Business

Daniel Ospina

Ethical Disruption Is Possible

Most industries are being disrupted, with the privileged benefiting while the vulnerable suffer. . .

But it is possible to solve or at least lessen the problem. Here’s how.

An example of a disruptor is Bodega, founded by ex-Googlers and backed by First Round Capital, Forerunner Ventures, and Homebrew. Bodega aims to replace corner stores with an automated, more cost effective alternative. If successful, it will make it easier to purchase last minute items.

But the problem is that mom and pop stores, and the families that depend upon them, will suffer as a result. The venture is even appropriating their cultural capital by adopting the name ‘Bodega’, a term popularized by the Caribbean-Hispanic communities who often run these establishments in the U.S.

The company doesn’t seem concerned by the negative impact that it will be having on these communities, and people are resisting. Here are some of the headlines around the furor:

Fury at ‘Bodega’ tech startup that aims to put corner shops out of business — The Guardian

Startup Bodega apologizes for upsetting everyone — CNN

Bodega Isn’t Just Bad Branding, It’s Bad Business — Eater

With all these bad vibes, good people will be put off from working for or with Bodega, to say nothing of investors and, in the long run, customers. Bodega could have done things differently. Their model’s financial projections look attractive on paper, but they failed to take humans into account.

If you want to be an ethical disruptor, you need to address the issue head on. Bodega could, for example, have offered to donate a small fraction of its shares to a foundation dedicated to training bodega owners with new skills. Instead of putting them out of business, it could have given them a path into the digital economy of the future.

People who felt inspired by that philanthropic purpose, or reassured by the company’s social responsibility, would have an incentive to buy from the company. The conflict of interest is acknowledged and mitigated, and the company softens and humanizes its image, finding a way into the all-powerful heart.

Unfortunately, most companies have not been designed taking into account the communities they operate in and impact, and the consequences are dire. Uber is a recent example, where focusing on nothing but customers at the expense of everyone else has cost investors $10 billion and the CEO his job. Not caring is bad business.

In contrast, companies that care generate goodwill. Elvis & Kresse make bags out of recycled firefighter hose. By donating to firefighters charities, they ensured a community of advocates, plenty of good press, and even a free supply of raw materials.

But it’s not enough to throw money at any old cause, as BP discovered when people started to protest against its donations to the Tate Museum in London. Ethical disruption is at its best when the negative impact of a venture is acknowledged. A leader in this space is Patagonia, where generous donations to charities, logistics, and advertising, are designed to reduce the damage to the environment. They harmonize their customers’ love for the outdoors with the products they sell, generating goodwill to the tune of 25% sales growth during the 2008–2009 crisis.

Ongoing support is much more powerful than prizes or grants. Warby Parker trains locals in deprived areas to deliver eye tests and sell low-cost glasses. As their website says, ‘It’s a sticky fact of life that kind-hearted gestures can have unintended consequences. Donating is often a temporary solution, not a lasting one.’ Rather than risk a flash in the pan or create a culture of dependency, their approach leverages their core competence to empower local communities.

If it is not Bodega, someone will someday disrupt the old-school industries. The technology is there, so why not seize the opportunity and become an ethical disruptor? Just be sure to assess and acknowledge your wider impact when designing your organization, investors and society will thank you.

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Daniel Ospina is the founder of Conductal, an innovative organisation design consultancy Beyond Conductal.
He is a visiting lecturer at Said Business School (Oxford University), a co-founder of Crossmodalism, an Associate Fellow at London University, a Fellow at the RSA, and a frequent public speaker. He likes to cook with friends.