Are Today’s Business Models Sustainable?
Note: In honor of Social Venture Network’s 25-year anniversary, the network is inducting 25 of its most innovative and influential leaders into its hall of fame Nov. 13 at Gotham Hall in New York City. To recognize these sustainable business pioneers, SVN’s news program, ‘Sustainable Solutions,’ is interviewing the hall-of-famers to celebrate their accomplishments and learn what more needs to be done. Read the whole series here.
When Margot Fraser reflects on business trends and what she’d like to see more of in the socially-responsible business movement, the question of ownership immediately comes to mind.
The founder of Birkenstock USA would like to see new business ownership models pioneered and encouraged, where people investing in a company are also intimately connected to the organization.
“It’s obvious that what we have now in mainstream business is not working because the owners are mostly investors that don’t understand the business,” says Fraser.
“Their only interest is to get money out of the business, to extract.”
While there is a need for profit, profit isn’t the reason for business, says Fraser. She credits fellow Social Venture Network (SVN) members for understanding the need to put money back into their businesses enabling them to develop in ways that care for people and the earth.
“The reason for the business is people,” she says, adding this extends to the environment.
“People, planet and profit, and profit is the least of it.”
She recalls starting Birkenstock USA in 1967 with little money and loans from several friends. Such small-scale options aren’t viable for entrepreneurs today, which has Fraser questioning what alternatives are available.
She says co-operatives offer an alternative to the traditional investor model. So do employee share-ownership plans (ESOP), but in Fraser’s experience ESOPs work best when the company is small.
Upon retiring from Birkenstock USA in 2002, Fraser sold the company to her employees. Yet, due to its size and predicted value, ownership was a struggle for the employees who ended up selling the company to the parent company in Germany.
While Fraser admits to having more questions than answers regarding business ownership models, she says something has to change because “what’s going on is not sustainable.”
“I think it has to happen. Not through government, though obviously they will help. It will come through the grassroots, through people trying out different ways of ownership and different ways of running a business,” she says.