The Fitness Sector Social Good Report (published by Ray Algar in March 2014) explores the idea that a business with a purpose beyond maximising its own self-interests can ensure long-term relevance with their stakeholders, thereby creating a more valued and sustainable organisation.
This report is written with the private fitness sector in mind because the pursuit of profit is very often a key measure of how they ‘keep score’. The public and ‘third sectors’ by contrast measure themselves by the social impact they are creating in their communities, while conscious of ensuring financial sustainability. However, all organisations in the fitness sector, however they may be legally constituted, have a fundamental obligation to inspire people to live more active and healthier lives and to pursue this purpose in a responsible, authentic and compassionate way.
The report is structured around eight themes:
When I discover a new and interesting new business, there are normally two things I immediately want to understand. First, what the business ‘makes’. Then I want to know the founder’s ‘back story’; why did they start the business and what is the big idea that is ‘fuelling’ it? Understanding its purpose – the shared understanding of the reason why the business exists – is the filter I use to help me decide if I am going to care about this business. Remember, if I care then I am inclined to share. I believe clarity of purpose matters because it unites people and drives actions.
There are four distinct types of business purpose:
‘Purpose is a reason for doing something that appeals to a person’s sense of what is right and what is worthwhile. So it creates a sense of obligation. Business purpose is the most powerful but least leveraged weapon in leadership.’ Nikos Mourkogiannis, Global expert in strategic leadership
The fitness sector is driven by an altruistic purpose. However, some outside industry observers see a contradiction. During an interview with Giles Gibbons, CEO of Good Business commented:
‘What is interesting about the fitness industry is that it has an incredibly strong social purpose – to help others. One that is well understood by the general public. It is a fantastic place to start and actually quite rare. I think the challenge for the fitness industry is that they seem to forget about this and see people as ‘numbers’, thinking of it as a cost-driven business. As a result, I do not think it is achieving the aspiration, the loyalty and the warmth that it should have, from such an important societal function.’
In 1970, Milton Friedman, the Nobel prize-winning economist, wrote a famous essay in the New York Times Magazine, titled ‘The Social Responsibility of Business is to Increase its Profits.’
More than 44 years has since passed and the world of business is now very different and the ‘responsibilities’ of business, arguably, far more complex to define. Now, an increasing number of businesses routinely ‘invest’ in social and environmental projects that may seem well outside the scope of their core business activity. As I write, Innocent Drinksis encouraging people across the UK to knit little woollen hats to adorn the tops of their smoothie bottles. The company donates £0.25p to the charity, Age UK, each time a bottle with a hat is sold. The motivation is to try to reduce the number of old and frail people dying from the cold weather in England and Wales. So what is the connection between a business that liquidises fruit and an elderly person who has never purchased a ‘smoothie’? Well, it seems as though many businesses are fundamentally redefining their role in society, which is reshaping their perspective of who is a ‘stakeholder’.
The responsibilities of a business:
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‘Authentic’ means to be real or genuine. In a business context, it translates to: ‘This is who we are and this is what we stand for. Please come join us if this matters to you as well.’ When an individual and a business do genuinely ‘connect’ there is a meeting of both heart and mind. Customers become enthusiastic advocates who just love talking about your organisational ‘story’.
Characteristics of an authentic business
I believe there are many facets to an authentic business:
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So what is your organisation’s story? Do you have one and would it captivate a room full of strangers? This matters because a ‘remarkable’ story has the potential to rapidly spread through a person’s network – and networks are larger and more efficient than at any other time in the history of humanity. Organisations with a remarkable story translate into more ‘mentions’ on social networks, powered by an individual’s passion and excitement to inform others. This means they spend less on paid advertising trying to convince others to ‘like’ them.
Organisations need to have a reputation for authentic generosity if they are to remain relevant to their stakeholders. Throwing out a few ‘scraps of charity’ once a quarter is neither credible nor sufficient. It smells of putting the interests of the business first, especially when the press release is rushed out, talking more about the ‘act’, while lacking proof of results and the difference made.
Is your business a ‘net giver’ or ‘net taker’?
Communities will care if a club is perceived as a ‘net giver’ rather than a ‘net taker’. What is a ‘net giver’? Simply, a club that, over the course of time, gives more to its community than it takes out. A business never wants to have a reputation for being a ‘net taker’, as it is a label that is very hard to shrug off.
Having ‘compassion’ means feeling concern for the misfortune of others. Together with the ‘feeling’, there is often a strong desire to relieve it. Compassion comes naturally to organisations whose purpose, the reason the business exists, focuses on serving others. For example, Tata Group, the Indian conglomerate employing 450,000 people in 85 countries, exists to ‘improve the quality of life of the communities we serve’. Jamsetji Tata, the founder of the company, once said: ‘The community is not just another stakeholder in the business, but in fact the very purpose for its existence.’
Showing compassion at the right moment
Giles Gibbons, CEO of Good Business, discusses the idea of organisations showing compassion at the right moment. Unfortunately, the fitness sector has an inconsistent track record in this respect. There are too many cases of members feeling let down when diagnosed with life-threatening conditions only to discover their gym insists on them fulfilling the full terms of their contract or requesting termination fees. The Office of Fair Trading has been working with the UK fitness sector for years to improve and simplify cancellation rights, but should it really require the intervention of a regulator to arrive at the compassionate thing to do?
Being connected is now a perplexing thing, given that more of us are now digitally tethered than ever before. 2.4 billion people are now connected to the Internet, which is one third of the world’s population. Facebook reached the magic number of one billion active monthly users as long ago as October 2012 and Zuckerberg, Facebook’s founder, has stated he would like to connect the other six billion too. So it is now becoming much easier for organisations to connect with our devices, but getting into our heads and hearts is far more challenging.
Genuine connection is an extraordinary thing
When an individual and a business do genuinely connect it is an extraordinary thing. It literally is a ‘meeting of minds’. During 2013, I was in Brazil and took the opportunity to visit the remarkable Ecofit club in Sao Paulo. Opened in 2005 by Antônio and Eduardo Gandra, Ecofit is probably the world’s most environmentally friendly fitness club. The brothers have intelligently combined their passion for the environment and wellbeing into a unique business that members love being a part of. The business has partnerships with Greenpeace Brazil, World Wildlife Fund and 14 other health and environmental organisations. This amazing club feels more like an environmental academy that also happens to be a fitness club. Members love the club and what it stands for.
Organisations that reach out rather than build from within feel more relevant for the role that customers and other stakeholders now wish to play. Co-creating is becoming the new normal. This is where customers and organisations collaboratively innovate over the long term. It is working with stakeholders to address future challenges and unlocking opportunities, which they have a vested interest in helping to solve. Take Kiva.org, a remarkable American non-profit organisation with a ‘mission to connect people through lending to alleviate poverty’. ‘Kiva’ leverages the web and a worldwide network of microfinance institutions to allow individuals anywhere to lend as little as $25. These small micro loans support people wishing to start or grow a small business in 73 countries. Kiva recently reached $500 million (£307 million) in loans made by its community of one million micro-lenders. Collaborative projects like Kiva are very exciting on so many levels; they allow anyone, anywhere with access to the web to participate in solving social inequalities.
The marketing team of one of the UK’s leading health club businesses is very excited as today they reached 100,000 ‘likes’ on Facebook. It has been a long journey of ‘nudging’ – ‘like’ our page and receive a free one-day gym pass – but today they reached the milestone. So, it is official; according to Facebook they are one of the most ‘popular’ gym brands in the country.
Of course, it feels good to be ‘popular’, but it is influence that really matters. Popularity can be bought or ‘faked’ whereas influence is earned and authentic. Popular businesses do not necessarily have the authority to ‘move’ people; influential ones do. Influence is the capacity to affect the way that people think and behave, and this only occurs if they believe in your organisation, loving what the organisation stands for and the way it is championing a better future for others.
As fitness businesses grow in size, some begin to potentially accumulate greater levels of influence, which may not at first be apparent. Virgin Active, for example, now has more than 1.2 million global members in seven countries, while Planet Fitness, the American low-cost gym brand, has more than five million, equivalent to the population of Norway. Add to this employees, suppliers and other stakeholders, and you have businesses with the potential to create dramatic social impact, if they are motivated to harness it. This means more than improving the lives of members, as this is the core mission of the business, but the mobilisation of these stakeholders on enriching the lives of other less fortunate people.
PIECES OF THE SAME PUZZLE
My report has been written around eight core themes because they all seem so interconnected. How can an organisation be socially responsible if its strategic purpose is unclear? How can it be influential, if not authentic and connected? What the recent global economic crisis has shown us is that the pursuit of a narrow and self-serving agenda is unsustainable and simply unfair. It may work in the short term, but at some point Twitter will realise there is an injustice taking place and its 241 million active users will get to work to right the wrong.
A RESPONSIBILITY TO BE AS GOOD AS YOU CAN BE
Several contributors to the report commented that the fundamental responsibility of all organisations connected to the fitness industry is to improve the health of the nation. This requires a relentless pursuit to create a remarkable organisation that understands what makes people ‘tick’ and, of course, ‘move’. This is because what is the point of switching off some lights to conserve energy, or saving water in the showers, if the organisation is merely mediocre at delivering its core business? So be good, however you wish to define it, but always remember your ultimate responsibility is to create something remarkable.
Ray Algar is the Managing Director of Oxygen Consulting, a company that provides strategic business insights for organisations connected to the global health and fitness industry. He recently founded Gymtopia, a digital platform that shares stories about how the fitness industry is creating positive social impact in communities around the world. Download a complimentary copy of the Fitness Sector Social Good Report, thanks to support from Matrix Fitness, The Gym Group and ukactive, from the Oxygen Knowledge Store.