Teaching Companies to Do Good While Innovating

getting it right and building out responsible innovation. It's something we talk a lot about here at Bloomberg Business Kevin Manias, founding partner at Category Design Advisors. He joins us on the phone from New York City. His new book is called Intended Consequences, How to build market leading Companies with Responsible Innovation. Kevin, how are you hey? I'm great, Thanks for having me on. Hey, it's really great to have

you with us. I want to hear the origin story here and the moment that you realize that what you've been observing, what you've been writing about, it was it was perfect for a book. Take me into it well. I co authors us with a guy named Haymont Tunisia, and Haymont is the guy who runs the General Catalyst, which is now one of the most powerful VC in Silicon Valley. This is the third book we've written together.

So we had over the last five or six years, constantly conversations about what's going on, what do we know, what do we want to say? Things like that, and um, one of the things we've it's been on our minds was, um that just as you say, right the um, there's been constant conversation about we gotta be responsible, we gotta

be addressed, all stakeholders, all this kind of stuff. Um. But uh, it was all kind of um like, all right, well, that would be a nice thing to do, but nobody had actually come up with what we What we noticed was nobody had come up with like a playbook, Like if you're a founder starting a company and you're saying, like I really want to do that. I mean, I think it's important, I think it's the best way to

do business. But nobody had actually written like, how do you think that through and build it into your business? And so that's what we decided to do. We we wanted to help a new generation of founders and perhaps people who know already have companies and are and are doing well, uh, to have a way to think through these issues. Well, and what's interesting too, And I was thinking about your book because it really does know how to build these companies and it really plays to the

startup world. But I do wonder, Kevin, can we as we see this rotation going on in the established corporate America or or global corporate world of companies, you know, laying out E s G practices talking about sustainability, being good global corporate citizens. Um, how do you view all of that? Because there's an awful lot of investment money

playing into that as well. Yeah. Well one of the probably the key point that we make here is that, um, it's it's all fine to say that you're you're going to do this but the um but but it's not really baked into the company unless it's part of the like the business model has to actually do better if

you're doing better. Um and and uh so you know, if you're an investor, for instance, and you're looking at like E s G scores just measure an outcome, They don't actually tell you what the company is really like doing as a as a and um. And if you're an investor and you really believe in this and and by the way, we believe that it's actually the path to better profits and better long term sustainability of a company. UM, then I would look behind the curtain and ask yourself,

does the business model actually support it? Does the business model do better? And you know, a great example of that is, you know, if you're you know, Facebook can say all at once about like we're going to be responsible, we're gonna we're gonna do this with our AI and all that kind of thing. But Facebook's fundamental business model works against it being able to hold to the hold that line. So you know, if you're an investor, look behind the scenes and ask yourself, does the business model

actually support those good intentions? Okay, this is we only have about a minute left, but we're gonna come back with you and we're gonna have more time. But this is a question that certainly requires more than a minute for an answer, so we can you can think about it more too. Is it possible to do this to succeed in this framework as a publicly traded company or do you have to do this as a private company? Because when Carol and I report on earnings every quarter.

It's top line, it's bottom line. I'm not saying do they not have you know, do they not impact the environment? Were they thinking about their workers? Were they contributing to society? We don't ask those questions. Amazon stock did not move higher today because of you know these metrics, right right? Well,

the short knowing you learn a much time. The short answer is yes, And I can explain why when we come back, if that's what you want me to do, perfect, Absolutely, we're gonna come back with Kevin many, founding partnered Category Design Advisors. He's got a new book out, Intended Consequences, How to Build market leading Companies with Responsible Innovation. I want to get back to our guests. We're talking with Kevin Maney, author of Intended Consequences, How to Build market

leading Companies with Responsible Innovation. He is founding partner of Category Category Design Advisors. Excuse me, and he's still with us on the phone in New York City. So when you look out at the landscape, Kevin, and you work with a lot of companies, and you you help UM companies when it comes to messaging and strategy and innovation and communication UM. But when you look at our companies that are their startups, are those that have been around.

Who do you think gets it right? Well, so let me let me jump in that from the also from the earlier question about can public companies do this? Oh, I'm sorry, I forgot about that. No, no, but these these things actually converge because because you know, one of the most successful companies I'm a planet at doing this

is Tesla and UM. And if you think about Tesla, I mean, it's business model is depends on it helping with climate change and in fact, you know, and must runs the company as a climate change company, not as an electric car companys. Why it's in batteries and then solar and getting into all these other things. So UM, you know, to go back to that earlier comment about UM that to really be a responsible innovation company you

have to have it baked into the business model. Your business has to do better if you do the right thing better, And in Tesla's case, the more it helps get carbon out of the out of you know, the atmosphere, carbon emissions out of the atmosphere and all of that, the better of the businesses because it's selling more electric cars and selling more batteries whatever. UM and so it's it's absolutely possible for public company to be that as long as it's baked into the business model and UM.

There are all sorts of startups that i've you know, counter worked with. We feature one, for instance, in a book called City Block Health and City Blocks found a way to be UM to have build a profitable business on the idea of bringing healthcare to the populations that I can't afford it, to get it late from homeless people and like that. UM and and so the more that it helps people who can't get healthcare get healthcare, the more profitable and the better the company is. And

it's valued at over a billion dollars. Now it's a private company, but it's uh, you know, certainly has an intent to go public at some point. Hey, Kevin, I want to I want to go back to this Tesla example, because I think of Tesla and I definitely think of the business model from the perspective of climate change and

being a climate first company. But at the same time, I think of the way that Elon Musk has come into criticism for the way that he's treated employees in the past, the way that the National Labor of Relations board ruled that Tesla had fired a worker illegally who was involved in union organizing. So I'm just wondering how you square those things because and look, even this week we learned from the President that a Berg story about how the President doesn't want to even mentioned Tesla because

it's not a union company. So how do you square that in this in this framework? Well, I mean, look, I agree with you there there is a caveat that

Elon Must himself at times acts badly. Um. But I just want to, you know, take the step away, to step away from that, just to the idea that back to the idea that Tesla is a company that is built on a business model that helps the planet, you know, with climate change, um and and so on the bottom line, the better the company helps the planet, the better the company does and it will be more profitable if you

a better stock and all of that. Elon Must may do some weird things that that you know, hurt the company as a as an individual, um, But I think we have to separate those things from each other. Yeah, because it's interesting. We have a lot of conversations, Kevin have just how executives and the c suite and senior

officials kind of square profitability against doing right. Like I've talked to, you know, senior officials at a B in Bev And I mean they're constantly seeing the environment because access to water, access to barley hops, you name it. I mean, climate change has impacted them pretty dramatically. And so a company like that is taking measures because I think it has to for the existence of its business.

But it but it's tough because it does feel like we have a lot of conversations of people saying they want to do good, whether it's the environment, whether it's for workers, workers rights, you name it. And yet when it comes to it, that talk doesn't always lead to action.

Well's true, and and in tastes like a company like a B and I mean, it doesn't really have a way that I could that I know, and I don't know where the company is in that way, but I do drink it spear but but the but the uh, But I don't I don't understand the way that A B Inves could possibly have baked into its business model that it is doing well for people or the planet or whatever, um, because basically it's you know, it's selling us drinks. I mean, UM, that's the business model. More

itsells that, the better it's going to do. It's you know, the climate change stuff is a nice to have rather than it must have in terms of its business model. So that's not responsible innovation in your view, right, you know,

it's it's trying to be responsed. But our argument with this book is that if you want to create a company or run a company that UM is sustainably going to be responsible UM over the long run, it has to have a business model that actually supports that and not not just we call it in the book, there's there's two aspects of responsible innovation we call mindset and mechanism.

And mindset is great. Lots of companies in the mindset we want to do better, we want to do good, you know, we're to stakeholders, all this kind of stuff. But if they don't pair the mindset with a mechanism that supports it, the first time there's some pressure on profits or something goes awry, they're going to abandon that mindset. And the only way to make that sure that those UM that happens over the long run is if those

two things are inextricably linked. Right, And I know you you you talk about key consequence indicators casey eyes as a way to kind of keep track of it. Hey, just unfortunately got about forty seconds or so. How do you deal with a tough issue like inequality? And we'll have to have you come back and talk more, but how do you deal with something like that? You know again, you know, um, there's there's one. It's one thing. If you're talking about inequality and hiring practices and all, again,

that's not baked into the business model. That's having a nice mindset of like we want to do this. You know, even something like I just mentioned like city Block for instance, which is trying to help healthcare inequality by helping people get healthcare who can't afford it, building a good business on that. That's a way to actually help with inequality. Well, let's continue this in the future. Kevin Maney, thank you

so much. Founding partner Category Design Advisors. The book Intended Consequences How to build market leading Companies with Responsible Innovation