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Are Today’s Business Models Sustainable?

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.

This article written by AxiomNews.ca is part of a Social Venture Network series featuring its Hall of Fame honorees.

 

Related Stories:

Birkenstock USA Founder Proud to Create Meaningful Work

Will Putting a Price Tag on Natural Resources Make Business Care About the Environment?

Founder of Seventh Generation Speaks Out on Responsible Business

 

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6 comments

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11:25PM PDT on Jun 24, 2012

Nice comments, John C., as I so agree with Fraser's model of business. It's all about the disconnect that has been ongoing for decades as the 'mega-corporate' driving force to appease stockholders at all costs is at issue with our country's constitutional origins, and the fabric of a collective consciousness. This disconnection is also witnessed in all aspects of government reflected in the rapidly growing divide between the parties and extreme Christian-right. We're in for some tough times ahead...

11:24PM PDT on Jun 24, 2012

Nice comments, John C., as I so agree with Fraser's model of business. It's all about the disconnect that has been ongoing for decades as the 'mega-corporate' driving force to appease stockholders at all costs is at issue with our country's constitutional origins, and the fabric of a collective consciousness. This disconnection is also witnessed in all aspects of government reflected in the rapidly growing divide between the parties and extreme Christian-right. We're in for some tough times ahead...

7:15AM PDT on Jun 23, 2012

If a business provides the best possible product or service, then it will get rich and will never need to advertise -- word of mouth does that. The trick is, again, superb products and services. Companies that make or do their best are consistently successful. Companies that focus on investors lose out. That's one reason why so many things are now manufactured overseas. I know these things since I started a small business, never advertised but made money anyhow. Customers and their needs are all that count. Everything else comes in a far second.

5:40AM PDT on Jun 23, 2012

Unfortunately in today's U. S. business climate the only thing that matters in the
majority of businesses is PROFIT. The majority of stockholders are no longer the
average person, rather they are large conglomerates, hedge funds, some unions,
but mainly the top 1%. The trading on Wall Street is not for the average investor,
but the super computers, which should not be allowed as they give an unfair advantage
to the companies and investors that are involved with them. Although, the major
corporations of the United States are sitting on trillions of dollars in PROFIT, they
still insist on sending jobs overseas, breaking unions and 'NOT INVESTING" in the
workers in the United States. They are breaking apart the social fabric of what this
country had been all about. Companies are entitled to profits, as are workers entitled
to share in those profits, as they do the majority of the work, not the executives,
who are overpaid by any standard. But extreme 'GREED" by the top 1% and
Corporations have put us in this situation we are in presently. And, if the republicans
control the White House, Congress and/or Senate, it will get worse. Rationally, think
without emotion, WHY DO YOU THINK THE CORPORATIONS AND TOP ! % are
donating so many millions and billions of dollars to the republican politicians, from
the local, state and federal level ??? Because they like their personalities or because
THEY EXPECT SOMETHING IN RETURN. If the republicans can control the fede

4:54AM PDT on Jun 23, 2012

Not nearly enough.

4:31AM PDT on Jun 23, 2012

I hope more companies strive to follow Fraser's model.

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