How to respond to consumers and build social value | Economic Times

As an early-stage venture capitalist with a window seat to the Indian startup world, I’ve noticed one theme emerging with great clarity recently — the need to balance performance with purpose. In a market-based economy, business has always been underpinned by voluntary exchange — however, this maxim of voluntary exchange alone doesn’t cut it today as increasingly, customers expect good citizen-ship from the brands they endorse. That evolution has been brought about by growing education and self-awareness, with the belief deepening in customers that their consumption should be aligned with brands that share their values.For many entrepreneurs, who have also been watching how different professional sectors, from doctors to engineers, architects to energy experts, are helping to contribute sustainable social value, this has become a defining personal aim. I’ve tried to incorporate this in my vision and I’ve gained some insights along the way on how to build purposeful startups which can incorporate conscious capitalism as a key ingredient in developing sustainable economies.1. Define your founding purpose: It is very important to ask yourself constantly, ‘Why are you doing this?’ It is one of the most challenging questions to answer and never as simple as knowing all the different components of a business plan template. Ideally, the answer to this should help reaffirm to you why you should be the one undertaking a particular social effort — and how you cannot imagine anybody else pulling it off with the level of commitment and belief you can give it.2. Build a company that outlasts you: Entrepreneurs should look to institutionalise their purpose, so that a company’s mission stands the test of time. Clearly articulate why your company exists and, through this, advance the vision of a world you aspire to live in. The founder’s vision should be embedded into the DNA of the company and communicated to all stakeholders — that is the best way to ensure the company outlasts you. An example I find inspirational is Apple, where founder and team culture built an entity that goes well beyond a CEO title.3. Purpose is not a zero-sum game: You don’t have to compromise on profits because your startup’s business purpose reflects social responsibility — creating shared value for all stakeholders can enhance a company’s competitiveness.A higher purpose can drive motivation and galvanise stake-holders into building a truly transformational entity, which accelerates growth and performance.Diverse founders and cultures have built in this manner — Narayana Hrudayalaya and Amul come to mind as examples in India, along with international brands like R EI, Patagonia and Chobani, known for both their social stand and entrepreneurial vision.4. Maximise across the board: Companies should operate like they’ve been gifted a license from society — all of it. As VCs, it’s very important that we take this responsibility seriously. We need to ensure that the companies we fund and nurture don’t add costs but add value to society. I find Carbon Clean, an innovation leader in carbon capture technology, very inspiring — its proprietary technology helps power plants and industrial utilities remove upto 90% carbon dioxide from f lue gases, reducing both operating costs and environmental social impacts.5. Start with purpose: By thinking about integrating purpose in your startup from day one, and not considering it as a possible add-on in the future, you can chart a path of sustained prof-itable growth, stay relevant in a changing world and achieve deeper authenticity in you r relationships with all your stakeholders.6. An ecosystem of respect: In the pursuit of purposeful profit, the adage holds true — do unto others as you’d have them do unto you.Approach your fellow entrepreneurs and VCs with respect and collaboration if one aims to build an eco-system which doesn’t just extract value, but seeks to create this across sectors.7. Prioritise the greater good: Jamsetji Tata, a visionary ahead of his times who, even in 2021, is a role model for conscious capitalism, said, ‘In a free enterprise, the community is not just another stakeholder in business — it is in fact the very purpose of its existence.’ Good corporate citizen-ship, community responsibility and environmental responsiveness are all markers of prioritising the greater good over smaller wins. This is increasingly important in a world where capital is not scarce and consumers look towards brands to show they care. Today, the idea of using private wealth to sustainably solve public challenges is appreciated and rewarded. Nothing can be more positive for all of us — VCs, founders, the entrepreneurial ecosystem and the wider community.Karthik Reddy is co-founder of Blume Ventures, an early-stage VC fund.