What should be the right level of profit for the company?
This question asked in 2007 by John Mars, one of the sibling owners of US-based private sweet maker Mars, triggered both moral and financial implications for the $35bn-revenue company.
A decade on and one conclusion has been focusing solely on profit gained from the majority of people can be exploitative and so the company has turned to newer approaches developed by Clara Shen, catalyst director and now within its nascent Mars Wrigley Ventures unit.
Shen said: “With a focus on emerging markets and reaching the four billion at the base of the pyramid (BOP), where it is obvious that focusing on profit (financial capital) alone is exploitative, I had the chance to pilot not-only-for-profit business models that field-tested new management practices.”
These involved partnerships with “uncommon collaborators,” such as non-government organisations (NGOs), microfinance institutions (MFI) and civil society organisations (CSOs), and new metrics across people (social and human capital), planet (natural capital), and performance (shared financial capital), she said.
Shen added: “Our focus was on accounting for and creating value for the individual, the community and institutions as a driver of our own business success. Though concept is still nascent, the Kenya business pilot is now a business unit that is stable, profitable and growing. It is a double-digit share of the Mars Kenya business, and is scaling across east Africa and southeast Asia.”
To add rigour to the new approach, in 2014 Mars launched a multi-year research program in partnership with University of Oxford’s Said Business School called “Mutuality in Business,” that strives to build a new management theory to challenge the Chicago school.
“Promoting a mutuality of benefits among all stakeholders” is a founding principle at Mars, and was defined as the company’s objective by Forrest Mars Senior in 1967.
Shen, who has been in its internal corporate think tank (Catalyst) and now in Mars Wrigley Ventures for the past six years, said Mars was guided by five principles: quality, efficiency, responsibility, mutuality and freedom. “Working in this context means an enviable degree of freedom to operate (versus publicly listed companies) and to deliver long-term value creation, including how to measure and manage holistic value creation beyond profit alone.
“Any small change in Mars can reach scale. Mars has the ability to shape the ecosystem though investing in or growing new businesses, including developing enterprises – especially small and medium-sized enterprises in our own value chain.”
However, with such size and influence can come challenges, which Shen said were “mostly internal”.
It was “difficult to create change in large organisations with set processes and key performance indicators. This was well summarised by this: ‘All truth passes through stages. First, it is ignored, then it is ridiculed, then it is violently opposed, until finally it is accepted as being self-evident.’ ”
And beyond her company, Shen is asking corporate venturers to think about the purpose of the company they serve: “Why do we exist?
“Surely the purpose of the company goes beyond generating profits, and goes beyond simply meeting a set of socially responsible consumer needs.”
In some ways it might seem a long way from her previous work as the co-founder of a biotechnology startup based in the Hong Kong University of Science and Technology that commercialised cell therapies and regenerative medicine, following her degree in biochemistry at Harvard University to working for the maker of the Milky Way chocolate bar but impact to make the world a better place takes many different forms.