Hi everyone, and welcome back to the Theology of Business Podcast. I'm your host, Darren Shear, and this is a show for Marketplace Christians seeking to explore and apply God's will for business. On this episode, we're joined by Dr. Jay Jacob. Jay is the chief advocacy officer for the Economics of Mutuality movement, which originated at Mars Incorporated, and that's a $40 billion company with over 130,000 employees around the world. If you're not familiar, they're the maker of MMs, Snickers, and other tasty, iconic brands. Jay and his colleague Bruno Roche collaborated on a fascinating book, Completing Capitalism, a rigorous practical case study for the economics of mutuality. In addition, this growing movement is now taught globally through Oxford University's Saeed Business School and other prestigious schools around the world. Jay, welcome to the Theology of Business podcast. Thanks, Darren. Glad to be here. So you why don't you go ahead and give us a better sense of how the economics of mutuality movement originated? Sure.
SPEAKER_02Well, I spent the last 14 years or so in the global headquarters of Mars Incorporated, which is this iconic food and beverage company that you mentioned working in the global headquarters. It's a family-owned, privately held business that had a really unique sort of internal think tank that was created by the founder of Mars, Forrest Mars Sr., back in the 1960s to challenge orthodox business thinking with a ring-fenced budget and really a lot of freedom to uh to go out and look for what the real next big idea is. So I helped the chief economist of Mars, who's the managing director of this uh catalyst internal think tank, is what it was called, uh, to uh to help lead that uh that effort. And um in 2007, just at the start of 2007, John Mars, uh one of the uh leaders of the three branches of the Mars family that own the whole company outright, he asked a really interesting question of his CEO at that time. He asked, uh, what should the right level of profit be for the company? Now, this is the kind of question, Darren, that uh you probably know in this world of Milton Friedman's uh financial capitalism, where it's all about maximizing shareholder value, that uh shareholders typically just assume that uh the answer to a question like, how much is the right level of profit is as much as you can possibly squeeze out of the value chain. But actually, John Mars was thinking very differently about this when he asked the question. He was thinking maybe there was an optimum level of profit above which you were taking too much, and that you would actually disadvantage yourself because you're only as strong as the weakest link in your value chain. So if you take too much profit from your from your value chain or your stakeholder, your ecosystem of stakeholders, you're basically gonna set off this chain reaction that's a squeezing effect of one uh partner squeezing another, squeezing another for more and more profit. And you're ultimately gonna create this kind of disequilibrium in your in your business value chain that's gonna disadvantage you, but you're not gonna have any idea where it's coming from. So that question was given to the CEO. The CEO uh came to the uh the internal think tank and basically said, you know, if we go to Goldman Sachs, we go to McKinsey, we know what the answer is going to be as much uh as possible, but that's not the answer that we're looking for here. So so go ahead and take a look at this question. So we did actually. And being an internal think tank, uh, the first thing that we did was go and do a literature review and try to find out what everybody else was saying about this very, very interesting and provocate provocative question. And we found nothing. Actually, it was uh like it was a blank space in the management literature. So we started to wonder, you know, is this a new question? Or is this uh something that's been around for a while? And actually we went back and all the way back to uh maybe several thousand years ago, to um to King uh Solomon the wise, who had a lot of uh ancient words of wisdom, one of which was a man may give freely and still his wealth will be increased, and another may keep back more than his right, but come to be in need. And this is this was fascinating because we thought, you know, that's actually getting right at the heart of uh of the question of what's the right level of profit should be. And of course, King Solomon said that in the in the book of Proverbs. And we thought, okay, so this is something that goes a lot deeper than uh than just a new management question within the context of the last 50 years of Friedman's financial capitalism. So that's how we got started.
SPEAKER_01Yeah, wow. And and so the the way that you articulate and kind of de encapsulated uh what's what's wrong is that capitalism is incomplete. And so you talk about completing capitalism. How how is capitalism incomplete?
SPEAKER_02Yeah, and that's a great question. And actually, uh, we gave a lot of thought uh when we wrote the book, uh Completing Capitalism, Heal Business to Heal the World, to what the title should be. And uh and actually, you know, we sort of came up with it at the last moment, and it was really uh an important moment for us because it not only captured exactly what we're trying to do, uh, but it also diffused any political or ideological aspect of what we're doing, because this is not sort of something that the left or the right uh can embrace or reject uh and say that it belongs to the other side. Uh actually, it's I found that when I talk to people who are real critics uh on the left of capitalism and may favor something that's uh much more radical as a solution, uh, when they hear that this is about completing capitalism, they figure, okay, you recognize that capitalism is flawed, that it's incomplete, and uh and things can be changed uh for the better. Similarly, when you're talking to people who are very focused on on free market economics and uh are wedded to to uh the current model of financial capitalism in a purer form, you know, they they think, oh, so there's an opportunity to complete capitalism and upgrade it, basically, make it make it more contextual. So there's no uh there's no sort of political or ideological aspect of this. It's something that truly, uh for me, at least personally speaking, comes from above, not from uh either side, uh, so to speak. So completing capitalism, the reason why we we use that term is if if you go back uh about 50 years to 1970, uh Milton Friedman from the Chicago School of Business uh was a famous economist at that time. And, you know, economics is really about the management of scarcity. And that the form of scarcity that existed uh in 1970 was very different than the form of forms of scarcity that exist today. Uh really, there was a lack of money, financial capital in the global economy. But there was a surplus of natural resources at that time, there was a surplus of labor uh for the job market as well. So it's not surprising somebody would step forward with a model uh to uh address the form of scarcity that was existing. And financial capitalism was all about generating as much money as possible that could be accumulated almost into uh uh into uh infinity, uh, and that that that really was part of the rules of the game of that form of uh of economy. Well, you know, fast forward 50 years, and what do you have? You have financial capitalism having created so much of an excess, I would say a dysfunctional excess of financial capital that far from being scarce, it's uh it's actually threatening uh the uh the viability of the global economy because there's just way too much of it, and it's not underpinned by anything of value other than the fact that people believe it has value. So it's very fragile, actually, uh financial capital now because it's in such excess. But the forms of scarcity are now um the opposite of what they were in 1970. You know, we have a severe shortage of natural resources, what we call natural capital, uh, in the world of uh of this business model that I'm going to talk about with you today uh in a few minutes. And we also have um shortage of talent matching the jobs that are being created in the new economy, which is often called the knowledge economy, uh, really because it's about accessing knowledge to do what it is you want rather than just having as much money as you need to buy everything you think you need. Really, you there's a lot of knowledge you can't buy. You need to get it through your relationships, your social capital, which again I'll talk about a bit more later. Uh, it's also got a digital uh component to it, this uh this new form of economy. And economies evolve over time. And whenever they evolve, the rules of the game change and the models need to be upgraded uh and adapted to the new rules of the game. So essentially what we have here is a very incomplete form of capitalism, uh, this financial capitalism model. It's very rudimentary in that it only values uh and measures through a robust set of metrics one form of capital among four, which is money, at the expense of the other forms of non-financial capital, which are social capital, human capital, and natural capital. And so what we're trying to do here is create a more complete form of capitalism by harnessing the uh power of the non-financial forms of capital and integrating them into the enlarged definition of performance of a company so that it's not all about financial capital maximization anymore, that there's actually significant value to be had by being able to manage, um, measure, and mobilize all four forms of capital. So that's what I mean when I say about creating a more complete form of capitalism.
SPEAKER_01Yeah. One of the concepts I've heard you and um Bruno Roche refer to is the Old Testament concept of Jubilee. What how does that uh how did that provide some inspiration for this model?
SPEAKER_02Yeah, and I should say as a caveat that this is uh sort of I'm a believer and Bruno is as well. So this is very much uh this part of the conversation is very much coming out of our personal views. So it's not sort of representative of anything that's coming out of Mars, which is a very secular company. And even the organization I belong to now uh is also a secular company as well. So I just want to get that clear right from the outset. But this concept of the Jubilee is actually very important to Bruno and I. And actually, um, when he was a young man, he had this kind of vision that Leviticus chapter 25 in the Old Testament, also in the Torah, uh, was uh actually something that was a blueprint for how the kingdom economy actually should function. So far from being uh sort of in the past in terms of a two-dimensional kind of Old Testament uh thing where we can draw some lessons from, but not necessarily utilize uh in a in a in businesses of today. It was absolutely something that was living for us, it was living and breathing. And I really personally believe that this is the way the economy ought to operate. And I'll let you know what I what I mean about that uh for your listeners. So so basically the the Jubilee is about, uh again outlined in Leviticus chapter 25. If you want to go back and look at it with fresh eyes at some point, it's about essentially how do you remunerate people, the land, and financial capital, essentially with rest or a Shabbat uh Sabbath uh in Hebrew. Basically, there's one day of rest in every seven for people, which is a Shabbat for people. And that's uh explained very clearly in Leviticus 25. There's similarly one year of rest in every seven for the land, which is again another Shabbat. The land is remunerated with one year that the soil is meant to lay lay fallow. And then every 49 years for one year, which is the 50-year Jubilee cycle, financial capital is really meant to be remunerated with its own form of a Shabbat where debt is forgiven and there's kind of a reset of sorts. Now, I'm not saying economics of mutuality, which is uh this business model management innovation that was kind of created with the inspiration of um of this kind of Jubilee concept, follows a literal uh application of all these principles, but it's definitely inspired by this Jubilee approach, in that the economic system itself really should account for uh what we call the three pillars of economic prosperity, which is a truth that has been uh such for millennia. Basically, the land is there that provides, the labor transforms and adds value, and money is there to provide liquidity in the system. In fact, the word capital, which everybody refers to as financial capital, uh even though it's just one of multiple forms of capital, it comes from the word capita, which means heads of animals that could actually be moved, enabling trade and transactions really to be more mobile. So each of these three pillars of prosperity for any economy, essential for any economy, any economy, land, labor, and financial capital, um, they all have different time horizons in the Jubilee as well. You know, nature has this very long time horizon of um of uh you know seven years, labor has is somewhere in the middle, and financial capital is really remunerated on a on a shorter term basis. So these factors all really need to be taken into account, but they're not in today's dominant financial capitalism model, whereby all the energy and all of the metrics are all about financial profit and um metrics for people, uh which we call social and human capital, and for the environment, which what we what we call natural capital, are very rudimentary and not very applicable in terms of value creation, but they need to be, especially because of the new nature of scarcity in the global economy. Because there's a lot of truths that intersect in terms of the spiritual and the natural in this in this way.
SPEAKER_01Yeah. Usually when I hear people talking about um these concepts, it's it just kind of stays at the philosophical level. But I like what I've I've heard you say is you only manage what you measure. And so you're you're you're not just measuring the the financial bottom line, but also you have metrics to uh to gauge to how are you being a steward of the land, the labor, and not just the financial aspects. What are some of those metrics that you use to um to really put these these things into action and to manage them?
SPEAKER_02I'm glad you made that point, Darren, because this is not uh philosophical. It's not uh impractical, it's actually eminently practical. And that's why we started actually uh this work by uh by spending almost five years. Now, of course, we were doing other things as well in the internal think tank, but the work on economics of mutuality started with a focus on metrics. How can we measure non-financial forms of capital with the same robustness, simplicity, uniformity, standardization, whatever you want to call it, as we measure financial capital? Because if it's too complex, uh businesses will not be able to utilize these uh forms of uh of metrics for the other forms of capital. So if I could just share a little bit about each one, just to kind of give you a top-level overview. Uh, social capital was where we started. And social capital is uh is has been around as a concept for over a century. And uh and there are maybe 60 to 100 different uh metrics or variables that you can use in the lexicon of social capital to describe what a social capital space looks like. So that's horrendously complex and that's not usable uh for business. So we really sort of drilled in and we brought on board uh uh a um development economist who was really brilliant, a guy named Melanin de Bois, a professor from the Sorbonne in France, to help us create a quantitative survey instrument that we could utilize to measure social capital because we knew we had to make it more simple, but we also knew that accuracy was going to be key. And so the qualitative side of social capital needed in the world. His name was Peter Berger, uh an Austrian professor, but who was uh at Boston University for a long time. And and Peter uh was there really to challenge uh with his quantitative lens, uh, uh you know, this sociological lens of going out into the field and spending you know sort of seven years sitting around watching communities before you actually can can determine uh anything about what a social capital space might look like, to really challenge the uh the survey instrument that was being developed by the by the uh development economists uh with our team. And ultimately, to make a long story short, we tested this survey instrument in multiple types of uh of business environments from you know impoverished coffee farmers in Papua New Guinea to coffee farmers in Tanzania to cocoa farmers in West Africa to uh distributors of Wrigley's chewing gum, which was in the Mars portfolio in places like Vietnam and elsewhere. And we discovered through this very uh objective measurement work that our survey instrument had identified three variables out of those 6,200 that were always the same and always accounted together for about 80% of what the social capital space looked like at a community level, wherever we did it, you know, no matter what the business conditions were, the market forces, the culture, whatever. And they were essentially trust within a community, uh social cohesiveness, and the capacity of that community to work collectively for the common good. And by focusing just on those three variables, you know, weighted differently depending on what the situation was, um, always these three, you could account for 80% of the social capital space of any business situation. Therefore, it was eminently simplified and usable for what we were doing. For human capital, it was quite different, the uh the approach. Instead of having sort of three universal metrics, uh, we uh human capital for us was about how do you identify individual well-being at work through what the true drivers of well-being are among the workforce in any particular culture. So if you were working at a Goldman Sachs, you'd have a particular kind of culture. Your what was most important to your employees, to your workforce, might be different materially than what it could be at a company like Mars. And so I don't know what it is at Goldman Sachs, but I found at Mars wage disparity as one of the descriptors of human capital, of a driver of well-being, wasn't even in the top five for uh for Martians, is what we used to call ourselves. And I think they still do over there. Um, really number the number one driver of well-being in the Mars business context among the workforce was do managers actually walk the talk of the values they espouse? And that this was roughly equivalent to a 30% pay increase that you would not have to give, actually, if you could find a way through some HR interventions to grow the so the human capital, the trust, the social cohesiveness around the confidence of um of that workforce in the fact that the managers were actually doing what they said that they believed in. And uh, and so really it's not a uniform set of metrics. Those metrics change depending on the culture, but that what is uniform and standard is the methodology we use to collect the data and analyze it and determine what the true drivers of well-being are. Now, know that these that these forms of capital have significant impact on your performance. Because if you think about human capital, about addressing the well-being of your workforce, helping your workforce identify their vocation at an individual level, letting them live that out within the context of the company's purpose is can be very powerful. You get three things when you do that properly in a business model management innovation type of approach. You get talent attraction, and we're in a war for talent right now. So getting and keeping the right talent is critically important to the success of your business. Talent retention, you know, it's the best and the brightest that you invest the most in that often leave the food the most quickly if their purpose is not being met. And then optimization of performance, because people whose purpose is being met in their jobs are much more likely to stay there and to outperform those who are who are not happy that they're there for other reasons. So that's kind of how social and human capital work. And then on natural capital, natural resources is a kind of a slightly different story. Uh, most companies look at uh they have one metric that in a very simplified way accounts for the natural resources that a company is involved with, and it's called carbon footprint. And you've probably heard of carbon footprint, you know, everybody, everybody talks about that in the business context. And you know, that's important, but it's not a tool or an insight that managers can use to manage to more resource-efficient outcomes. It's called an output metric, and it's about external reporting and benchmarking. So, you know, it's fine for that role, but it doesn't, it's not a leading indicator. Uh, it's a lagging indicator. A leading indicator would actually help you drive greater value creation, including, you know, not depleting your resources, but being more efficient with them. And so we um in the economics of mutuality utilize five universal input metrics that have to do with biotic and abiotic materials or organic or inorganic materials, uh, land erosion, you know, soil erosion, air and water. And not all of those metrics are always uh actionable uh on their own in every business situation. But when they are, you actually can get some really powerful insights into um uh into what you can do as a manager to be more uh resource efficient. And by doing so, you leave a smaller footprint. So it's really actionable for uh uh for a business model and contributes to the performance of the company. So that's that's kind of where we come up with these 13 metrics: five for natural capital, five for human capital, and three for social capital, and 13 metrics to cover all three forms of non-financial capital. That's a very small number of metrics, very easy to work with in business.
SPEAKER_01Yeah. And our our audience will, I'm sure, notice that financial metrics were not one of the and were not included there. Um, so the idea is that you you focus on the the three, the fourth will is more of a lagging indicator.
SPEAKER_02Or well, no, we uh we use financial capital as well. Um it's it's one of the four forms of capital, but it just happens to have all of the metrics that it needs at present, whereas uh the other three forms of capital are are virtually ignored by by business or mishandled. And so if companies really want to be able to measure, manage, and mobilize all four forms of capital, they really need uh to have kind of simple, stable, uniform metrics. And the other big discovery we made after we cracked the ability to actually measure these things with the same simplicity and robustness as financial capital is that we found through our field experiments. A very strong relationship, uh causal effect, really, between how much uh non-financial capital, human, social, and natural, that a company creates or destroys in every business activity, and how much uh financial capital in terms of economic performance is actually released. Now, this is absolutely critical to understand because um if you're working in a kind of traditional corporate social responsibility type of uh role, or if you're just working in the sustainability space, which is very important, so I'm not diminishing those spaces, but there is a uh kind of underlying assumption uh when you do something good in business through CSR or through sustainability, that there's an inherent trade-off of profit to do some good for people and planet. And what we've discovered by scouring hundreds and hundreds of sustainability reports is that none of them are scalable. And the reason they're not scalable, uh, which is the prerequisite of being transformational for business, is because they're not profitable enough to be self-sustaining, right? And if it's not self-sustaining, it can't be scalable by nature. So you can kind of um do some good for people and planet by trading profit, but it's really hard to scale up. And if you can't scale, it's really hard to really move the needle and transform your business into something that's much more purposeful and responsible and in ways that you can prove through through measurement. So this not having to trade profit to do good for people and planet is central to uh to how we do this. And we need those building blocks of social, human, and natural capital and financial capital because they need to work um synergistically with uh with one another. Uh, when you create through your management practices of any business activity more human, social, or natural capital, you can expect uh a better impact on your top and bottom line. Similarly, if you're damaging human, social or natural capital with your business practices, you're acting, you're you're you have a drag on your PL, on your profit and loss statement. So you're both on your top and bottom line are suffering, but you don't see it because you don't realize that it's because of the fact that your business practices are not responsible, they're not purposeful, they're damaging either nature or individual well-being or you know, community trust, that you're you're acting as a drag on your own profitability and on your growth. Uh, so it's you could look at it as a as a blessing or a curse. You know, it's an opportunity or uh or it's uh something that's a drag. I tend to look at it as an opportunity, you know, to do better, but also to be more resilient and more profitable. There's no reason why you can't be more profitable with this approach uh if you're not chasing the money, if you're actually trying to fix the problems of others and leverage the non-financial forms of capital.
SPEAKER_01Yeah. Well, that was an important point you made about uh scalability is a prerequisite for it to be transformational and really affect the the culture on a on a macro level. Um, what success, Jay, have you found as a result of companies implementing this model?
SPEAKER_02Well, for many years, we worked just inside Mars Incorporated because we were the internal think tank of Mars Incorporated. And uh I remember when we first cracked the measurement um challenge of non-financial forms of capital, and then we found this connection between non-financial forms of value and greater value creation on economic performance and financial performance. Uh, we we went to the president of uh of Mars Wrigley's, which was the big Wrigley chewing gum company, which Mars had acquired in 2008, I believe. And the president of uh Mars Wrigley's a guy named Mark Bradvan, he was a really strong supporter of what it was we were doing. And he said, you know, now I need you to show me how this works in a real business. So why don't you go to East Africa, where we have the only uh Wrigley's factory producing chewing gum on the whole continent of Africa and show me what you can do uh with this, with these insights. So we went out there and we sat down with the uh with the general manager, I remember. And the general manager was uh really excited about what we had to say, about the vision for this work. Of course, we didn't have any data to show because we hadn't tried it yet. And um and he said, you know, I love what you're saying. It sounds very inspiring, but you know, I have to deliver really uh tough performance targets that are financial in nature, and I can't have you guys come in here and uh compromise my ability to do that. So don't break anything. And that means you can't work where we're already working. Uh so we said, okay, but where can we work? And he said, Well, there's some slum areas that are around Nairobi, Kenya, which happen to be the largest slums in all of Africa. And they're called Kwaonguera and Kibera and a few other places that were rural that uh were very impoverished. And um, the Wrigley Chewing Gum Company really had roots to market for this uh chewing gum product that used master distributors and and used all the kind of traditional techniques that you would find in in financial capitalism to um to create uh a route to market for chewing gum to get from the factory into the hands of uh of retailers and ultimately into the hands of um consumers. Well, we took a look at these slum areas and these uh rural areas that were impoverished, and we thought, okay, we um this is gonna be really challenging because there's no natural capital that's visible, there's no financial capital that's visible, there's no uh human capital, well-being that's visible, and there's some social capital, but uh, you know, it's kind of off on its own. How are we going to build a business like this using traditional means of distribution? And we realize we can't, that uh we as a corporation that's a Western multinational, we have no credibility and little brand recognition, no social capital, really no trust of these local communities. And that uh when people sell chewing gum retail outlets, it's not in supermarkets and you know, Walmarts in these slum areas, it's in little wooden kiosks run by people that will only buy the product from uh people that they grew up with that they know because they have trust in them. They have the social capital. So we thought, okay, how are we going to do this? And we realized we needed to we needed to throw out the playbook uh of traditional business and we needed to think out of the box and start working with citizen sector organizations, nonprofits, microfinance lenders, those that businesses traditionally don't work with for something like uh a root-to-market business for a product like this. Uh, but these were the organizations that actually had the social capital in the communities that we wanted to work in that we did not. Even a church that I happen to know the leadership of out there, that was a mega church called Mavuno, uh, who happened to be adjacent to these slum areas. And I remember being out there helping the program leader set up this program. And I took the pastor and his wife out to dinner, and I just told them about what we were doing in Kwangar and Kabara. And they got really excited and said, you know, we have thousands of parishioners who are young entrepreneurial Kenyans, men and women, um, who are in our Mavuno church and they live in those slum areas and they have no jobs, they have no opportunities. Uh, how about if we um partner with the secular Wrigley's Corporation in uh in Kenya and become a pipeline for group for scaling up the program and we'll direct our youth into uh your microdistribution jobs in exchange for uh, and what we'll do for you as well is we will mentor, we'll commit to mentoring them to keep them on the straight and narrow. And sure enough, we introduced that church to to the Wrigley's leadership, and they thought this is a great way to scale up this program. So, so just in a in a long to make a long story short, because I think this is important to understand how we got started. So we created this very different kind of approach where it was about identifying stakeholders brought together around the purpose of the business, uh, which we expressed. And these stakeholders really were non-traditional players. So we found, for example, a um a uh nonprofit that was in the slums to try to uh uplift uh unemployed single mothers to find job opportunities for them. But they were suffering from the fact that they just didn't have enough good job opportunities to offer them. So they were willing to partner with us. Uh, Western multinational for-profit, this nonprofit, was willing to partner with us and help recruit these women who are unemployed single mothers to be microdistributors of Wrigley's chewing gum and to help train them to do that. And what they got out of it was they were able to be more effective in what they were doing because they were providing better jobs to these people and helping them lift up. We were getting access to the nonprofit, which had the trust in the community so that they could actually recruit people into our programs. Well, then we uh we realized that these people had no money and they had no possessions to collateralize so that they could get even a loan, a microloan, to buy a bicycle with a basket on it, to pedal out to a central stop point and pick up the chewing gum and then bring it in and start distributing it to the kiosks that were the retailers. And so we didn't want to be a bank and we lend the money. We didn't want to guarantee those loans either. But we found a micro lender that was also having a lot of trouble operating in these slum areas because it could not meet its mission objective, which was execute X number of microloans because it couldn't figure out how to collateralize anything that these people had or didn't have. And they realized that they could use as a proxy the fact that these people were micro distributors in the program run by a Western multinational corporation that was very well known. So we struck a partnership uh to uh with again a microfinance lender that was there to do good, and they were able to be the funding source for these people to get microloans to start getting on their feet and become operational as distributors of the product. Anyway, to make a long story short, this um program just took off this initiative. And um, we found out that we also changed what are called in business the KPIs, the key performance indicators, so the metrics that managers are required to deliver against to get their bonuses from things like uh retained earnings for the company and sales and those kinds of things that are traditional to human capital and social capital. And we taught the business uh how to deliver through interventions greater human capital, greater well-being, greater social capital, greater trust. And we tracked those things and we found that as they delivered more and more social and human capital in this business, that uh sales and retained earnings went up, scalability of the program went up, um, the quality of life of those people went up, uh, the retention rates went crazy. They were like 90% for a long period of time. And uh the profitability to the company doubled what uh uh the neighboring business was doing with wealthier consumers, with more brand recognition, with traditional root-to-market type master distribution distribution and so forth. So it really proved that uh if you don't chase the money, if you actually look at how you can bring together the right stakeholders around purpose and then deliver greater human and social value to people that uh in that program, that actually you'll wind up with a better business that's even up to twice as more profitable, if not more so. And so this program is really scaling up to four different countries now: Egypt, India, uh, the Philippines, in addition to Kenya, and uh and it's doing really well. And then on the other end of the scale, you know, we we took this to uh the uh pet food company within the Mars portfolio that was the Crown Jewel. It was called Royal Kanin, it still is, and it's about a six billion dollar company that sells a very, very high quality, high nutrition pet food that would cost about 80 euros or close to $100 a bag for a bag of dog food in uh Europe. Uh, this is not a product that the poor, poorest among the poor can afford. Only the wealthiest consumers in the most mature markets can afford that. Different context, but very similar approaches as we used in um uh elsewhere in deploying the economics of mutuality, starting with purpose, building an ecosystem of stakeholders necessary to deliver that purpose, uh, mapping them out, identifying what their pain points were, what were they suffering from, creating some interventions to grow the different forms of capital that'll address the problems of the stakeholders rather than just trying to extract as much value as we can from the stakeholders. And what happened? It started to deliver much more holistic and financial value for Royal Canon, even in the short term. So we've seen it work from one end of the scale to the other. Now we've moved outside of Mars as of uh August of 2020, and we've been working with other companies with Mars, but also with uh very large retail group that's headquartered in France that has 11 multinational corporations in it. We've been working for two of those big companies, delivering very uh promising results. We're also uh soon working for a large uh UK bank, uh, for a couple of technology companies in the US, uh, for a pharma company in Germany. And again, the more work we do on this, the more we publish on it. So we put out more and more case study data when uh when we can do that with the company's permission. And uh we try to share the learnings and uh and teach this as well uh at the executive education level and also uh in uh universities at the MBA level. So I guess those are some examples of uh uh success that we've witnessed as a result of companies implementing this.
SPEAKER_01Yeah. Wow. So, Jay, as you as you talk to business owners and you notice that they're just not, they're just not measuring this stuff, they're not tracking this stuff, and so therefore they can't manage it. What would be maybe one or two of those metrics that you would say, okay, you got to start implementing this today, you got to start watching this. So maybe one or two metrics that they should be, we should be watching, but most likely in in your experience, just just aren't. And then how do we how do we measure it? How do we um and not just sort of, you know, we we write down a you know on a Likert scale one to five, but actually like really measure it over time?
SPEAKER_02Well, there's a lot of metrics that are out there. Um, you know, ESG, environmental, social, and governance. Governance is a big term these days, and uh, and so companies are increasingly being required to report on what are called ESG um uh metrics. The problem with ESG metrics is that there's a very, very large quantity of those metrics, and none of them, to my knowledge, is uh is uh directly connected to value creation in a business. So they kind of have limited utility. We like to stick with the basic building blocks, uh the social, human, and natural capital that I laid out and the financial capital. And I've shared with you 13 metrics that together cover all of what you need to be able to work with those um non-financial forms of metrics to be able to measure them, manage uh with them and mobilize them, mobilize the value creation that is uh inherent in them. So that would be where I would start. I mean, it's not sort of one or two metrics, it's it's the three forms of non-financial capital and the um and the small number of metrics, uh, relatively speaking, that unlock those to uh to help your business perform more holistically, more financially, and more purposefully. And companies that actually deliver their purpose and strategy rather than just talk about their purpose, they're the um the ones that actually become more profitable and more resilient over time. But you know so the one about trust. Go ahead. I was gonna say there's a reason we called this book um completing capitalism, heal business to heal the world, because there's a real temptation to uh think that, okay, this is just another clever way to make uh make companies more money um in the in the new context. It's really uh instead about healing broken relationships, broken relationships between business and the environment, and broken relationships between business and people, uh, most certainly. And I think companies have lost the trust of the consumer, they've often lost the trust of governments. And partly that's because Friedman's approach can be summarized in one way as the sole social responsibility of business is to maximize shareholder value. Well, 50 years ago, a hundred of the largest economies in the world were all nation states. Today, I think it's about 69 of the largest economies are multinational corporations. So if multinational corporations don't step into the responsibility role that they have now because of their size and influence, nobody is going to be able to solve the biggest challenges we have to people on the planet. So um, you know, that's where I kind of stand on that issue.
SPEAKER_01Yeah. And so where can people go to connect? And do you actually um for let's say, let's say I'm a company, I've got 10 employees. It like, are we are we kind of too small for you to come and and work with us? So do you have resources that you provide to kind of help people do like a self-assessment? Or what um what option, what options do you have for anyone? Well, my company as a manager.
SPEAKER_02My company at this time is a small, is a small one. So we we have about 20 people and a global remit. And so we tend to work with uh larger companies, but economics and mutualities for for companies of all sizes, there's no question about that. So there's lots of ways that smaller companies can get involved. And actually, in many ways, it's easier to implement this uh with a clean slate in a startup than it is trying to get a huge corporation to start to unlearn many of the uh the lessons that keep them locked into the financial capitalism kind of approach of old and open their minds to the fact that you can create a more complete form of capitalism. So I mean, I think to really move the needle, we need to work first with some of the larger corporations, but smaller corporations can can engage in different ways. Um, one is that we have an an annual economics and mutuality um executive education program that we do at Oxford University. And because of the COVID the last two years, we've found great success in in doing it virtually, which also makes it a lot easier for for um for business leaders to uh to attend because they can do it over four weeks and maybe six hours a week and do it all online so they can still do their jobs uh while they're while they're um enrolled in the in the course. So that's one way to really start to get a hands-on, uh deeper um knowledge about the practical application of this without having to engage the company directly as a consulting in a consulting arrangement. Um, second is take a look at this book, Completing Capitalism, Heal Business, Heal the World. It'll give you a good sense of of where we started and where we're going and give some case study material. We recently published another book with our Oxford partners that has about 30 co-authors. Um I'm one of them, and it's called Putting Purpose into Practice, The Economics of Mutuality. And it was put out by Oxford University Press in March of this year, but uh we cut a deal with them because it's an expensive uh book uh to buy online. That uh we have a free download of this on our website, which is the other way to uh to learn more about what we're doing, which is uh EOM.org. That's EOM for economics and mutuality.org. And in that you can find lots of different events that we do, including an annual forum that's online uh at Oxford. We just finished our sixth annual uh Oxford EOM forum, in which we bring in outside speakers, present case studies. We have lots of free uh information and the ability to network uh around this uh this issue. We give a lot of um talks on this topic and in often public and non-public settings. I think I've given about 42 uh keynote talks or or guest lectures or whatever uh just in the course of this uh last year. Uh COVID has actually made it easier for me to speak to more people because uh we can do this virtually. So there's a lot of different ways that you can you can get more information. In our database, um in our archive and the EOM.org website, there's uh over 50 case studies that are in there with lessons that are very relevant to to what I a little bit that I shared today on this topic.
SPEAKER_01Excellent. Plenty of uh plenty of content out there to get more from JEOM.org, the book Completing Capitalism, I know is available everywhere. Um, Dr. J Jacob, thank you so much for coming on the show today and helping us grow. We're all better for it.
SPEAKER_02My pleasure, Darren, and Merry Christmas to you and all your listeners. And uh, I just wish you all the best. And and uh, you know, putting purpose into practice is what this is about. And it's possible, and there's a lot of ways to do it, no matter what kind of company you have. So I just urge you to make 2022 the year that you join the movement. Let's do it.
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