Purpose, not just profit! How to achieve a sustainable impact in the industry based on steward-ownership model?
Learn more about steward-ownership, the alternative governance model and the basis of the social ventures supported by SoTecIn Factory and its equity-free 3.3 Million EUR and capacity building & business support for tech-savvy innovators in 3 key industry value chains (textiles, food, water & nutrients, plastics & packaging).
Imagine a 21st century company and the first image that would show up in your mind is a corporation consisting of shareholders, private equity firms, or parent companies that are generally making strategic decisions with a sole purpose of maximizing profit. But such traditional corporate structure may well be a trap for the social innovators wishing to make a lasting impact.
Conventional investments and ownership structures that bring founders and their businesses to fast growth or failure, and ultimately an exit, do not offer a new generation of mission led entrepreneurs an opportunity to design, operate and manage their businesses with a strong foundation in their values and mission.
In the times of growing social, economic and environmental challenges, a growing number of entrepreneurs is deliberately choosing business as a tool to drive social change, rather than just for the increase of their own or investors’ profits, and they need an alternative both to conventional investment opportunities as well as to ownership structures that will not force them to either sell their companies or drift away from their missions.
How can they have legal businesses running where decisions are made based on values and impact scaling/maximization while still having an opportunity to access funding opportunities necessary to start, operate and scale their impact? How can they maintain the company’s commitment to the determined purpose? The answer lies in companies adopting the steward-ownership model.
The Principles of Steward-Ownership Model
Purpose Foundation, the German association which coined the term “steward-ownership” described this governance model and alternative company ownership in their research paper “Rethinking ownership in 21st century” as a set of principles:
Profits serve purpose
For steward-owned companies, profits are a means to an end, not an end in and of themselves. All the profits generated by the company are either reinvested in the business, used to repay investors, shared with stakeholders, or donated to charity.
For-profit businesses are often beholden to the interests of shareholders who aren’t involved in the operation or management of the business. Steward-Ownership structures keep control with the people who are actively engaged in or connected to the business. Voting shares can only be held by stewards, i.e., people in or close the business, and the business itself can never be sold.
The SoTecIn Factory approach to Steward-Ownership
The SoTecIn project has incorporated the steward-ownership in its mission-oriented social innovation process. The process convenes diverse actors centered around defined Missions in the 3 value chains. These Mission councils facilitate the progressing of purpose-led ventures with solutions for circular transformation of industrial value chains. The solutions are specifically addressing higher value “R” circular strategies, maintaining the value of products and materials for as long as possible.
The process involves the interaction between 1) Challenge Owners, private and public industry actors that are facing a specific challenges within their organisations adhering to the previously identified regional missions, 2) Social Innovators, tech-savvy startups and SMEs which are proposing Solutions and 3) Mission Councils, groups of industry experts spread across 7 economic regions, that support Solutions and make sure they contribute to the specific Mission of transforming targeted value chain.
Through their joint effort and mutual interaction, they will help shape the selected social innovators in such a way that they effectively contribute to driving systems change in the regional value chain contexts. The ambition of the program is to incentivize the participating entrepreneurs to change their ventures’ governance to steward owned, and commit to go beyond producing products for profit but do so in pursuit of a visionary mission ahead.
Interested in becoming a SoTecIn Factory social innovator?
SoTecIn Factory will offer an extensive package of capacity building and business support to the social innovators who will choose to respond to SoTecIn Factory’s mission-oriented challenges, and have their own innovations systemically stewarded by Mission Councils. The support will include – alongside funding packages worth up to €100k (€15k+€85k) for the 30 ideas reaching the demo implementation phase – training, mentoring, consulting and peer-to-peer engagement. The 15 teams per call, in average (30 in total), that will successfully make it through to this support stage will have access to multiple resources and to the consortium’s in-depth expertise on circular business models, systemic change, social entrepreneurship, funding strategies and industrial value chains, to name but a few.