always those that will take advantage and exploit the market. But fundamentally, the basic principles of profitable business plans (advance) sustainability when solving many social issues. Would the Arab Spring have occurred without Facebook and Twitter? Would micro-funding be successful in Africa without the explosion of mobile phone use, enabled by extremely profit-conscious mobile network operators? The quest to make money provides focus and ensures that businesses provide products of value.
Catalyst: Can you explain some of the problems that these perceptions create for fostering sustainable solutions that address social problems in today’s society?
Grant: In my opinion, the main problem caused by the stigma surrounding the intent of for-profit organizations is that we are stifling innovation, and thus preventing progress. The reality is that revenue motivates many individuals with the skill sets essential to success as social entrepreneurs.
There are three main stakeholders in the [non-profit] ecosystem: those who use services, those who fund services and those who provide services. Organizations [that provide services] may or may not be invested in the solutions, because there is little accountability. In this context, we have to question the sustainability of government and charitable aid. In “Fortune at the bottom of the Pyramid,” C.K. Prahalad argues that true sustainability is only attainable if the question of return on investment can be answered. Successful business models must be developed from the bottom up, so that profit can be maximized in a self-sustaining manner. By levering commercial enterprise, in even micro fashion, the importance of return on investment is reinforced – allowing successful business ideas to flourish.
A few years ago I presented a solution to a senior Ministry of Health official, from an East African country. I later learned that we were one of five organizations competing to provide a solution (none of which the Ministry would have had to pay for). We were the only “for-profit” company. When asked why he should choose us, I explained that we were the only company that’s business was at risk if we were not successful. That we were more motivated to make it work because we needed to make a return [on investment] for our shareholders. Organizations are never more accountable than when profits are at stake.
The advantage provided by a for-profit company is that at the end of the day it comes down to one thing, if you don’t make enough money, your shareholders are not going to invest in you. The challenge with non-profits is whether or not methods for measuring effectiveness and accountability, other than return on investment, can be identified.
There is an imbalance of talent between the for-profit and non-profit sectors. Talent tends to (not always, but generally speaking) gravitate to organizations that pay the most. If more talented people work at for-profits, rather than not-profits, there is always going to be an imbalance.
Catalyst: How have you addressed this challenge as an organization?
Grant: At Voxiva we try very hard to demonstrate that our objective is to generate profit, in order to fuel the innovations necessary to make progress and solve social problems. That’s why as an organization, we are a socially-oriented for-profit and being “socially-oriented” is an important part of the culture. It’s become a constant mindset, and when we make business decisions as an organization, they are not determined purely by financial gain. We always try to make decisions that continue to further the objective of doing good, and we want to do so as efficiently as possible.
For-profit and social good are not mutually exclusive. A focus on increasing shareholder value, and return on investment, can help social enterprises to attract the best talent, innovate solutions to global problems and catalyze change to design peace.
STRATEGIES IN ACTION:
Customize commercial strategies to sustain the impact of social services.
Transform conceptions surrounding the integrity of for-profit social enterprises, to
balance the distribution of talent between market sectors.
Accountability to shareholders provides incentive for social entrepreneurs to successfully address social issues.
During his time at Voxiva, Grant Elliott, served as Chief Operations Officer and Chief Information Security Office, and helped the company grow from a struggling mobile health startup into a profitable digital health engagement company. In 2013, Grant founding Ostendio, Inc. a mobile solutions provider that supports Mobile Application development and delivers multi-channel mobile applications. He understands first-hand the need for capital to turn great ideas into tools, products, and services that provide real solutions.