Mallory Erickson: Thank you for talking to me at the end of a long day, I am so thrilled to have this conversation. I’m here with Maurizio Zollo who I am just so lucky to have recently learned about your work. And I want to, so that I don’t butcher anything, would you just give us a little introduction to yourself and your work, and what brings you to this conversation?

Maurizio Zollo: Sure. First of all, thanks so much for having thought of me and involving me in this conversation. Basically my current responsibility is to direct a research center that I’ve created a couple of years ago at Imperial College Business School, it’s called Leonardo Centre on Business for Society. I’m also the head of the Management Entrepreneurship Department, but that’s not what we’re going to talk about today. 

The centre, however, I think is meaningful to this conversation because we are developing a couple of decades of experience in studying at the same time, collaborating with the private sector with companies who are trying to understand what it means to be a corporate citizen that integrates the interest and the needs of society in what they’re doing. And not only trying to understand, but also trying to innovate and change in a transformational way, what they’re doing. And so this is quite fundamental because potentially it can involve directly there, all of the third sector, right? The non-governmental organizations and civil society, although that potential, unfortunately, as of today is largely untapped, so I think that’s going to be something that we’re going to discuss today. 

Mallory Erickson: Yeah, I love that, and I was so excited when we got to meet and talk about this, but I’m just curious as a jumping off point, where does your passion for the role of business in creating the societies that we all care about come from? Where does your passion for this work really come from?

Murizio Zollo: That’s a great question, Mallory. The passion is fundamentally related to the fact that as an academic, I’ve always found it almost frustrating to basically spend our time observing reality, trying to understand it, of course that’s what we’re supposed to be doing. Essentially, that’s when the show ends, because the next step in actually trying to make the world a better place is essentially reduced to doing a good job in class, and clearly trying to influence the young minds or sometimes business executives and executive education programs. But it’s very narrowing, obviously with a very small subset of the population of business enterprises and even more of the world that we would like to influence, we would like to see improving.

And so that frustration drove me to rethink in quite fundamental ways and not the only one, by the way, with other very senior colleagues around the world, rethink what we’re doing and rethink how we are engaging, not only companies, but also their stakeholders, local governments, civil society in this, what we call, engaged scholarship. So basically doing research, but at the same time, experimenting in the field within organizations, in the actual ecosystem where companies and the other actors are working and trying to not only think about what could be done better,  but actually trying to see whether that works and what is it that doesn’t work and how to fix it and so on and so forth.

So it’s a bit more, a lot more concrete, it’s kind of like looking at the plumbing rather than being just engineers and thinking about the big house, actually working on the plumbing and making sure that all the details of the house actually work. 

Mallory Erickson: I love that! And I love that image too, because I feel like the plumbing, how the water moves around the house is such a good metaphor for even the movement of money throughout society and the roles that businesses play in that in terms of their own, like them as a company themselves, but also just the facilitation of that movement throughout the ecosystem around them, so I love that metaphor. 

So tell me, from a business perspective, I think a lot of the folks who are listening to this come from the nonprofit sector, and so I think for them it’s quite easy to imagine why businesses should be better global citizens. But from a business perspective, why have we seen this growing shift really in so many companies or why are companies really exploring this reinvention to participate in the ecosystem differently?

Murizio Zollo: Mallory, the answer is very simple actually: because they’re finally realizing that above all the ethical issues and the looking good and the nice things that have to do with social responsibility, the looking responsible in many different ways… the heart of the matter is fundamental and is strategically important for the company. 

See, every company essentially competes in four different markets: obviously there’s a product market, there’s a labor market, there’s the financial market and the technology or materials, basically the supply market. It turns out that each and every one of these markets, essentially, their counterparts are demanding companies to change behavior. Employees, we know this, particular generations, that don’t even want to think about giving their life-time to a company they don’t respect. Customers are becoming increasingly sensitive to the company, their reputation, but also the products themselves, the services that they’re buying, that they want to be responsible and socially impactful and environmentally sustainable. 

Financial markets, this is the most recent component. Financial markets have exploded in the last three or four years. We are now counting about 40 trillion dollars of investments that are done on the basis of ESG filtering assessments. This is one third of the amount of a  massive amount of equity investments, I’m talking about just the equity, forget about all the other parts, just on capital. So when you have one third of investors that are asking you to do this, you’ve got to listen, there’s no question about it. 

Now on the last bit, I know that I’m giving you a long answer here, the last bit is on the supply side. Companies are realizing that all of a sudden, they are not only responsible for what they’re doing, but also for what all their supply chain is doing, so it’s not enough that they are respectable, that they don’t infringe on human rights and environmental destruction, but if their suppliers are doing, and in most cases a very large percentage or their negative social and environmental impact is in the supply chain, not internal to them. Obviously they need to get their house in order as well. But supply chains are huge, particularly for large multinational companies, and that’s a completely different ball game. You have thousands of suppliers, how do you get them to behave? You see the power, however, because the moment that one, obviously many multinational companies are asking their suppliers to change the way that they do business. What do you think suppliers are going to say? “Well, I’m going to try to do it, otherwise I’m not going to be able to sell to you anymore, you’re a big client.” And so the combination of all these pressures are now unbearable. The big problem is still there though. Now that they’re all waking up, finally, to this reality, that doesn’t mean that they have the answer to the question. What does this mean? How am I going to change? What is it exactly that I need to do? That is what they are struggling with. 

That’s where particularly the nonprofit sector has a big piece of the answer. They’re not realizing that they have it, they are not quite conscious that they do, but in my view, there’s no question. Again, the problem is not even fixing the operations. “Okay, I need to put some more filters so that I don’t pollute as much, or I need to adjust a little bit the way that I treat my employees.” Those are the quick fixes, that’s easy to do. What is not easy to do is to rethink the whole purpose of my company. How do I rethink the way that I compete in the product markets? On the basis of solving societal problems or essentially making all the stakeholders, all the investors of financial capital, but also human capital, my employees, social capital, the customers or suppliers, the local communities… They are all investing in my company. They are all investors in different ways in the creation of my company, in the growth of my company and in the success of my company. They expect returns on their investment, they expect to get something back and I’m not organized to give them what they’re expecting. Obviously I give a wage to my employees, but that’s not enough, they’re expecting a lot more, and that’s the big problem. 

The real issue is how to rethink the purpose of the business organization and how to make the transition? Because by rethinking the purpose, then all of a sudden, I actually have to rethink the governance of my company, the leadership models, the culture, the incentive systems, the control system, and so on. All the big core pieces of the engine of a company, that makes a company work, everything has to be redesigned, and that’s a big check. 

Mallory Erickson: Yes! And so how does the non-profit sector plug in there? When we were talking previously, you said the word “treasure”, that you felt like the nonprofit sector was sitting on this treasure and had these keys really to unlocking and answering some of these questions, unlocking the possibility here. So, can you give me an example or two of how a nonprofit might plug into one of these problems and help a company solve it? 

Murizio Zollo: First of all, what is the treasure? The treasure is that the private sector is trying to figure out what it means to create value for society. And that logic, that way to think about their own existence is something that, guess what, the nonprofit sector has been there forever. That’s exactly what they’re living and breathing for. So, potentially the most valuable asset of the nonprofit sector is to share their own way to think about the role of their organization, the way that they organize themselves, to make sure that they’re contributing in a positive way in their own specific area, their area of expertise, but sharing that mindset, sharing that logic, not just the service or the particular activity, the project, of course, this is the core of a potential partnership with the private sector, but it’s the mindset that is the real treasure. 

By working together, unconsciously, the nonprofit sector will diffuse its mindset, its way of thinking and the private enterprise will understand what it means to really be thinking and organize itself to create, to have a positive impact on society and on the natural environment. That is the potential, as I said before, largely untapped. And this is a problem, both for the private sector, because they are not capable of really learning and speeding up and improving this transition. They won’t like to do it, they’ll have to. And at the same time, it’s a real pity for the nonprofit sector, because this would allow the real value added form of growth, of development, of learning also for the nonprofit sector and of funding of their activity.

All of that would come at the same time, if on both sides, of course, there is a willingness and an investment, really, has to be an investment of time and energy to figure out how to position, whatever each has in order to benefit the other. Although for a nonprofit, I think it’s critical, just like companies. 

Now I’ll give you some examples, but it’s actually relatively straightforward. Look at how the big global NGOs are organized. Amnesty International, WWF, they have entire divisions dedicated to the fruitful, positive engagements of companies on the basis, precisely of creating joint projects that will obviously benefit the agenda of the NGO clearly. But at the same time, will also transfer the mindsets and transfer the logical, how to organize in order to respond to the issues of human rights or environmental issues. It is by rubbing each other, elbow to elbow, on projects that really all the implicit yeah, the mindset really gets influenced and it’s great for both. 

What does this mean for small NGOs? The locals focused, maybe working on specific issues, whether it’s health or poverty or inclusion, education, whatever that is. I’m a small NGO trying to do as much as possible for my local communities. First of all, there are local enterprises in your local communities. To the extent that you think about how to organize, how to present, how to frame the narrative, such a way that is of interest for companies in the local communities that are interested in understanding what it means to be good corporate citizens. But also there are local subsidiaries on larger companies that might have, already their Monday, they would belong to larger groups and therefore they know they should be enhancing positive ways of regenerating both the social and the natural environments. And so they are actually looking for the NGOs that are willing to collaborate, that are willing to make an effort with the right mindset and the right type of organization, because that’s the biggest problem. It is that there is a mindset shift that is necessary also for the NGO, that the mindset is in a way more towards understanding how to run a business. Even in for profit, the business mentality is the way to actually manage projects as if you were independently, whether you’re doing for profit or nonprofit, the economic sustainability of the organization obviously is the primary goal anyway.

And so that’s what they’re looking for: companies, local companies, particularly if there are subsidiaries of larger companies. They are dramatically in search of the right kind of partners. And so it’s a question of organizing both in terms of activity, but also in terms of communication and capacity to engage with the private sector, that would make a difference for the individual NGO as well as for the variety of NGOs in any local environment.

Mallory Erickson: Yeah, I love what you’re saying. And I totally agree that I feel like there’s this mindset, both entities are stuck in their own sort of mindset and siloed thinking, and that there’s tremendous benefit from them coming together. And there’s a certain amount of mindset work that needs to be done to prepare them to come together, to even be open to coming together. I think on the company side, I hear all the time like, “Oh, I’m nervous to work with a nonprofit. How hard are they going to be to work with? Are they constantly just going to be asking us to sponsor this event and this event? And it doesn’t feel like the nonprofit is really interested in mutually beneficial partnerships.” I think that is true on the nonprofit side, and I feel like I was guilty of this early in my nonprofit years too, of being like, “Hey, I’m a nonprofit, we’re doing good work. Just give us money because you make a lot of it.”

Murizio Zollo: Exactly! “You’ve got a lot of money, c’mmon, give me some!” And if that’s the only thing that we’re asking… Come on, it is not fruitful. I would say it’s not fruitful for the NGO as well, because it becomes into a mentality of asking, begging for money rather than, creating value for the counterparts that you want, in any case, to work with you on your agenda, but in a way that it’s good for them as well, beyond the feel good, because they also have their own goals. 

Mallory Erickson: Yes! I remember saying one time to a marketing director, VP, “I want to make sure we come up with a partnership that’s really beneficial to your company because I want the whole ecosystem in this area to succeed. And so tell me, how can my organization support you”? He just stopped and he was like, “In 15 years of doing this, no one has ever said that to me from the nonprofit sector before.”. I think it is really problematic and I think some of this goes back to a lot of nonprofit mindset around like, “we’re the do-gooders and we’re fixing a lot of the problems that the private sector…

Murizio Zollo: “That you guys have created!”

Mallory Erickson: Yes, exactly! And so that creates this barrier to collaboration. I think the recognition for the nonprofit sector and something I say to my folks all the time is, “Look, businesses are changing and business is changing, and business is solving a lot of problems out there.

Murizio Zollo: Willingly too, right? They’re realizing that they have created the problems and they’re trying to become a solution. And guess who has the answer? Guess who has the expertise in providing the solution? It is the nonprofit sector! So to me, there’s nothing new here, nothing amazing, but the problem, as you said, is that the mindsets are hard to change, right? They are deeply ingrained in our identity in the way we just think about,  “Oh, we’ve always done this. This is how we do things, it’s our culture.” And that’s tough, but I really couldn’t think of a better moment than now to invest in making a clear cut, changing in a fundamental way, the way that we think about our identity from a nonprofit standpoint. And the way that we engage and propose fruitful partnerships for us and for the private sector, it’s  absolutely timely, it couldn’t be more relevant than now.

Mallory Erickson: Yeah. And I really want to double tap on one of the things that you said before around the fact of the matter is when nonprofits are staying in this really transactional state with companies, it is not beneficial for them from a financial standpoint. One of my big courses is around how nonprofits can build corporate partnerships, annual corporate partnership programs, as opposed to so many nonprofits think about corporate sponsorship, like on an event basis or specific campaign basis. And that is not about creating strategic partnerships. That’s not about solving a problem together. 

Murizio Zollo: They need to think, every NGO, if they could think about themselves as the suppliers to a fundamental, good, service where the private sector is on the demand side. So there is a supply in the map. What is that good, that service? Is it the solution to social maladies? Whatever is the social malady that the NGO is expert in. That social malady is recognized now by the private sector as something that they need to do something about. There’s no question, the demand is there. 

Of course they can create internal projects and do a lot of nice stuff. If you take a sustainability report from any company, you’ve got fifty, sixty, on average, it can go up to a hundred initiatives every year with good stuff that they do. Most of them, not all, most of them are done internally, but they also know first of all, that it’s not enough. Second, it is not particularly efficient, because there are experts out there who can actually help them. That’s demand and supply that needs to meet for the benefit of both. And shifting the way to think about ourselves as the suppliers of solutions is a cultural shift, but it puts the whole conversation on completely different grounds because it’s a win-win for both, immediately.

Mallory Erickson: Exactly. And the other thing that you are saying here, I think that I’m hearing, or at least it’s resonating with me this way is that this also really shifts some power dynamics between the nonprofit and the for-profit sector that has been really detrimental for a long time. And this I shared with you, when we first spoke, my asset mapping process that allows organizations to see all the components of value inside their organization and you’re highlighting a really critical one here too, which is just around thought leadership and the knowledge that they have around the local community and this supply that they have.

And I think what I want nonprofits to really hear in this is you have tremendous value to your corporate partners. And so when you’re sitting at this table, when you’re trying to build mutually beneficial partnerships, it allows the breakdown of the old power dynamics around that hounding for funding and all those things. Because it’s all about alignment and fit, and it’s not about any company being the right partner for you. It’s about finding the company that’s looking to solve the same problem you’re working to solve and coming together. 

Murizio Zollo: And therefore the question that you ask that marketing person is exactly the right one is the NGO’s responsibility to ask the counterpart: “What is your strategic problem? What are you trying to solve?” First of all, because if it’s something different from what I can help you with, that has nothing to do with me, that’s okay! There will be others who will help you, but if it is, then the match starts there. That is a completely different conversation. How are we going to make it work? Because you need what I can give, and therefore it becomes really a collaborative process that helps, as I said, not only the specific project based activity to obviously be designed and start with the right logic, the right mindset and all the right resources and so on. That’s great. But more supplely maybe, but equally important, is the fact that both the people on the two sides will start working together and will start if you keep on asking the right questions. Which is about “How you guys are actually organizing yourself? Maybe you could do something different, but maybe you are not considering this, and you’re not considering that.” Which is besides over and above the project itself, really the conversation is about what does it mean to have an organization that yes, in the case of the business needs to create returns for their investors, as well as, however, create wellbeing for their employees, for their local communities and for their suppliers. So the key is shared on both sides, by the way, because also NGOs have a lot to learn besides the project’s activity on how the companies are organizing themselves. There are all sorts of capabilities that they have: a project management, cost control, I mean, you name it. It would be wonderful if NGOs would have those capabilities, as well as the capacity to act on their particular subject area. The rest, that is just as important as getting a group project. 

Mallory Erickson: Yeah! There’s so many things you said that I love there. And I think, one of the mindset pieces that I feel like the for-profit sector has that I’m reprocessing this now, in everything we’re talking about is, the nonprofit sector is so baked in a scarcity mindset that it often holds them back from thinking bigger or imagining. And so I think the coming together of solving this problem and the for-profit sector, really having more experience with maybe innovation or iteration and being able to formulate different models and sustainable models… That wisdom and experience and thinking is tremendously impactful for the nonprofit and things that the nonprofit wouldn’t think about alone. And then what you’re saying is of course, on the flip side, there are all these, like I have said for a long time, I’m like, anytime a company is making a big strategic decision around something that impacts a particular audience or a particular community, why the heck don’t they have non-profit leaders who know those communities, who know those people in the room? They should be in the room!

Murizio Zollo: Thank you! Thank you very much, because that’s exactly one of the big things that we are working on in the Leonardo Centre. So the whole idea is to engage, fundamental in this case, companies to start with, in getting them to innovate and experience on the field in their own organization on inclusive ways to create their governance, for instance.

So it’s not just the board of directors that needs to obviously have representatives of their stakeholders, including the NGOs, but also the strategic decision-making processes, and the committees that make the key strategic decisions, whether it’s marketing, purchasing, or the new product development.

Obviously you need to have stakeholder representatives there, and the NGOs obviously are the representatives if you want of the communities, because they represent a specific need of the community in which they’re working. And gosh, it would be the easiest thing to do, for companies to engage NGOs during the strategic decision-making, but not only, even before to sense what needs to be done, first of all, before you make a strategic decision, you need to really make sure that you understand the problem to generate potential solutions.

Certainly the companies could generate solutions internally, but if you talk to people who have been working on those issues, you would probably be able to generate more solutions for sure. Selecting them, selecting what is the most appropriate thing to do for the company and for society is exactly the problem, right? That’s exactly what companies are trying to learn how to do. And that’s where you start seeing that the NGOs are a huge part of the solution to that problem. 

And then, by the way, it’s not just after the decision is made, imagine we’ve done the sensing, we’ve done the ideation together with the NGOs, we’ve done the selection and therefore we’ve made the decision. And now there’s a question about how typically these decisions might need to be implemented or tried, piloted. Voilá! Again, the NGO could help in providing feedback on the pilot projects, on the implementation, so that the company can learn much faster and much better than they would otherwise without their help.

You see? That’s the treasure I was talking about before. This is it! This would allow companies to speed up tremendously their innovation and their learning processes, and they would become, hopefully, in the not too distant future, really socially centered on the needs and interests of their social counterparts.

Mallory Erickson: I think you and I are sitting here and we’re like, “this is such a no brainer”, but I’m curious from your perspective, how much does ego and control hold folks back from innovative partnership?

Murizio Zollo: That’s a good question, Mallory. It could be that there’s individual ego, and for sure there is a question of letting go of control.

Mallory Erickson: And I don’t just mean on the company side, I think this is an issue on the nonprofit side, definitely. 

Murizio Zollo: Yeah, on both sides, but I, and this is my own conviction, I could be wrong, but I think it’s more the weight of the past, the weight of this is how being, doing things worked so far, this is who we are. 

As I was saying, it’s mindsets, it’s culture, it’s the routines that we have built. It’s very difficult,  as you also said it before, to innovate and redo, rethink about what we are, who we are and questioning our identity is a big deal for both NGOs and companies. And then understanding the consequences, because if you come up with a different answer to the question of who we are and what we are supposed to be doing, then all the rest is painful.

Then I need to change my governance, all the various things I was talking about. And on the NGO side, I need to change my strategy. I had to rethink how I grow, how I communicate, how I source the resources that they need. It’s a completely different game in a way. And having the guts to me, it’s a question of courage, to look into this, to ask the tough questions and to be willing to go to the bottom of the ass and to embrace the need for changing in a radical way, the way that we are operating. That’s the tough one. 

It could be ego. It could be that everyone has their own individual idiosyncrasies, but for me it’s abandoning who we are and what we do in search for a better identity for a better purpose. 

Mallory Erickson: Yeah. It’s like that cognitive dissonance. Of course, it makes sense that if you’re trying to change your external operation or the perception of your company or the way you show up in the way you’re providing value, that that’s going to require an internal look first and internal change first, but it doesn’t make it less scary to do so, I really hear that. 

And I know we could talk about this forever and I’m just so grateful for your time. I just so appreciate what you’re doing and I feel like discovering your work and learning more about it, now I see the other piece of the puzzle to this piece that I’ve been trying to figure out from the non-profit side around how to help nonprofits get over that communication barrier to build these mutually beneficial partnerships.

My favorite question to ask companies is “What keeps you up at?” “What’s the problem you are just banging your head on the wall to solve and can we help you do that?” And I think that just opens up so much. And so then hearing you talk about it from the corporate side is just so amazing and I could not agree more with you that like now is the time. 

So tell everyone, like, where can they learn more about you and find out about your work and then tell us about your nonprofit so folks can go check that out as well. 

Murizio Zollo: Thank you for this opportunity, getting in touch with me is actually very simple, just go on the Imperial College school website, and look for the Leonardo Centre. And you will see me of course, but you will see a whole network of about 15 resource centers only at Imperial College London that are connected with Leonardo. They’re coming from the medical school, the engineering school, the school of natural science, basically we’re all working together in order to tackle issues that really span all the sustainable development goals, poverty, all the way to collaboration.

In fact the seventeen are particularly important for us, because the way that we are doing this, as I was saying before, is to really engage all the key actors of society starting from business, of course, because we are in the business school, but their stakeholders are fundamental and we have created a number of laboratories, co-labs contributing to a Renaissance in terms of the way at least the business sector is operating. 

So that ‘s easy. Alternatively, just send me an email and you will find my email at m.zollo@imperial.ac.uk. But the other part that you were mentioning is a non-profit foundation called GOLDEN. GOLDEN is based in Holland, it is a global community of scholars, as well as companies and institutions that have been working for quite a few years now in order to experiment on solutions, on these types of changes that we’ve been talking about. 

Again, it’s a completely open institution. We welcome everyone and particularly from the NGO community, whether you want to engage directly with the research center, but there are a lot of other research centers around the world, similar to Leonardo who are really counting on the engagement with both business and NGOs precisely for that man that demand and supply discussion we were having.

We would be very happy for instance, to point you to maybe relevant institutions in your area. Logan Foundation is another way of doing it. It’s a nonprofit, so it is an ideal partner for other NGOs who have the same objectives in mind. 

Mallory Erickson: Awesome and I will make sure that there are links below for all of this information too. Thank you so much for the work that you’re doing and for having this conversation with me today. 

Murizio Zollo: Thank you so much for inviting me. It’s been a real pleasure and a lot of fun.