Judging Success in Achieving Social Missions

When reading “Etsy I.P.O. Tests Pledge to Balance Social Mission and Profit”, the following quote stuck out to me:

If Etsy eventually reincorporates as a full-fledged benefit corporation, as required to do under B Lab rules, it could potentially become vulnerable to lawsuits from shareholders over any failure to achieve its social mission, in addition to the risk of potential litigation by shareholders over its fiduciary duties[i].

The idea that shareholders might be able to sue over “failure to achieve its social mission” raises an interesting question, who is in charge of deciding if they’ve achieved their mission and how do we evaluate their success. Measuring success in terms of profits, sales, and stock prices is one thing, but deciding at what point an organization is a social success or failure is a much more subjective question. Geoff Mulgan highlights this problem in his discussion of evaluating social value, stating that the issue is that in many cases people have different ideas about what the desired outcomes should be[ii].  Through his experience in different NGOs and organizations, he talks discusses the difficulties of measuring social value and suggests a model of making judgement about different criteria on a scale.

Etsy states in their mission that “We believe businesses are obligated to create value for their stakeholders as well as their shareholders and that the power of business should be used to strengthen communities and regenerate our environment.”[iii] Their website includes a detailed report with information on their 2014 impact on their employees, the community, and the planet. Included in this report are tangible metrics like, greenhouse gas footprint. It’s easy to measure items like this in defining success but if companies in the future are to potentially be liable for achieving their social mission, we must to continue to work to establish more mechanisms by which success can be measured. I would think one affect this will have is making companies be clearer in stating early on exactly what success means and creating a criteria by which this can then be judged. In this way, each shareholder would at least be judging against the same criteria. This is easier said than done, as we’ve learned from looking at other organizations, just because you have developed an excellent product that fulfills your mission, like Envirofit, doesn’t mean that it will successfully be adopted and widely accepted.

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[i] Tabuchi, Hiroko. “Etsy I.P.O. Tests Pledge to Balance Social Mission and Profit.” (2015 April 16). New York Times. Retrieved from   http://www.nytimes.com/2015/04/17/business/dealbook/etsy-ipo-tests-pledge-to-emphasize-social-mission-over-profit.html?emc=edit_th_20150417&nl=todaysheadlines&nlid=29801776&_r=2

[ii] Mulgan, Geoff. (Summer 2010).  “Measuring Social Value.” Stanford Social Innovation Review. Retrieved from http://ssir.org/articles/entry/measuring_social_value.

[iii] “Understanding our impact. Etsy .https://www.etsy.com/mission