The moment of inspiration came, as they often do, over a glass of red wine. It was 2002 and the founder and chairman of Silver Chef, Allan English, was opening mail on the deck of his Queenslander in the Brisbane suburb of Sherwood.
English had founded the kitchen equipment leasing firm Silver Chef in 1986 and had grown it into a profitable business with 10 staff. He was still nominally chief executive but had mainly handed over to a management team.
He had always preferred the game of business to the money itself and now his business was established he had motivation problem.
“I got lost for a while,” he says.
One of the letters he opened was from Opportunity International Australia, a charity he had worked with on a micro-financing project in rural East Timor during a break from the business. The letter said the project was on track to lift 40,000 people out of poverty: enough to fill a football stadium. English was a bit stunned. He had another glass of red and turned over some ideas in his head.
“Imagine if I could do that every year,” English remembers thinking.
That was his reason to go back to work. He was determined to link the success of his commercial business with programs that delivered social good.
“I had a purpose for making money that wasn’t for just its own sake,” he says.
Silver Chef’s performance over the past decade makes a compelling case for what Harvard University professor Michael Porter and Mark Kramer have dubbed “shared value”. As they wrote in an article in the Harvard Business Review last year, shared value involves the creation of economic value in a way that also creates value for society: essentially, rather than pitting business’s interests against society’s, the two can complement each other.
They argued that it was a new way to achieve economic success: “It is not at the margin of what companies do but at the centre ... it can give rise to the next major transformation of business thinking.”
Corporate responsibility partner at PwCMark Reading believes shared value is the way of the future. “In the long term it’s not sustainable to have healthy companies if we have sick communities,” he says.
The Silver Chef example supports the shared value thesis. Within a year of English’s epiphany the company had raised $13.5 million in unsecured notes to help the business grow. Within two years, the company was listed on the Australian Securities Exchange with a market capitalisation of $13 million. Today it is valued at more than $120 million. English attributes much of this success to his philanthropic work and a desire to be able to broaden it.
“Once I had a purpose it gave me the inner energy to be the best I could be,” he says.
And this has helped inspire staff, stakeholders and shareholders.
The business and the foundation are enmeshed through share ownership. The English family had a 35 per cent stake in Silver Chef, although now 40 per cent of this is in the Foundation. By next year, half of the 35 per cent stake will be in there. English says the dividends on this block of shares should deliver at least $1 million a year for philanthropic work.
It is not just the share registry that links the two. Since 2003, Opportunity International Australia’s Queensland office has been based, rent free, in Silver Chef’s Brisbane offices. “I can’t really think of the business without Opportunities Australia,” chief executive Charles Gregory says.
The most notable link between the two are Silver Chef’s poverty alleviation goals. The vision is to get 1 million people out of poverty by 2020. “That was our big, hairy, audacious goal,” English says.
Revenue and profit targets are now worked backwards to this number. Gregory says the target has been great for staff morale. “A big part of that is having a purpose behind generation of profits,” he says. It is the embedding of motives beyond profit creation throughout the business that makes it an example of shared value creation, rather than corporate responsibility.
Silver Chef is a commercial business. Its model is to lease equipment – pizza ovens or coffee machines are popular – to small businesses that cannot afford to buy them.
But the links with the philanthropic foundation have helped with staff recruitment and retention. English says this is particularly the case when attracting talented younger workers. He sees this as a key driver to the business’s future success.
“They desperately seek having purpose to their work. It’s not just about making money,” he says.