Businesses incorporate forms of expression into products and services through design and style. With the decisions you make about the style of car, smartphone, soap, or coffee you buy, you are expressing something about your preferences and your values.
The feelings and ideas that you express and the messages that you communicate are delivered by telephone lines, mobile phone networks, and online networks, which are all operated by businesses.
Purposeful businesses provide access to the provision of materials, tools, conduits, platforms, and venues for essential resources of expression.
Purposeful Businesses that Enable Connection
The businesses that exist to help us connect with one another are diverse. Businesses enable us to connect in person, physically and virtually. Place-based businesses, such as cafés, bars, restaurants, conference centers, and community halls, as well as businesses that enable modes of transportation, make it possible for us to connect physically.
Businesses like Skype, Google, and online meeting service providers use Internet technologies to enable connection virtually. We are able to acquire skills and information around how to better connect with others from businesses that provide training in these areas.
Purposeful businesses give us access to the provision of places, media, transmission, communication, and transportation, which are the essential resources of connection.
Purposeful Businesses that Help Us Manage Change
We have businesses that provide products and services to address our need for financial security and to manage financial uncertainty and change. Banks, credit unions, mutual fund companies, investment firms, and insurance companies exist to help us accumulate and manage our money in case of changes in our financial situation.
Businesses in the hospitality and travel industry such as tour operators, resorts, and hotels enable us to voluntarily experience change. Moving and shipping companies help us manage change in our physical location. Health insurance, medical practitioners, counselors, therapists, pharmaceutical companies, and gyms exist to help us manage or influence change in our physical and mental health. Education businesses can provide us with skills and training in processes and problem solving tools for managing change.
Purposeful businesses that help us create a safety net and manage risk—be it financial resources, knowledge, or acquired skills—provide us with access to essential resources for managing change.
Purposeful Businesses that Help Us Make Decisions
The more we are inundated with information and choice, the more businesses emerge to help us make decisions. Search engines, business directories, and smartphone apps all help us access essential resources of sustenance, expression, connection, and managing change. Increasingly, businesses are being developed around algorithms that attempt to track and analyze behavior to predict a direction and help you make a choice. Businesses help map, curate, and match you with the essential resources you’re looking for.
Education businesses and self-improvement courses also exist to provide you with the tools to make better decisions.
Many purposeful businesses provide us with the information, tools, map, or apps to find what we are looking for and help make decisions—they provide us with essential resources for decision making.
Purposeful Businesses and Money, a Medium of Exchange
As I mentioned earlier, the most familiar essential resource of exchange is money. Businesses are a conduit for money; they create jobs and transfer money to people in the form of salaries and wages. Businesses also put money into people’s hands by purchasing goods and services from their suppliers.
A Word on Luxury Goods
If something is a luxury, it means it is not essential for our survival. Resources that meet a need of sustenance, expression, connection, managing change, and making decisions can be produced and packaged in forms that make them luxury goods. For example, caviar can be eaten, but it is not an essential form of sustenance. We have been encouraged to believe that extravagant diamond rings are an expression of a person’s enduring love for their partner, but they are not essential. There are other ways to express love that do not require extravagance. Exclusive members’ clubs are places where people can connect with each other, but they are not essential since there are other alternatives that are more inclusive. So yes, luxury goods exist; but I won’t focus on them in this book, as they are not essential resources for us to survive, thrive, and be happy.
Purposeful Businesses Give Us Different Types of Access to Essential Resources
The difference a business can make in how the six essential resources are accessed can be described in one of six ways:
Basic access to resources
Efficient access to resources
Access to more or better choices of resources (greener, healthier, etc.)
More convenient access to resources
Through the supply chain
Through employment
Basic Access to Essential Resources
Some businesses provide basic access to essential resources. This is the first point of access: what you need when you do not have the essential resource you are seeking. It is, therefore, the simplest form, such as a roof over your head or food in your belly.
When you do not have basic access, you struggle to participate in society and in the economic system because you lack the energy and security to interact and exchange with others.
Efficient Access to Essential Resources
Over the course of history, businesses have harnessed the ingenuity and ideas in people’s minds to invent machines and new technologies designed to make the manufacture and production of essential resources more efficient. Inventions such as the steam engine made it possible for businesses to mechanize and automate many hand production methods. This led to scale, and the essential resources we needed could suddenly be produced in larger quantities at a more rapid pace. The industrial era was the beginning of creating efficient access to resources. With the advent of new technologies, efficient access to textiles, processed metals, mining and resource extraction, chemicals, machine tools, light and energy, glass, paper, agriculture, roads, rail, boats, and transportation was made possible.
Efficient access continued in the form of offshoring and outsourcing manufacturing and production processes in the 1960s and 1970s. Developments in computer technology in the 1990s began to enable outsourcing of services. Large-scale agriculture, mass production, and cheaper workforces have all been employed by businesses to provide us with more efficient access to essential resources.
More or Better Choices of Essential Resources
When businesses began to produce essential resources faster, cheaper, and more efficiently, it often meant they were using poorer-quality ingredients or materials, alternatives that were less healthy for us, or methods that led to the ill treatment of employees or the environment. As business owners recognized this, they created businesses to provide people more ways to access essential resources, thereby giving us more or better choices. These include organic food, such as fruits and vegetables, and organic materials, such as cotton. They also include business practices like fair trade, which ensures that farmers and workers are justly compensated, as well as accurate labeling of products.
Choice may also be about different technical or design aspects or different measures of quality and value. When businesses offer us more or better choices, we have different experiences of the essential resources, they reflect our values differently, and we may experience different price points. How we access essential resources may differ in terms of the choices provided by businesses.
Convenient Access to Essential Resources
When people have basic access to essential resources through an efficient means, and they have choices, businesses strive to enable convenient access as well. This can mean delivering essential resources to people’s doorstep, or making them available nearby; it can also mean making them available quickly and in accordance to cu
stomers’ time requirements.
Access to Essential Resources through the Supply Chain
Suppliers exchange one type of essential resource for money to access other items. For example, people who are able to produce fruits and vegetables supply them to a retailer in exchange for money, which they use to purchase fuel for their vehicles. By being part of a supply chain, suppliers can access other essential resources they need.
Access to Essential Resources through Employment
Similar to the way that suppliers get access to essential resources through the supply chain, other people get access through employment. They work to produce essential resources, and in exchange, they receive money that allows them to purchase other things they need. For example, a person who works for a cleaning business is paid wages as an employee, which enables them to pay their rent. In other words, employment gives them access to an essential resource of exchange and as a consequence of that, they are able to access an essential resource for sustenance: shelter.
What We’ve Learned
Everything we do in life falls into one of six categories: sustenance, expression, connection, managing change, making decisions, and exchange. We need essential resources to enable us to do them. In this chapter, we learned about the six essential resources that we need to fulfill our wants and needs in life. We also learned that purposeful businesses exist to give us access to essential resources, including the types of access I’ve called basic, efficient, choice, convenient, through the supply chain, and through employment. Now that we’ve covered these important concepts, let’s delve into understanding and learning about the role of investing.
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WHY WE INVEST
S I NCE THE FINANCIAL crisis in 2008, I have spent a lot of time reflecting on why we invest, as well as what it means to do so. Why does the activity of investing exist? Do we need it?
I met Dougald Hine during my transition away from traditional investment banking and into the world of social enterprise and impact investing. Dougald is an author and entrepreneur and was named one of Britain’s fifty New Radicals in 2012 by Nesta, a not-for-profit charity in the UK that focuses on innovation and helps fund the development and realization of new ideas. Following the significant shifts in the global economy in 2008, Dougald gave a talk describing five purposes of money, with the goal of helping his audience think about or move toward a way of living that was less reliant on money. He identified these five purposes:
Subsistence: A means to stay alive
Security: A means to manage your future, to make the world less unpredictable
Luxury: Something you enjoy but are not dependent upon
Status: Games by which people establish, hold on to, and change position
Accumulation: The idea that more is in and of itself better
Inspired by Dougald’s ideas, but convinced that there must be more than five reasons why we invest, I delved deeper into our other motivations and identified eleven.
In this chapter, I look at the definition of investing, describe how where you are in life affects your readiness to invest, and go over the eleven purposes of investing and how they relate to essential resources.
The Definition of Investing
The word “invest” has origins from the post-medieval (1525–35) Latin word “investīre,” which means to install, to surround, or to clothe in.
Dictionaries define the verb “to invest” as putting money to use for a return or accumulation, or to achieve an outcome. But money isn’t the only way to do this; we can also invest our time, talents, and efforts.
For the purposes of this discussion, I define investing as contributing resources, typically financial in nature, to businesses with the anticipation of generating long-term future benefit, outcome, or return .
Where You Are in Life Affects Your Readiness to Invest
Since 2012, I’ve spoken with many people about impact investing in purposeful businesses that provide access to essential resources. These people sought investment advice and services across a broad spectrum, and I learned that knowledge and expertise in a particular subject matter, awareness of risk and impact, the skills of due diligence and scenario analysis, and the breadth and depth of their knowledge, awareness, and skills factored into their readiness as investors.
Another thing that factors into a person’s readiness, of course, is where they are in their lives—whether they’re new graduates, new or experienced entrepreneurs, already investors, or leaders in their respective fields. Ultimately, there are four stages a person can be in, categorized as follows:
Safety: There are times when people find themselves focused on seeking safety and security, like when they feel resources are scarce. For example, recently having graduated, having a baby, relocating to a new city, or undergoing some other significant change in life may require you to focus on saving your resources rather than letting them flow away from you.
Building: Whether you are building a career or a new business, there is a point in every person’s life—perhaps more than one—when they focus on gathering and collecting resources and applying them to something they are developing, or use them for their own self-development.
Executing: After building, at a stage when we are confidently doing or executing, we begin to create surplus resources and start to find more room to help others.
Leading: This is a stage when we feel resources are abundant due to success in our careers, our businesses, or our lives. At the leading stage, we find ourselves with more than enough time, expertise, and resources to be leaders, mentors, and to actively help others in the building and executing stages.
People in the safety stage are least likely to be ready to invest. They spend most of their resources on their day-to-day need, and if they are investing their resources it is to create a base or safety net and create a greater sense of security. People who are building are focused on investing in themselves or their own projects and initiatives, not in external ventures. The people who are in the executing or leading stages are in the best position to invest in others because they are equipped with the knowledge, insight, and resources to invest well and wisely. They have already invested in themselves and seen results; now they’re ready to invest in something else.
Meet Some People at Different Stages of Life
Lynn is a new graduate looking for a financial advisor who can provide the advice she needs about saving money and what mutual funds to invest in, but who also understands Lynn’s values and which types of companies she wants included or excluded from her savings portfolio. She is just starting her career. She is less concerned about investing in innovative new businesses, taking risks, and being a leader, and more concerned about learning, developing new skills in her job, and starting to save some money. Lynn is in the safety stage.
Karen is a mid-career entrepreneur who is two years into building her business. She is drawing on her experience, network of connections, and resources to make it grow. Although she has some savings, she is investing much of her residual earnings and available cash back into her business. Karen is in the building stage—not in a position to invest in someone else just yet!
Natalie has been running her business successfully for a number of years, and recently began to mentor other entrepreneurs. She combined some of her own money with that of a few friends and colleagues to make one investment in another business. A confident business owner, Natalie is relatively new to investing and is in the executing stage.
Suzanne is an experienced entrepreneur. She previously owned and operated a successful business that she sold to another company. She is also an outspoken community advocate and confident leader, and is already investing some of her own money in startups and growing companies. When Suzanne speaks, people listen. She is in the leading stage.
Yasmine is an example of how you can find yourself in different stages of life in relation to two different paths. Yasmine is a successful corporate executive and has experience raising in
vestments for new ventures, as well as investing her own money. She is about to embark on a new startup venture, which means she is partly in the safety stage because she needs to give her venture enough resources to get off the ground amidst uncertainty. However, because she has budgeted well and has designated part of her money for her investment portfolio, despite the fact that she has her own startup to worry about, she is also keen to invest in other entrepreneurs and their ventures. She is also in the leading stage.
Although the stages of life are often sequential, progressing from safety to leading as you move through your career, that is not always the case, as we can see in Yasmine’s situation. Throughout the course of your life, you could be in leading stage in one area, and then change paths and suddenly find yourself seeking safety and security.
Readiness to Invest and Taking Risks
Investing, by nature, requires you to take risks. The returns and compensation for investing are not immediate, and in many cases are uncertain. Not everyone is in a position to put time or money into something without a guarantee of remuneration or compensation in the future.
Investing and leading both require time, expertise, and resources. During the safety and building stages of life, people often cannot afford to take undue risks. People in the executing and leading stages of life, in contrast, can take risks as investors and steps as leaders to support the development of others who are not in a position to do so.
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