Jacqueline Novogratz | Acumen’s CEO on moral leadership and the audacity to imagine a better future for everyone

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Nina: Jacqueline, thanks for making the time to chat with me! You’re no stranger to the Reimagining Capitalism conversation. You founded Acumen nearly twenty years ago around the idea that we can tackle poverty by investing patient, long term capital, in companies, leaders, and ideas. Can you share a bit about this premise for those who might be unfamiliar?

Jacqueline: Absolutely, thanks for having me Nina, it’s always a pleasure! The seeds for Acumen were sown when I left the banking world and moved to Rwanda. There, I met a small group of women interested in women’s economic development and together, we co-founded the country’s first microfinance bank. 

But then, the 1994 genocide ripped the country apart. After years of conflict, the violence began to subside and I saw people asking—not unlike what we’re seeing today with Covid— how we might create something extraordinary in the wake of such devastation. And the answer, I think, is not with business as usual. How might we use capital in a way that we control rather than be controlled by it? 

So in 2001, I pulled together my banking and development background to try to reconceptualize what it would mean if we took capital and invested it as long term equity in entrepreneurs trying to solve the toughest problems of poverty: from health care and education to agriculture. 

We’ve invested in more than 100 companies and supported nearly 700 young leaders around the world. I can’t imagine a better education. I’ve learned how markets and government work – and where they fail. I’ve learned about sectors I didn’t even know I wanted to understand: artificial insemination in the dairy industry, chickens in Ethiopia, rice gasification processes, and solar mini-grids. But those are lessons for another time.

Of them all, the two big lessons that stand out are, first, we need the right kind of capital. Different companies need different kinds of capital at different times. So, over the years, we’ve developed various parts of our business to enable that. 

But the second thing we learned is that we need the right kind of character in our entrepreneurs: individuals who are, what I’ve now come to call, moral leaders. 

Nina: Yes, and that topic of moral leadership is what you take on in your newest book, Manifesto for a Moral Revolution: Practices to Build a Better World. I’d love to start by learning more about this moral revolution and why you think we need it now more than ever.

Jacqueline: Plato wrote almost 2,500 years ago that a country honors what it cultivates. For too long we’ve cultivated and honored success based on money, power, and fame. And now we need to change that. 

We need a set of leaders that put others before themselves. We need leaders that are willing to do the long, hard work of reimagining and redesigning our systems to put our shared humanity and the sustainability of the earth at the center, and not profit. 

The leadership I’m talking about is not an easy leadership. It’s not driving toward a single bottom line. It has to have the nuance and the groundedness in a belief system that we are all interconnected. That's the shift: we must understand that we are all interconnected in today’s world. 

I call this kind of leadership ‘moral leadership’ and my book offers a set of thirteen operating principles that I think comprise it. 

Nina: I wish we had time to deep dive into all thirteen! Of these principles, which ones do you think challenge us most to rethink what effective leadership looks like?

Jacqueline: The most important principle to me is moral imagination, which is what I talked about in your book on systems change—moral imagination is so critical for systems change. 

I see this kind of imagination as shorthand for the humility to see the world as it is and the audacity to imagine what it could be. What that actually means in practice is a leader’s willingness to see other people as equals, to see other people as part of themselves, and to see themselves as part of other people. In other words, they understand our interconnectedness and interdependencies. This is a different mindset from idealizing, victimizing, or even blaming other people as even the most well-intentioned leaders can sometimes do. 

The moral leader, by contrast, works to not see other people as ‘other.’ They practice deep listening, a second key principle. They get close to the problems or the people they are serving, trying to understand the structures that get in people’s way and also how individuals might be holding themselves back. This kind of deep listening comes from a place of inquiry, not certainty.

It’s funny, we tend to think about ‘hard skills’ as things like vector modelling or what you might learn in business school; but to me, listening, is the real hard skill—it asks us to be willing to hear, truly hear, and to stretch beyond our worldview.

So, as the moral leader gets close to the people she serves, she understands each of us is a mix of light and shadow, of good and evil, of angel and monster. This is part of our shared humanity in this interdependent world. And within that, we need to be able to hold contradictions, opposing values, and even opposing belief systems, in tension, without rejecting either. And to make principled decisions that acknowledge the validity of both. 

Nina: I’m struck by how you frame moral imagination. Usually we think about the most imaginative leaders as those who come up with the best ideas, as the creative genius. But what you’re describing is an imagination that comes from a place of listening and holding contradictions, not necessarily imagining new ideas. 

Jacqueline: Absolutely, yes that’s exactly right! Because too often we use just the lens of our own imagination, even when we’re designing systems for people whose lives are completely different than our own. Moral imagination starts in the reverse, understanding the problem from the perspective of the people you’d like to serve first. 

Now, it means you still need to have the competencies of knowing how to use markets. It’s too easy to say capitalism is so broken that we need to just destroy it, or to say the opposite, that capitalism through free market innovation is the answer. It’s in that middle ground again where you’ve got the humility to realize that we have to learn how to use the best of markets and not be controlled by them.

When you work with social entrepreneurs as I’m fortunate enough to do, you learn in a Petri dish what is possible when courageous individuals inject moral imagination into building a new kind of capitalism. 

Nina: You beat me to my next question! So much of the Reimagining Capitalism discourse is by big business, for big business. What can we learn from social entrepreneurs?

Jacqueline: We can learn so much from them! So for instance, if you look at the chocolate industry, you're looking at a $100 billion industry that still depends on the labor of about 5 million small farming families. They bring home an infinitesimal amount of that $100 billion—90 percent of these farmers make under two dollars a day. 

What I’m seeing through Acumen is a new generation of entrepreneurs that are ignoring global commodities prices, which is the way farmers have historically been paid for their cacao or coffee beans or what have you. This new crop of entrepreneurs is immeresing with farmers, understanding their production costs, building trust and transparency, supporting them with inputs and training so that they can actually consistently provide quality products. And then by working with them collectively, they give farmers more power to be price makers rather than just price takers. 

As a result, what we’re seeing is farmers actually able to continue farming since they can create sustainable livelihoods. We're also seeing much higher quality coffee and chocolate.

And with all this, I ask myself why wouldn't the big companies get on board? Many of them still are not. I think it's because they are stuck in a status quo, afraid to have the moral imagination to flip the model on its head. But long term, I believe it is an inevitability that those companies will make themselves irrelevant. 

And what's so thrilling right now is we have models of more sustainable and inclusive businesses that can scale. And we have, importantly, two stakeholder groups—employees and customers— with a growing voice. As consumers, we’re all part of that chocolate industry, if you’re like me. And we can either enable that status quo, or disrupt it through what we choose to buy.

And then there is a third, silent voice that’s starting to scream, and that’s the earth—whether it is the land that’s no longer producing or all the calamities we’re seeing globally. If businesses do not learn from these new models and listen to these voices of people and the planet, they do so at their own peril. If they cannot wield moral imagination, they will, I believe, make themselves irrelevant. 

Nina: The way you talk about moral leadership is that it’s not a moral choice to be a moral leader, it’s an existential one. Businesses need to adopt this mindset if they are going to survive well into the twenty-first century. Is that right?

Jacqueline: Yes, exactly. It’s an existential choice. And sometimes when people hear me use the word ‘moral’ they think it comes from a place of righteousness or a place of some set of rules handed down by some higher authority. It’s actually the opposite. It takes a lot of humility because it recognizes that to succeed in an interdependent world, we have to navigate competing belief systems. 

You think you know what’s right and I think I know what’s right. The moral leader is not the one shouting from her corner what is right. She is looking for the solution that includes you and me. And builds one with you and me in it. She makes it work for the most people, and particularly for the vulnerable and the poor. 

And it means, to your point as well, the importance of finding partnership, even with those we think are adversaries. There is a lot of imagination in seeing the possible there. When I look at our entrepreneurs that have really succeeded in serving the poor, and more importantly in making a dent in intractable issues, they are always doing it in partnership, and usually with government.

Nina: Yes! One of the major themes from this newsletter has been the possibility that partnership unlocks for moving the needle on systemic challenges. Are there any good examples you can share of how moral leadership enabled new kinds of partnerships?

Jacqueline: Yes! In fact, there is one I love from the US in the midst of Covid. There is a company called Everytable run by Sam Polk, who is an excellent example of a moral leader. His purpose is to bring healthy, affordable food to food deserts, so he started a company in Compton that is essentially a fast food, healthy, nutritious, affordable restaurant. People so appreciated that this business existed that it grew to eight restaurants just before the pandemic hit. 

On the day of lock down, Sam had an existential moment: how could he continue, in this crisis, to provide healthy, affordable food—and to keep providing employment to the people he had hired? He went on social media and told the world his mission. He said, if you want a healthy meal, let us know and we’ll deliver it. If you can’t afford it, let us know that too and we’ll deliver it. If you’re willing to pay it forward so that those who can’t afford it can eat too, here's a link to donate. 

Within a few weeks they had delivered 160,000 meals. But it gets better! Then the governor made a partnership with a hotel chain where homeless individuals were staying to protect themselves from Covid, and they partnered with Everytable to supply food. So did elderly homes in the area. Through these partnerships, Everytable is on track within the next few weeks to deliver a million and a half meals, and they’ve added jobs along the way. 

So look at that stakeholder model. You’ve got local people solving a local problem. You’ve got local jobs with pride and dignity. You’ve got partnerships with rideshare and delivery services. You’ve got philanthropists—and I'm not talking big money donors, I’m talking every day individuals— contributing meals. And you’ve got government. All working together, busting through siloes to get the job done. 

That is the new model. But that takes the moral leadership of a guy like Sam Polk, who never wavers from his purpose, uses moral imagination to make capital and markets work for him, and is driven by serving others and not just himself. 

It’s why I'm so hellbent on identifying role models and business models that inculcate this new ethos. People say all the time that we have no leaders. And I say, you’re out of your mind! Everywhere I look, especially in this moment of crisis, I see leaders.  

But it isn’t just about these leaders. I’m almost at a point where I think we don’t just need more heroes, we need a million little heroic acts. People—like those donating meals to Everytable— are doing that, just quietly. When people are out there shouting all the time, they drown out the quiet revolution that’s already happening. 

Nina: As we aim to build back better, what do you hope to see from corporate America?

This is an urgent situation and business has a huge role to play in designing our future. They can do this by first, stepping back and asking, what are the problems that need to be solved? And how can we make that the purpose of our business? Start with that problem. Then, using that moral imagination, look at the different stakeholders you engage with and rethink how we might come together around that problem. 

As companies do this work, there are new business models out there to learn from and adopt. But I’m also convinced that there are many more still to be realized, pointing us in the right direction of morally rejuvenating our society and economies. We’re just at the beginning of exploring how we might use capitalism to reimagine our world.

And at the heart of it all, I actually think if we extended the Golden Rule from “do unto others as you'd have them do unto you” to “are you giving back more than you are taking,” we could unlock a new future. We could start to see people not as consumers but as citizens, and we could start to see employees not as inputs but as contributors, collaborators.

Jacqueline Novogratz is a best-selling author and the Founder & CEO of Acumen, a non-profit that invests in leaders and businesses whose products and services are enabling the poor to transform their lives. Jacqueline has been named one of the Top 100 Global Thinkers by Foreign Policy, one of the 25 Smartest People of the Decade by the Daily Beast and one of the world’s 100 Greatest Living Business Minds by Forbes. She lives in New York with her husband. Her new book, Manifesto for a Moral Revolution: Practices to Build a Better World, is available anywhere books are sold in the US.