Can non-profits provide important business lessons to for-profit companies? Matthew Bishop of the Economist thinks so: he refutes the corporate stereotype of bumbling non-profit leadership and provides examples of for-profits and non-profits working together successfully.

Question: What can for-profit companies learn from non-profits?

Matthew Bishop: For profit companies can learn a lot from non-profits. One of the interesting things that I think has happened is that the for-profit sector and the non-profit sector have increasingly worked together. That is that both of them started out thinking that they were much superior to the other. That if you were in the non-profit set, you used to think well all of these people have sold their souls by trying to make money. And if you’re in the for profit sector, you think, oh kind of softhearted kind of do-gooders, but they haven’t got a clue. As the sides have come together, they’ve started to really learn about the strengths that each side brings, and so I think for-profits are learning a lot about how do you inspire people who work for you. What is it about the mission about social enterprise that just gets people to work with passion and much longer hours to actually get to know the people they are working with much better and to actually form partnerships based on trust with the people they are serving, whether it be the customer or the person you are helping. And so, businesses are discovering that actually, in today’s world, a lot of the best people that they want to hire want to do something that they feel good about in their life. They want to make a difference, and therefore, if the company doesn’t have a mission, and a mission that is about building a better society, even if it is through making soft drinks, or something like that, they’re not going to hire the best people. The people are going to go elsewhere, and so they are learning from their partnerships that motivational question.

They are also learning about the societies in which they live. For many big companies today, if you want to have a confidence that you were going to keep growing in the future, you know you’ve got to be successful in the world’s poorest countries as they emerge from their poverty into being kind of prosperous countries. And so, you need to know what the people in those societies really care about, what they want, where they are going. And you don’t want to be on the wrong side of history. I am fascinated by Nike, for example. Nike is a company that, 10-15 years ago, the idea that they were a force for good in the developing world was laughable; in fact, they were seen as running sweatshop operations and often found their workers in very poor conditions. About 10 or 12 years ago they saw the light and realized that they were on the wrong side of history—that, in the future, they were going to be selling a lot of their products in those countries where currently they were working people in appalling conditions, and the long run bet is that those people are going to get richer and if they see Nike as a brand association with exploitation, they’re not going to want to wear Nike clothing. So, it’s completely turned itself around as being probably one of the leaders in working with non-profits to monitor the quality of work in its supply chain and the conditions in which people are working. It’s put a huge resource into working with HIV Aids issues in Africa in particular. Now it’s got a huge initiative called the Girl Effect, which is all about promoting the economic empowerment of women in the developing world. And I don’t think this is just a fig leaf, it’s not just superficial, it’s about something that is actually fundamental now to Nike’s DNA. And I think other companies are now looking at that and saying, “Well, this is the future of business. We have to be on the right side of history in the long run if we are going to deliver a sustainable business.”

Recorded on: September 24, 2009