Tweet

Profit is not a reason for being in business

Written by: Ian Berry

Article Overview: One of the most profound statements of our time was made by The President of the World Business Council for Sustainable Development Bjorn Stigson, "Business cannot survive in societies that fail." Currently society is failing many of it's citizens. 2006 Nobel Peace Prize winner Muhammad Yunus says in his excellent book ‘Creating a world without poverty', "Half of the world's population lives on two dollars a day. Over one billion people live on less than a dollar a day."

Profit is not a reason for being in business



© Ian Berry All rights reserved.

What are the solutions from a business perspective. I believe broadly speaking there are three options.

1. Yunus strongly suggests social businesses such as his own Grameen Bank or their joint venture with Danone, Grameen Danone, a business that sells a special yoghurt product for a fraction of the cost of traditional markets.

Social business according to Yunus have social goals only. Investor's get back their investment over time however any profits are put back into the business. I agree with Yunus in his assertion that the number of social businesses on the planet will increase dramatically in the not to distant future.

2. Businesses with social and economic goals (‘double bottom line'), or social, economic, and environmental goals, (‘triple bottom line').

For the past 25 years or so 'double and triple bottom line' focused organisations have been making their mark and the so called corporate social responsibility (CSR) movement is gaining momentum. I subscribe to reportalert.info and automatically receive notification of the latest CSR reports by companies. The ReportAlert service is managed by CorporateRegister Limited, the world's largest online directory of CSR Sustainability reports. I sometimes scan reports and sometimes read them in full. All are food for thought and provide insight that helps me to stay informed and to make my own decisions. The last time I looked there were 17543 CSR reports across 4468 companies! These numbers demonstrate businesses of this type are already making a difference.

3. Businesses whose goal is profit yet are serious about philanthropy or giving back to the societies in which they operate.

Which one of the above is your organisation? For me purely profit oriented businesses will become dinosaurs. Profit is not a reason for being in business, profit is a result of being good at business.

Dave Packard, Co-founder of Hewlett Packard company said the following in 1939. "I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a company's existence, we have to go deeper and find the real reasons for our being."

Famed economist Milton Friedman held a very different view to Packard.

"Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible."

The continuing fall out from the world's credit crisis suggests the Friedman's of the world presently outnumber the Packard's! For me once the dust settles a new world will emerge that no longer tolerates the greed, lack of accountability, poor legislation in some countries, and just plain stupid business practices, that were the underlying causes of the crisis in the first place.

In our new world businesses with operating models like the three I suggest above or hybrids of these will be the most successful. Already households names such as Alcoa, BP, Hewlett Packard, Starbucks, Unilever, Vodaphone, are making a difference by measuring their impact on society and the planet and by ensuring changes in strategy and execution plans that will lead to the reduction and eventual elimination of negative impact.

The following are the key signposts of a successful modern business:

• Vision is no longer trite words displayed on board room walls and in annual reports, that no one really believes in, rather an authentic and compelling story is being lived and told that inspires and engages all stakeholders

• Mission statements have been replaced by a genuine cause beyond profit

• Values have become virtues rather than words very few people live

• Strategy is the social, environmental, and economic reference point/s from which decisions are made concerning the future direction of the business

• Strategy execution plans have been cascaded down to and are owned by teams and individuals

• Structure is based on determining value delivering roles without people in mind and then matching people to roles

• Systems fully support people in bringing everything remarkable that each of us is to our work on a consistent basis

• The order and alignment of the above is never taken for granted and is always a work in progress

How does your business stack up against the signposts above?

Be the difference you want to see in the world.

Ian

Founder Differencemakers Community

Related Articles
  What Business Are You In?
  Are You Making The Profit You Thought You Would In Your Network Marketing Business?
  5 Tips to Starting a Successful Non-Profit
  The Secret Button in QuickBooks for a Better Profit and Loss Report
  Are You A Profit Center or a Profit Drain?

Article Tags: business sustainability, profit, world business council for sustainable development



Related Forum Posts
Which kind of industries are you interested in? - Ecological or E-business or Investment or Finance or Management or Non-Profit or Retailer or others.
20 Reasons why you must be a reader - I am starting this post with only one reason why you must be a reader. I expect you to write your own reason. Just one reason. And please if you read this post you must write your own reason. Thanks for your cooperation 1. Where you are in five years time will determine the books you read and the people you move with.
More Profit Women! - I really enjoyed the stories of Lisa Shepherd and Julie Mitchell - More Profit women CEOs would be great!
A ton of Great Women - You might want to profile Teresa Cascioli of LakePort Brewery. She has an amazing story! I met her at at the celebratory luncheon for the Profit/Chatelaine Top 100 Women Business Owners. The Top 100 list is also a great resource for inspirational stories of Women Entrepreneurs.
Re: Did you meet your goals in 2010? - Hi Yinka, I met some of my goals but they were mostly in terms of increasing my workrate and profile on the Internet and I have made some progress but like Michelle and Alan, in terms of business success I still have some way to go to get to where I want to be. For some reason my Alexa ranking has just rocketed back up after all that which is very discouraging by I am told that this can happen for no reason so I am trying to be positive. I am committing myself to even more effort in 2011 and hoping for a breakthrough but maybe try to streamline my efforts in terms of time management regards, Mal.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Motivation Mistakes

Effective Leadership

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.