Creating Sustainable Social Impact Through Business

[00:00:00] In today's episode, Richard Conway interviews Audette Exel, former Director of Westpac and Suncorp, and Founder of the Adara Group, about how to create a purpose-driven business model.

[00:00:14] Richard Conway: Welcome to Minutes by boardcycle. I'm your host, Richard Conway, and today my guest on the podcast is Audette Exel. Audette is an experienced, non-executive director having sat on the boards of Suncorp and Westpac. And she's also a social entrepreneur having founded the Adara Group, whose unique business model we’ll be discussing today.

[00:00:34] Richard Conway: Welcome Audette.

[00:00:35] Audette: Lovely to be here.

[00:00:36] Richard Conway: So, Audette, to start off with, for any listeners who haven't heard of the Adara Group, would you mind outlining what it does, and in particular, your “business for purpose” structure?

[00:00:47] Audette: Absolutely. It's funny because it took me years to figure out how to give an elevator pitch on the Adara Group, but I'm hoping that I've got it down cold now.

[00:00:54] Audette: So, Adara is actually quite a simple concept. It's what is now quite a large international, not-for-profit that focuses and we implement and deliver service in two areas of expertise: we deliver maternal newborn health services to very small and very sick babies, and their mums in very remote places. And we deliver education, child protective education services, in some of the world's most remote places.

[00:01:20] Audette: So, our most remote school project, which we started right at the beginning, is 25 days walk from the nearest road. So we're very remote international development experts with quite large teams, and that's quite a big organisation now.

[00:01:34] Audette: The funding model for that: part of the Adara Group is I've got a, a set up right from the start, sort of a "little engine that could," if you know that kids story. A little corporate advice investment banking business, which is owned in trust for the benefit of the international development organisation. And its job is actually to provide advice at the highest levels of corporate Australia on mergers and acquisitions, equity, capital markets, debt capital markets, complex commercial problem solving.

[00:02:03] Audette: And all the fees that we generate go to the work of the international not-for-profit. So, if you like, the business is the cornerstone funder, and the largest funder of the international not-for-profit.

[00:02:16] Audette: One in every three dollars for the entire journey that we've been on has come out of the business. And the business has covered all the core support, all the admin costs, a lot of the emergency costs. If you like, we use the business to guarantee the financial viability of the NGO.

[00:02:33] Audette: So, it's a little bit unusual. You don't usually find investment bankers sitting right beside their colleagues who are maternal newborn health experts, or NICU experts, or educational specialists.

[00:02:44] Audette: We've got different skills but one united purpose: service delivery to people in extreme poverty in very remote areas. That's how the whole thing comes together as this kind of one beautiful group. The Adara Group.

[00:02:58] Richard Conway: Yeah, absolutely. So, what was your objective with trying to set it up that way, Audette? Why did you do it that way versus alternative or more traditional NFP approaches?

[00:03:09] Audette: Yes, I'll try not to get too geekish about models. I've always been very interested in creating models to find different ways to affect impact and to impact social change.

[00:03:20] Audette: My background, before I set up Adara, was in banking. And I'd actually had the great good fortune of being the managing director of a publicly-traded bank in Bermuda. And when you're running a bank, you think all day about asset liability management.

[00:03:34] Audette: And I sort of took those eyes. I've been thinking a lot about social justice my whole life, and I looked at the funding mechanisms of even the great not-for-profits. And what I saw was this terrible asset liability mismatch.

[00:03:48] Audette: You know, these very long, multi-decade, in some cases, responsibilities to your client groups, if they're vulnerable people, and yet this short-term donor dollars coming in at the top.

[00:03:59] Audette: So, I wanted to manifest for myself and play with the idea. There must be a different model to that. And the only other really different model to that or would be in big endowment. Well, unfortunately, but I don't have an endowment or a big pot of cash.

[00:04:15] Audette: So, I wanted to try to set up an NGO, do really hard work, but make sure that it was gonna be okay if you'd like with this different funding model.

[00:04:24] Audette: So, we also have amazing partner donors, but the business, because it's the largest donor, because it's funding all the core support and the admin, the business is able, if you like, to look after the INGO, look after the development integrity, the international not-for-profit, look after the development integrity of our work, and continue to generate money, you know, month on month on month to make sure that our operations are safe.

[00:04:49] Audette: That was the kind of the genesis, the idea, the vision for it. And the wonderful thing is over the last, particularly the last decade, it's kind of got traction and it has managed to catch the imagination and the attention of some of the greatest and most well-known investment bankers and corporate advisors in corporate Australia.

[00:05:08] Audette: And so, we have many of these extraordinary leaders in corporate Australia, in the advisory sector who now lead mandates for us entirely without recompense to themselves, entirely outside of their home firms.

[00:05:21] Audette: So, I'm talking about the heads of Citibank, the heads of Goldman Sachs, the heads of Barrenjoey. I mean, incredible people. Some of the top non-executive directors in the country. Because they like this idea that they can use their skills to generate revenue, to support a not-for-profit that's serving some of the poorest people and most vulnerable people in the world.

[00:05:41] Audette: So, it's engagement. Our tagline is "Bridging Worlds." We're trying to bring together those two worlds across that divide.

[00:05:49] Richard Conway: So, Audette, I'm gonna, paraphrase a bit of what you said there to make sure I've understood it properly. So, setting up this model means that effectively you can underwrite your operational costs. So when a donor is donating some money to Adara group, they can have some confidence that's gonna go much more directly to the end purpose, because you are financing yourself operationally. Is that correct?

[00:06:14] Audette: That's exactly right. That's a more succinct way of putting it than I just did.

[00:06:18] Richard Conway: And then, I was going to ask you, but I think you've answered this. So you're less reliant on donors on a day-to-day basis than other NFPs. But you are, conversely, more reliant on the quality of the commercial advice that you are giving out. And I was going to ask how you guarantee that quality, and I think essentially you've answered it, it's from selection of the people who are donating their time for you.

[00:06:41] Audette: Yes, that's true. It's funny that you use the word "guarantee." Show me a business where you can guarantee that it's going to still be standing year after year. But I'm enormously grateful that we are into this third decade of our existence.

[00:06:55] Audette: But yes, working with the best in the business is enormous help. Making sure that you're differentiated is an enormous help. But you touch on an incredibly relevant, important point. There are no guarantees. Every day, we've gotta get up and we've gotta make sure this little business keeps doing its job and to make sure that we cover all those operational costs.

[00:07:18] Audette: Now, the good news is we've done that year on year on year for 27 years. The bad news is who knows what's gonna happen in the markets? You know, we've been through plenty of times where the markets have shut down and I've sat around and thought, "Gosh, where am I going to earn my next dollar?"

[00:07:33] Audette: It's amazing how driven you get when the outcome of what you do is not enriching shareholders, but it's providing service to people an incredible need. So fingers crossed we're gonna be able to do that for years to come.

[00:07:48] Richard Conway: I'm imagining also, Audette, for your panel members, it's a way that they can effectively leverage their own skills to deliver to Adara much more than they might be able to do personally as well. 'Cause they're giving their time to Adara. But what Adara is getting is what the end client is willing to pay for that person's time rather than directly that person's time.

[00:08:11] Audette: Spot on. And there is something, you know, I realised in the first 15 years or so where I was sort of leading the deals and the mandates and I was the face out the front. What an incredibly enriching and joyous experience it was to use all those business skills that I had to advise clients, and you make a couple of million dollars, and the feeling you get when you know you're gonna save life like a lot of life.

[00:08:35] Audette: And I realised that, gee, we see that in the legal fraternity. They've got pro bono law in the accounting fraternity. But when I looked at the advisory community investment banking, I saw that, gee, that's really missing.

[00:08:48] Audette: And they actually don't have an easy way where they can have all the fun of using what their whole life, their whole career has brought them to. Some of these men and women that we work with, they're brilliant at what they do.

[00:09:02] Audette: They've never had that experience before of "I'm gonna go and advise, you know, AusNet or Pendal or Blackmores or Atlas Arteria" clients that we're able to name and many, many more.

[00:09:14] Audette: "I'm going to use my brilliance. I'm gonna be in the game and have all the fun at the fair. I'm gonna work, but I work them in pairs. So I'm gonna work with someone who's a competitor in the rest of my life. And oh my goodness, I'm gonna generate hundreds of thousands, millions of dollars and tens of thousands of women are gonna be able to give birth safely, or thousands and thousands of kids who otherwise wouldn't be able to do it, are gonna go to great schools."

[00:09:38] Audette: So yes, watching that. And as the panel we call them in Adara Panel, have really started to get into this. Watching how it's enriched their lives has actually enriched mine too. It's wonderful, and many of them have now been to see the work as well. So that's kind of a double whammy. I know once I get them on project site, they're stuck with me forever because it kind of breaks their heart open. But yes, use your skills for purpose. It's a very powerful motivator.

[00:10:03] Richard Conway: Yeah, absolutely. So, to ask you about the flip side of that Audette, what challenges or tensions does it bring to Adara having both a development side and a commercial business together, particularly around prioritisation, perhaps of your time? How do you choose whether to spend your time on the commercial side or development side?

[00:10:23] Audette: Yeah, good question. I mean, the great news is I've got a great big team, and a brilliant CEO, and a big board on the development side and a lot of people, global leadership team there that know a lot more than I do about international development. I mean, that's the benefit of having made it for all these years, I guess. The business I'm, so, I'm Chair of all those entities. And I'm still very involved, but not as an expert. I'm involved in strategy. I'm involved in helping, hold culture, and I'm certainly involved in holding stories. And hopefully as a mentor and coach to some of our amazing team that are coming up.

[00:10:57] Audette: But yes, the challenges on my time. Sometimes it's a little bit schizophrenic. Like this morning, I was on a mandate for an ASX Top 50 company and deep into a conversation about the competition landscape and the particular sector. And then I flipped straight out of that to start to look at some work that we're doing on what are the right outcome measurements for a Nepal education or remote education.

[00:11:20] Audette: It's a little bit schizophrenic. But certainly not boring.

[00:11:23] Audette: And yeah, so challenges? Yes, I guess there are challenges. It's a challenge to keep the business, making sure the business is making money, as I've said before. But it's most of all, each side of the house, if you like, keeps me motivated, keeps me interested.

[00:11:39] Audette: And I'm constantly challenging my own siloed thinking and preconceptions about one sector or another because we're working completely cross sector. So they're never going to write on my gravestone “She led a boring life.”

[00:11:54] Richard Conway: That's absolutely clear. And last question, Audette on this is, we're obviously seeing more and more organisations wanting to integrate purpose and profit together. What advice would you have, in general, to an organisation that is trying to integrate social objectives into what has been up till now, perhaps just a commercial mission?

[00:12:17] Audette: Yes, really good question. I'm inspired by the number of social impact organisations, businesses for purpose, the whole B Corp movement, which we've been a part of for a long time. That movement of understanding and multi-stakeholders, which, from the smallest not-for-profit to the biggest businesses in the world, it's inspiring.

[00:12:37] Audette: But one thing I'd say for sure is that if you are going to sit on the knife edge of profit and purpose, which is what we've done for the last 27 years, it has to be very real and very authentic and you have to embed the purpose really deep.

[00:12:53] Audette: Because otherwise, you wake up and you start to realise, you know, like you're creating your own path, so you couldn't see the path in the bush. So, maybe you wandered off a little bit and you wake up saying, "Oh crikey, actually, the purpose piece is now just marketing and window dressing."

[00:13:09] Audette: Purpose and profit collide. Now in a beautiful world, they work together. But they require a series of choices and trade-offs, and they require enormous integrity.

[00:13:21] Audette: So I guess my principal advice I'd say to people is they want it first of all, do it. What's the point of being in business in my view, if it doesn't have a purpose and doesn't have a positive impact? Life is too short not to.

[00:13:32] Audette: But secondly, embed it. And have those conversations with yourself, with any partners you've got, with your team early.

[00:13:40] Audette: So, you don't wake up a year or two down the road and say, "Oh my goodness, when you said we were gonna run this business for purpose, I thought it meant after I received my 200% bonus and went off on my Aspen ski holiday."

[00:13:54] Audette: Because those conversations could blow organisations apart. Or, "Oh my goodness, I told investors that they were social investors, but they're gonna get a high double-digit return and I'm supposed to be building green buildings and I just bought a building and discovered that underneath it as a nuclear waste dump and now I've got a choice of wiping out all my investors' return this year if I remediate it, or I could just cap it." I'm making this example up, but you see where I'm going with it.

[00:14:25] Audette: Be clear. In my view, purpose should trump profit every single material time otherwise it becomes nothing but greenwashing and branding. So it's not easy, and the sooner that you can face into that and have those debates and those discussions with yourself and others, the better. Because, then the way you go really clear on what you're trying to achieve, and not going to be led off into that path down the woods, it takes you in a direction that you didn't necessarily want to go.