Announcing the Winners of the Long-Term Capitalism Challenge

A few weeks ago we shared twenty-four real-world case studies and bold hacks for accelerating the shift to a more principled, patient, and socially accountable capitalism. After much debate and some wrenching decision-making among the judges, we’re delighted to announce the winners of the Long-Term Capitalism Challenge —the third leg of the HBR/McKinsey M-Prize for Management Innovation.

Re-imagining capitalism for a new age and a new set of challenges is a sweeping undertaking. So it’s not surprising that we received a striking diversity of entries from every kind of organization and from every corner of the world. That diversity is represented in the final ten winners—but so are a core set of themes any aspiring long-term capitalist can learn from.

Don’t just launch an initiative—embed the ethos in the DNA of the organization. Several of the winning stories demonstrate the power of true management innovation—they go beyond a single initiative, product, service, or program to embed a new set of values (and a new approach to defining value) deeply into core management processes and mindsets. With its approach to “considered design” Nike has awoken its entire workforce to the ethos of “growth that’s good for all” in their day-to-day behaviors and decisions. The athletic apparel giant has also engaged a broad base of partners (and competitors) in innovation toward that goal. Another global retail giant, The Coca-Cola Company, has been celebrated for its water stewardship initiative. Greg Koch tells the story of how plant managers around the world have absorbed their connection to the communities in which they do business—and work hard to earn the “social license” to operate.

Natura Cosmeticos, the $3 billion Brazilian cosmetics company, was founded on the idea of “well-being” for all. Over the course of four decades, it has innovated relentlessly around that deeply felt sense of purpose—whether that means radical transparency (in both its advertising and reporting on its impacts); advancing an “integrated management model” in which environmental, social, and financial considerations are weighed equally in micro- and macro- decisions (executives are compensated based on their ability to honor the triple bottom line); becoming a true steward of the rich natural and human resources of the Amazon region from which it sources most of its raw materials; and developing a 1.4 million-strong army of advocates for this principled approach to business in its “consultoras” (direct sales agents).

And Accenture Development Partnerships (ADP) moves beyond the service firm model of pro-bono volunteerism to pioneer an approach to enlisting business, government and civil society in tackling crucial (and formerly “unsolvable”) problems together. Just as important, the ADP approach taps into a widespread hunger for meaningful impact among the next generation of workers with its clever approach to the “hybrid career”—in which the most ambitious individuals develop “core” capabilities and in-depth experience in managing big projects and solving problems in developing economies around the world.

It’s not enough to change one company—it’s crucial to advance the entire ecosystem. In his winning hack, Heerad Sabeti makes a powerful case for the concerted cultivation of a “fourth sector” of the economy (alongside the public, private and social sector) to give “for benefit” firms equal billing as vehicles of value creation alongside for-profit firms. Already emerging (and evidenced in many of the finalist entries), a healthy fourth sector ecosystem will require a radical rethink of everything from education and management theory to public policy to legal structures to reporting standards—and the cooperation of leaders, entrepreneurs, and individual citizen-consumers alike. Ashoka’s “hybrid value chain” further defines the operating framework for citizen- and private-sector collaboration to solve large-scale problems neither could solve on their own—and to redefine value once-and-for-all as the interlinked creation of wealth and sustainable social benefit. Both entries offer up powerfully practical pathways for leaders of at all levels to play a part in advancing progress for all.

We’re all in this together. The challenge winners make a virtue of the inescapable reality of our interdependence—with our closest neighbors, far-away actors, and the natural environment. That’s the spirit behind the story of Sustainable Harvest and it’s approach to “relationship coffee.” The organization has turned a conflict-ridden, zero-sum game—coffee importation—into a collaborative community of stakeholders. They’ve created a big tent (literally—their annual “Let’s Talk Coffee” event is a Lollapalooza of smallholder farmers, NGOs, and even competitors) for developing human, trusting relationships and advancing transparency at every opportunity.

In their hack on “quantifying well-being,” Paul Herman and co-authors draw investors, advisors, and the financial community into that tent. They offer up a powerful re-framing of the metrics from, as judge Dov Seidman put it, “how much” to “how.” And they push both investors and leaders to generate human impact and profit simultaneously, by considering the dimensions of “health, wealth, earth, equality, and trust,” as interlocking pieces of the same puzzle.

As a $17 billion, 83,000-person network of 258 cooperatively-owned businesses, subsidiares and affiliated organisations, the MONDRAGON Corporation is the antithesis of the monolithic, go-it-alone enterprise at the center of so much economic activity. Founded in the 1950s in the Basque region of northern Spain to combat widespread unemployment, inequity, and poverty, MONDRAGON has advanced the principles and practice of employee ownership, democratic organization, participatory management, and human values to build the ultimate competitive and caring organization. Their case study is a blueprint for building a cellular, social organization.

If the winners of the Long-Term Capitalism Challenge teach us anything, it’s that the future will be shaped (and led) by people with what philosopher and reformer John Dewey called “audacity of imagination.” Individuals and organizations who not only see a new way to win in their industry or area of endeavor, but whose greatest ambition is to win precisely by figuring out a way for everybody to win.

Here are the winners (in alphabetical order) with links to their stories and hacks:

• Ashoka’s Hybrid Value Chain: Revving the Engine of Sustained Global Prosperity and Social Value

  Hack by Valeria Budinich, Ashoka

• Inside-Out Transformation: A Hybrid Business Model for a Converging World

  Story by Gib Bulloch, Accenture Development Partners

• Relationship Coffee: Creating Shared Value with Transparency and Trust

  Story by David Griswold, Sustainable Harvest

• Innovation in Well-Being—the Creation of Sustainable Value at Natura

  Story by Luciana Hashiba, Natura Cosmeticos

• Quantifying well-being and impact can drive investors to build a better world

  Hack by R. Paul Herman, co-authored by Gayle Keck, Avary Kent, Nicholas Gower, HIP Investor Inc.

• Valuing Nature – How Responsible Water Use Sustains Business, Communities and Ecosystems

  Story by Greg Koch, Coca-Cola

• The Mondragon Cooperative Experience: Humanity at Work

  Story by José Luis Lafuente and Fred Freundlich, Mondragon

• Develop and Support the DNA of a New Capitalism —the For-Benefit Enterprise

  Hack by Heerad Sabeti, Fourth Sector Network

• DaviPlata: "Self-Service" Financial Inclusion

  Story by Juan Carlos Rojas Serrano, DaviPlata

• Nike's Gameplan for Growth that's Good for All
  

  Story by Lorrie Vogel and Agata Ramallo Garcia, Nike

Congratulations all! What’s next? Along with our partners from Harvard Business Review and McKinsey, we’ll be announcing the grand prize winners of the year-long HBR/McKinsey M-Prize for Management Innovation at our live event, the MIX Mashup, in San Francisco on June 19, 2012. Stay tuned for reports and video from the event.