Profits and Purpose Benefits of Doing Social Good
Profits and Purpose: It is in the founder’s interest to start the business knowing that we are all interrelated and interdependent. That is quite easy to recognize, but hard to act on. Accepted economic wisdom tells us it’s the job of a business to maximize profits. Politicians talk about the economy doing well, when many people struggle. They glory in output and GDP, but seldom in outcome and changing the world for the better for us and them.
The startup will actually perform more successfully, when not exclusively fixated on profits and growth. Goals balanced between profits and purpose will produce better results and a better world for all.
What? Surely that can’t be true! Of course it’s true, otherwise why do 64% of people say that CEOs should take the lead on change rather than waiting for government to impose it. In the US, 54% of people consider that it is easier for us to get brands to address social problems, than it is to persuade government to take action1.
According to the Net Impact’s What Workers Want2 report, 45% of employees would take a 15% pay cut for a job that makes a social or environmental impact. Another 51% of workers say that helping “make a better world” and making a “contribution to society” are essential for their ideal job.
Doing the right thing brings business value. “ In a transparent world, businesses can no longer get away with pockets of good practice”, says the HR consulting firm, Mercer in their Global Talent Trends Study 2018. They stress the importance to bring Ethics, Equity and Empathy to the workplace. Mmmm.
Are You In Business for Profits and Purpose?
These are the kinds of reasons why your brand or company needs to make clear WHY it exists, as much, if not more than, what the product is. If the business is not living its purpose genuinely, consumers and buyers will get to know pretty quickly. Hollow claims by the company and its people will be spotted as window dressing, rather than a genuine culture of profits and purpose.
Profits and purpose are both needed for survival and success, especially with the degree of greed, hatred and self-deception that are so prevalent. If you are intent to startup with purpose, then you have to be sure that you have the right understanding of what’s going on the in society, exercise right thought about the contribution the firm can make to a better world. Be sure to say the right thing about WHY you are doing what you’re doing, and how the brand you sell fits your purpose.
That is not enough, though. Your actions in the light of all that reflection have to be right. Everything about the employment you offer has to be right. The company has to put in the right amount of effort to ensure that words and action coincide. Everyone in the business has be mindful about what’s happening and apply the right level of concentration to make sure that all the commitment to doing the right things impels the venture to flourish.4
All of the people in the new venture have to behave ethically and exercise wisdom about all that they do—to the best of their ability. You can see some of the ways that you can put this into practice at Successful Startup Behaviors Match Purpose, or at Beneficial Values.
Values Not Lived are Value-less
Perhaps it would be better if companies did not publish their missions and values statements, if they are poor at living them. Arrogance hides credibility.
For example, Volkswagen doesn’t have a formal mission statement, but its goal is “to offer attractive, safe and environmentally sound vehicles which can compete in an increasingly tough market and set world standards in their respective class.” VW’s vision statement is “to make this world a mobile, sustainable place with access to all the citizens.” In April 2017, a US federal judge ordered Volkswagen to pay a $2.8 billion criminal fine for “rigging diesel-powered vehicles to cheat on government emissions tests”. No wonder the CEO resigned.
Similarly, United Airlines used to say, “Every day, we help unite the world by connecting people to the moments that matter most. This shared purpose drives us to be the best airline for our employees, customers and everyone we serve.” And then they lost $800 million in quoted equity value in one day, after they had forcibly ejected a passenger from a flight. A few years later, the “New Spirit of United” statement says, “We Fly Friendly. Warm and welcoming is who we are.” I wonder why?
Corporate misdeeds such as these and many others are cautionary tales for entrepreneurs. You might think that new ventures with no outside shareholders would avoid being caught out. They generally do not hit the headlines when they transgress but they do suffer ignominy through business failure as a consequence of loss of customer confidence, difficulties in recruiting good staff, negative feedback on public comment websites, being penalized for unethical behavior by not being invited to bid for public contracts…
Startups should watch the big boys and avoid misbehaving, or better still, aim to have to have a deep-rooted commitment to and a practice achieving both profits and purpose.
1. According to the 2018 Edelman Earned Brand report—a study of how brands can earn, strengthen and protect consumer-brand relationships.