EPISODE #5:

Canopy: Building Companies for Purpose and Profit with Scott Koloms

Or listen to this episode on Apple Podcasts.

Ok. So you want your company to have a social impact and make money, right? How do you get started? Scott Koloms, founder of nonprofit, Canopy, is here to help. And while Canopy focuses on assisting small to medium-sized businesses in Kentucky, Scott’s wisdom can help anyone anywhere! 

Scott loves his state!

“I love the diversity, the history and our tale – Daniel Boone, George Rogers Clark.  I love who we are as a state and I love the industries that are prominent. I love the mix of North and South and rural and urban.” 

He is determined to make Kentucky a hotbed of social entrepreneurs. 

In this episode, Scott tells the great story of why Canopy exists, and how he hopes to help this state he loves and the companies in it. He shares his hard-won wisdom of how any company, no matter where the location, can address a business problem and create a benefit to society at the same time. 

Scott knows what he is talking about – he has done it! And he is here to tell you about it. 

What advice does he offer us in this episode? According to Scott, the magic is in finding a solution to a business problem that will also have a direct and measurable social benefit. He describes how his business hit this home run and how you can learn from his example.  

Here is a snapshot of a few topics we cover in this podcast…

• Canopy wants to educate, guide companies and create a hotbed of social impact entrepreneurs in Kentucky.
• How every product or service is designed to make the world a better place.
• The importance of creating a new dynamic with your customers by aligning your values with theirs. 
• The difference between corporate philanthropy and partnering with nonprofits operationally.
• How to create social impact without hunting for a globe-changing purpose.

EPISODE #5 TRANSCRIPT

Kathy Miller Perkins: Today we have Scott Koloms back to talk about another one of his ventures. You’ll remember that Scott is the president of FMS, Facilities Management Services. and we had the opportunity to speak with him at length about how he took his company towards becoming a B corporation. But he has another role today that he’s going to talk about that should be useful to all of you who would like to become certified or would like to move in the direction of becoming a mission- driven company but don’t know exactly where to go for help or what to do. So welcome Scott back. He’s going to talk to you about Canopy, which is a nonprofit that can help businesses like yours.

Scott Koloms: Yeah, well thanks for having me back. It’s always good to be here. Yeah. So Canopy is a nonprofit organization that is really aiming to put Kentucky on the leading edge of what we’ll call the good business movement that’s occurring right now. You see it showing up, in a number of different ways, whether it be public benefit corporations, triple bottom line businesses. There are so many different names right now. I don’t think they’re all the same, but there are different approaches to what we’ll say are common denominators and those common denominators being operating business in an open and honest way – sort of reframing the concept of business to where we, as business owners, recognize that it’s our responsibility to take on some of the tough social and environmental challenges we’re facing.

Kathy Miller Perkins: Okay. So FMS has two certifications, correct? One with B labs and then with the state?

Scott Koloms: Yeah. The public benefit corporation is not a certification. It is much like a filing that you do with the state. And instead of Facilities Management Services Inc, we are Facilities Management Services, PPC, public benefit corporation. So it doesn’t affect any tax. There are no tax repercussions at all. We still file as an S Corp. But it does require that we change our corporate documents and commit to pursuing a social or environmental mission.

Kathy Miller Perkins: Okay. Well it sounds like that could be complicated. My understanding is one of your reasons for founding Canopy was to help businesses get through this whole process. Can you just say more about the mission of Canopy and what you offer in terms of services?

Scott Koloms: Yeah, sure. So Canopy is really trying to create an environment in Kentucky that is hospitable to the social entrepreneur. It is not just about the Canopy program, which is a process by which we help guide companies through the integration of becoming a more socially and environmentally conscious business. The idea being that we move companies from the space of intuitively doing good to intentionally doing good. We help guide them through the process of finding a social or environmental mission, incorporating that into their culture, eventually executing that mission in some way, and then measuring the success of those programs and then reporting on that. And then of course, along the way, we look at the culture of the company to make sure that internally they’re doing the right things. They’re treating people well. We also look at the leadership of the company to make sure that they’re walking the walk as they move through this process. And also looking at some of the elements of governance to make sure that they also reflect the values.

Kathy Miller Perkins: Okay. So it looks like you’re covering a lot of bases there. How do you provide support to them? Do you train? Do you, what kinds of support do you offer?

Scott Koloms: So as a company’s moving through the Canopy program, they will have access to a Canopy curriculum that will expose them to ways of doing the things that we’re asking. So that will be accessible online. And yes, we’ll have other support mechanisms. But some of those will be monetized. Others will be come with the process, come with the deal. So, you know, that’s one component of Canopy.

Another big piece of what Canopy does is around education. And we really look at our educational division as having three major pieces. One we just mentioned, and that is the curriculum that is tied to the Canopy certified program.

Another piece is what we call sort of the general curriculum and that is executed through the Canopy traveling road show. And that’s where we’ll go across the state to different spaces. We will discuss the greater movement, what’s happening across the States, what’s happening across the globe around that sort of redefining of business, redefining capitalism and the idea that the shareholder supremacy is sort of dwindling and what we’re moving to is more a state of all stakeholders being considered in our exchanges and in our business. So that is part of the general curriculum.

So also, we will provide data around consumer spending habits that we see showing up. Being around the localized business movement about how consumers are becoming more awake to who they’re buying from, the companies that they’re buying from. And, the data around the Millennial generation and the fact that people are becoming more aware of who they want to work for. Not  only do they want to buy from companies that are behaving well, but they want to work for companies that are behaving well. So the general curriculum will be around that – creating sort of maybe what she would call a consumer awareness, consumer consciousness, of this sort of movement.

And the third leg of our curriculum is what we call the academic curriculum. And that’s where we’re going to get into high schools and our universities to teach social entrepreneurialism, in this new way of doing business to our students.

Kathy Miller Perkins: Do we have anything like this in Kentucky now in any of the schools or is this completely new?

Scott Koloms: We do have professors that are teaching classes around sustainability and some going into social entrepreneurialism. We don’t have any programs necessarily at this point. A couple of universities are moving in that direction

Kathy Miller Perkins: And you’re going to help, right?

Scott Koloms: I hope so.

Kathy Miller Perkins: Why Kentucky? I know that your business is here, so that’s probably one reason, but do you have any other reasons to be focused specifically on Kentucky?

Scott Koloms: Besides my business being here and besides being born and raised here? Yeah, I, I’m not sure that there’s anything beyond that. I, I guess, suppose you could be born and raised somewhere, not care for it that much. So I’ll guess I’ll go beyond that and say that I love my state and I love the diversity here. I love the history and I love our tale – you know, Daniel Boone, George Rogers Clark – I love who we are as a state. I love the industries that are prominent in this state. I just love this sort of mix of North and South that we have going on. And this wonderful sort of urban and rural mix.

Kathy Miller Perkins: That’s really interesting. And, and in an earlier conversation I had with you, you talked about another piece of Canopy in terms of attracting companies to Kentucky. Could you say more about that?

Scott Koloms: Sure. One of the ends of Canopy is to create this environment. So if we really talk about the intentions of Canopy, we’ve spoken about two of them. One is the education. The second is the idea of the Canopy program to help guide companies.

A third intention is to create a very solid network of folks that are aware of and interested in a part of this good business movement. And what we want to do is create a very strong network that’s attractive, to existing businesses to help them stay on the path and inspire them to continue pushing themselves to solve more problems and to get better at what they do. But also, ultimately, we want to create an attractive space to where we draw start-ups. We want to bring other companies to our state because of the work that we’ve done. So the idea is, is that we become a hotbed for social and environmental entrepreneurs.

Kathy Miller Perkins: What a wonderful goal.

Scott Koloms: Yeah, it’s exciting. I mean, we like to consider ourselves just one tool in the toolbox of trying to solve some of our toughest problems.

Kathy Miller Perkins: Do you know of any other organizations elsewhere in other States, or is this a unique first?

Scott Koloms: Yeah. You know, I don’t think that anything we’re doing is all that unique or a first. You know, there are different manifestations of the work that we’re doing in different States. A lot of it is driven by B lab, the B Corp group. They are getting more localized in some of the different States to have champions that are taking on the initiative at the state level.

 There are a couple of other organizations that are diving into the entrepreneurial space, creating ecosystems for entrepreneurs, social entrepreneurs. We’re not claiming to have created anything all that new. But what we are doing is creating something that’s for Kentucky.

Kathy Miller Perkins: Yes. And that’s important. That’s important to me because I also live in Kentucky. I’m glad you’re here. So are you already working with some businesses or are you still in the development stages of Canopy?

Scott Koloms: So we are very much still in the development phases. We have recently hired two more people to our staff to bring us up to eight now, which is great. We have received some funding and we’re in the process of developing the Canopy program. We have a couple of wonderful people that are focusing on that.

We are also working towards hiring our educational director, which would really speed up the process of creating the curriculums.

Currently it’s about, it’s a startup. It’s very much a startup. It’s about finding the right people, creating the frameworks, getting a really solid message down, getting very clear about what our intentions are, what the work we’re going to do. And we’ve done all that. And you know, I really think over the next six months, things are accelerating. Our goal is to have eight to 10 companies going through the Canopy program in beta testing in February.

Kathy Miller Perkins: That’s soon. That’s great. And, and will those companies be startups, or will they be existing businesses that want to transform, or do you know yet?

Scott Koloms: So what we do know is we’re going to have a diverse representation, and that diversity will show up in terms of geography, where they are from the state. It will show up in terms of industry and it’ll show up in terms of the size of the company and it will show up in terms of whether they’re a conversion, an existing company that wants to move in this direction or whether they’re startup. So we’ll have a little bit of everything.

Kathy Miller Perkins: So you have criteria for the first round that you’re trying to seek out certain characteristics for the first round.

Scott Koloms: Obviously we want a diverse representation so that we get feedback from multitude of perspectives.

Kathy Miller Perkins: Makes sense. Let’s switch just a little bit and talk about, since you’re developing a program, through Canopy, if you were at this point to advise, let’s say a start-up, let’s just start there on how to, what are the first steps, what are the first steps in getting organized around a mission or a purpose? How would you advise a company to begin that process?

Scott Koloms: So, to me, it really comes down to identifying a problem you want to solve. So, you know, you can either have a product or service in mind. It isn’t inherently linked to making the world a better place.

You could argue that just about every product or service is making the world a better place. You know, from making a video game that gives people happiness and joy to running a cleaning company, which ultimately makes spaces cleaner so people can live healthier lives.

So, identifying what is that problem you want to solve out there in the world. How do you want to make the world a better place beyond just job creation? Really zeroing in on that what is your passion. Because certainly, the more in alignment you are with what you’re pursuing, the more likely it is you’re going to stick with it and, and really go for it.

The other thing too is, some people think that their product or service has to be this really obvious contribution to making the world a better place. That’s not necessarily so easy.

For example, you know, my janitorial company, you don’t necessarily think of that as contributing to the betterment of the world. So what we did is we added layers on top of that. We added a social mission on top of that, around providing access and opportunity for our employees and helping the communities where they’re from thrive. So then on top of just running the janitorial service and cleaning buildings, we’re working towards retaining employees and getting them excited about work by providing a programming for them to allow them to lead healthier lives.

So that’s a way of incorporating that social mission beyond just the service or the product you’re offering.

Kathy Miller Perkins: All right. So, so I take it then for a startup or even for an existing business for purposes of what you’re talking about, you don’t have to try to do major globe changing work in order to be socially responsible or mission driven. You can be more local; you can be more circumscribed. Is that, is that what you’re saying?

Scott Koloms: Absolutely. 100%, you know, to me, one of the things that’s really exciting about the work that we’re doing is we do have some focus on small and midsize businesses. And I truly believe that.

We know that small and mid-size businesses account for over half of the economic wealth that we have, be it human capital or financial capital. I really feel like that’s an untapped resource.

I just have this vision. Just imagine if we can get, you know, hundreds and hundreds of companies across Kentucky, small and midsize companies that are solving some problems and are working towards that. And, I always say, the problem can be in the neighborhood. There are a number of single parents that can’t afford things for their kids. It can be giving haircuts when school starts.

But an important piece of this, is that, as you consider your social or environmental mission, you want to make sure that you’re doing something that allows you to be financially viable.

So the idea isn’t simply just giving something away because you care about something, which is nice and that’s important, but we need to stay in business. So we can continue to do that. So the idea is to identify programs and ways of engaging your social or environmental mission so that it allows you to succeed financially. So that’s an important component.

For example, over at FMS, we developed sort of a hierarchy to decide whether we should pursue a program, a partnership with a nonprofit, a social program to, to help our people, our community. And, you know, the highest level in the hierarchy is does it provide a direct measurable benefit for people, and does it provide a direct financial benefit to the company?

So those are the home runs, you know, the next one is does it provide a direct measurable benefit for our people and does it provide an indirect financial benefit to our company?

And what we call indirect financial benefits are things like exposure, you know, potential customers, those sorts of things.

And then, you know, the hierarchy, as you can imagine, just goes further and further down, you know, to more indirect benefits, not measurable, that sort of thing. So the idea being, as we choose what programs and what things to do in terms of our social or environmental mission, we’re really aiming for this, this sort of program that can provide us that direct measurable benefit for that social mission that we’re trying to achieve, and provide that financial benefit.

Kathy Miller Perkins: That’s really interesting. So some companies talk about their social mission in terms of charitable giving and volunteerism, but I think you’re talking about something quite different. Could you talk about that? Is volunteerism and charitable giving part of what you do? Or is it different? What’s different?

Scott Koloms: We certainly are involved in charitable giving, but we also put it through the same filter that we put through our social programming. So in other words, we have really zeroed in as to where our charitable giving is going to go. And usually our charitable giving goes to nonprofit organizations that we’re partnering with.

Our partners are on an operational level. So we’re partnering with nonprofits in order to provide benefits typically to our employees or the communities where they work. We partner with a local nonprofit called New Roots. When we surveyed our employees last and asked them what they’re interested in, what could help them they said physical health, eating healthier. That was one of the markers that came up. So we didn’t know a lot about that. So we decided that we would partner with a local nonprofit that creates what are called fresh stop marketplaces. You can buy shares of fresh fruits and vegetables, enough for a family of four for two weeks.

We use local farmers and gives them a sustainable revenue source. And we heavily subsidize those shares. Our employees pay $5 on payday Fridays and they come, and they get their fresh fruits and vegetables.

And we’ve created an experiential component in that we’ll have chefs teaching how to cook. We’ll have different foods and we’ll have educational moments where they learn about the fruits and vegetables and what their uses are and how they affect your body. So it’s really a nice thing.

And the employees enjoy it. They talk about it. I mean the proof’s in the pudding in the numbers, right? It started off with 18 to 20 families and I think we’re at 65 this year.

Kathy Miller Perkins: That’s wonderful. So it’s different than just writing a check and giving it to the nonprofit and saying, go do good. It’s not like that, what you’re talking about.

Scott Koloms: Very much so. Our people, our leaders, are the ones, alongside volunteers from the nonprofit, that run the show. So you’ll see our leadership engaged in putting up the fresh stop tents, distributing the fruits and vegetables and just being a part of the way it’s executed. So, it is really a full integration of the nonprofit and the for-profit. The lines get really blurred as to who’s offering the services. And it’s a wonderful partnership.

Kathy Miller Perkins: It’s very different than companies that write checks. Correct. It sounds much more strategic to me. It sounds like what you’re talking about, (and I’m assuming that this is going to be true for what you support with Canopy),  is  a more integrated, more strategic approach to doing good because you’re emphasizing making money and doing good, not just sort of a bolt on such as, oh, by the way, we’re going to use some of our profits and help nonprofits. Would that be a fair characterization?

Scott Koloms: Yeah, yeah. It’s certainly not an afterthought in any way. Our charitable component is really embedded within our business model. We are at the point where we can truly say that it has allowed for our successes and it must continue in order for us to be who we are. So it is no longer a, we had a good year, let’s write a bigger check, sort of mentality. Or even taking it beyond asking our people to volunteer for those specific organization. It’s fully integrating these programs into the way we do business.

Kathy Miller Perkins: When you started doing this, did you get any pushback from anybody, any of your stakeholders? Shareholders? Or anything, any pushback?

Scott Koloms: Yes I did. I mean, there were certainly some people within my organization and even, you know, sort of peripheral related to my organization that had the crossed arms and like, you know, what are you doing here? That’s nice, I think it’s lovely that you’re doing it, but I don’t see how it’s really going to help your business.

And, as with most things that are good and with all things that are sustainable, I think it took time. And so over time we got some converts and then, as the results continued to happen, it started to get harder and harder for folks to say, you know, maybe that that was coincidental or maybe he got lucky or… the cumulative effects began to bring some converts along.

Kathy Miller Perkins: So it has been good for your business, you think?

Scott Koloms: Yeah, very much so. So it has reduced turnover. Obviously, we’re gathering data. That so important and what Canopy will do is help other companies gather data. So, one of the intentions of the Canopy program is to teach and help companies gather this sort of data, both for their own purposes, but also for the larger purpose of making the argument to other companies that this is an effective thing.

So turnover, has diminished considerably, almost cut in half in the last four years, since we intentionally brought on this program. We also have several customers that came aboard explicitly because of who we are and some of the more innovative practices we’re doing in partnering with nonprofits around employment opportunities. We partner and go into certain customer spaces.

We’re picking up business in a way that we never have before. You know, it is truly a values alignment between customer and us, the service provider. And it’s really a new way of doing business.

So on the revenue side, we’re picking up business and we have diminished turnover. We have certainly earned a reputation in the community. Culture-wise it’s just better for people. When people find purpose, when they trust who they work for – just on the surface it is just more pleasant. But also, you know, I mean, you look at things like where do our employees come from? Well over half of our employees come from referrals from existing employees. So, those sorts of things speak volumes. And when you’re in a field like the janitorial business, those referrals are key. You know, we have 900 people and we’re constantly in need of people because of the growth. So that’s important.

Kathy Miller Perkins: Other businesses, would it be talent attraction that would motivate them? What is the message from Canopy to businesses that might be on the fence?

Scott Koloms: We talk about this a lot. So you know that there’s a lot of evidence now that shows that younger folks want to work for companies that are operating this way. And they’re seeking those companies out. So there’s that data.

There is the data that shows that companies that integrate social missions into their organization aren’t just mission-driven in general. They bring their employees along in that effort and really integrate that into their culture. The data shows that folks are sticking around for those sorts of companies. So retention and attraction. And yeah, definitely the attraction components.

 I’m hoping for a day that the attraction component goes away because everybody’s doing this. But for right now, there is that attraction. There is a certain set of people that are very interested in working for companies that are thinking this way.

Kathy Miller Perkins: Yes, yes indeed. And some of the research that I’m familiar with shows that companies are more profitable in the long run.

Scott Koloms: Well, obviously I suspect that to be true. If not, I wouldn’t be doing what I’m doing. I do think it’s a longer game. But I think that values alignment with your customers brings trust. It is more than just a service that we’re offering them in terms of cleaning their building. They truly feel that, by working with us, they’re in alignment with their values and their missions. So then it becomes a whole different dynamic with the customer.

And my suspicion is, and I mean it’s showing up now, but my suspicion is it’s just going to be longer term relationships. This, of course, allows us to grow. You know, if we’re losing business while we’re picking up other business, we don’t grow nearly as quickly as we do when we keep all of our business.

Kathy Miller Perkins: Well it sounds like it’s working well for you and it sounds like you’re ready to take the lessons you’ve learned to Canopy to help other companies do the same.

Scott Koloms: Probably not exactly the same. It occurs to me that probably each company’s going to be unique in how they approach it because they’re not all janitorial services. Right. So you’ll be helping them with their own unique challenges.

You know, one suggestion is as maybe a startup or an existing business considers its social or environmental mission or the good that it wants to do, see if you can tie it to a problem that you face in your organization. See if you can tie it to something specifically that you’re dealing with, to where the successful execution of that social or environmental mission not only does the good that you set out to do, but also addresses a problem that you’re facing within your business. So that’s sort of tricky.

To me, that’s exciting. That’s just an intellectual creative sort of thing to think about.

Kathy Miller Perkins: It sounds like they have gotten really good. Any other advice, any takeaways that you’d like to either summarize or offer to our listeners?

Scott Koloms: Well, I, I would just say just if you’re not really familiar with this new way of doing business and what’s going on, dive into it. I mean just get on the internet, Google it, there’s plenty of material and just start digging into it a little bit because what I believe, and I’m not the only one, is that in 10 to 15 years, if you’re not thinking this way, uh, you’re going to have a tough time.

Kathy Miller Perkins: Well, the timing is good for all of this. The Business Round Table just a week ago had 181 signatories, as I understand it, on a letter talking about the importance of purpose for risk management, survival of companies, among other things. So, you were way ahead of them, but it sounds like there’s some momentum behind this approach to doing business.

Scott Koloms: There certainly is. That was an interesting move. For the first time in 20 years, they removed the language that essentially was around shareholder primacy over everything and integrated more language around stakeholders. The company’s purpose is to provide value and opportunity, and honesty and integrity, to stakeholders and to make a profit for its shareholders. And to be transparent around that profit. So this is a really interesting transition.

And you just see it happening more and more. So, my contention is that the movement really needs to take root in small and mid-businesses.

Kathy Miller Perkins: Why, why do you feel that way?

Scott Koloms: Well, as I spoke to earlier, because we represent most of the resources in America, right? I think we’re going to be more agile – that it’s going to be easier for us to do that than it is going to be for the larger corporations to make those pivots.

Kathy Miller Perkins: You’re not publicly traded for one thing.

Scott Koloms: Yeah. So those companies I feel like aren’t going to be able to make these moves until consumer consciousness completely swings in the direction of demanding that these things occur. So when people start speaking with our dollars and demanding that companies do this, it’s going to require those shifts up top. But until then….

Kathy Miller Perkins: That day will come. I think probably sooner rather than later would be my guess. But we’ll see. There’s obviously some movement towards it at those larger corporations. You can see that happening. Some of the larger corporations are buying B Corp’s, I’ve noticed in the last couple of years, which is an interesting way to address the challenge. I’m not sure I understand exactly where that’s leading, but it’s really interesting.

All right, well we really thank you for joining us and talking about Canopy as well as your position with FMS and how you got where you are. Anything else about Canopy that you would like for your listeners to know in terms of how they might get involved or how they might get in touch?

Scott Koloms: Go ahead and visit us on our website. You know, we’re at Canopy KY.org. So come check us out. Holding true to our values, we are still holding general meetings that anybody can attend just to give updates. And we also put out a newsletter so you can hop on our website and get on our newsletter to know when our events are coming. We have events across the state coming up here in the next several months. And, we’d love for you to join this movement.

Kathy Miller Perkins: Is it possible for people outside of the state to attend these events as well?

Scott Koloms: Sure. They are open door to anybody.

Kathy Miller Perkins: Okay. Very good. Thanks again, Scott, for all of your wonderful advice and observations.