Profit and Purpose, Integral Business Drivers

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by Soren Eilertsen, Ph.D. May 6, 2015.

Are you in business to make a difference in the world or do you just want to make money? Purpose driven people tend to be less money conscious and money driven people tend to be less purpose driven. Yet, many people answer affirmative to both of these choices; however, they are often confused about how to talk about a noble purpose and wanting to make money at the same time. The two pursuits can be difficult to align. Leaders in not-for-profit and foundation-based businesses have the liberty to be more purpose driven but even they must consider the bottom line. How do you integrate the duality of profit and purpose?

Profitability is the lifeblood of a business. The general definition of business is “an act of commerce in an attempt to make a profit.” You need to make money to invest in the future and to compensate the stakeholders. Profit in integral to business. So, if you are in the game of business, you should play to win since winning is the goal of any game. Winning means beating your competitors on the key score of the game. If you don’t play to win, are you really playing the game? Now, we can discuss the metric on which to score. Is it valuation of company, earnings (profitability), or something else? Unless you are in a first mover start-up or trying to sell the company, most people would agree that earnings and profitability are on the top. In the game of business, profit is the fundamental key metric.
So what about other important objectives of the business? What about the business’ impact in the world, innovative offerings, customer following, employee engagement and other aspects of company success more aligned with the possible purpose of the business? These are important in business only if they are important to the players of the business game; in other words the leaders of the business. Some businesses survive fine – at least in the short-term – without focus on these items. However, our consciousness and free will as humans allow us to decide which type of business we want to be associated with – one that’s solely money driven (think many Wall Street firms) or one that also has a noble purpose (think companies like Patagonia, WholeFoods, and Chipotle).

purpose_with_profitMore and more people want to work for businesses with a noble purpose: a company that makes a difference in the world with innovative offerings and loyal customers as well as engaged employees. It’s not enough to focus on money and to pay people well. Hence, we believe that in the new order of business, profit and purpose are in an integral relationship as drivers of the business. Both profit and purpose are holons, simultaneously a whole and a part. While profit is more fundamental than purpose, purpose is more significant. You can read more in our article titled “Purpose with Profit: Evolving Objectives for Business” first published in CEO for High Growth Ventures magazine in May 2015.

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About the Author:

Soren Eilertsen, Ph.D., works with business leaders to clarify vision, set strategic focus, and develop leadership muscle. Since founding Kollner Group in 1999, he has shaped the success and strategy of numerous for-profit and non-for-profit businesses in a variety of industries. He teaches business strategy as Adjunct Faculty at Pepperdine University’s Graziadio School of Business and Management. For additional information, visit Kollner Group or email Soren.