Balancing purpose versus profit
It’s one of the key questions of our time: how does a for-profit company balance between ‘doing good for society’ versus the need to generate a healthy profit? In the last few years, vision and mission have often been replaced by purpose statements. Why does a company exist? Or, in other words: ‘what would the world miss if we were not around as a company?’ If we turn the question around, it becomes perfectly clear what our added value is. Because if we don’t have added value, we should go bankrupt. At least, if the capitalist system works well. No added value means no clients, so, no revenue, no business, no money. Simple.
Back to balancing purpose against profit. Every for-profit company must generate a healthy profit at the end of the day. Simply because profit is what oxygen is for humans. Profit to survive and to invest into the future. A no brainer. The question then becomes, how much profit?
We see nowadays many companies working on their purpose. They are, by applying reverse engineering, trying to find an answer to the question: why are we here on this planet? Many companies are answering their purpose question. But, we have to be very honest here. At the end of the discussion, doing something bigger than your immediate short term self-interest will have an impact on the profitability of a company.
What are the companies that seem to have found this purpose versus profit balance? Which businesses are generating a healthy profit and are purposeful? These companies can serve as inspiration for others. Whether you’re running a big or small business, you’re starting or legacy, whether you’re private or public.
There are no perfect companies. We all have our issues, make no mistake. But some companies seem to be in the forefront of balancing this Purpose vs. Profit tradeoff. And it’s probably a bit easier for private companies to find a good balance. The shareholders of Mars Inc. for instance take roughly 10% dividend from the companies’ profits each year. The rest is reinvested into the business. Which is significant and allows management to really develop the company.
- Patagonia (privately owned)
- Mars Inc. (privately owned)
- Unilever and Ben & Jerry’s (public)
- Electrolux Professional (public)
- Icebreaker (private)
Most of the companies listed here are quite well-known. But there are many more! There are so many small private companies that work under the radar that seem to have found a healthy balance.
So, we’d love to hear from you too! Let us know if you know of any companies that we should add to the list and that can serve as inspiration for others?
Feel-good brands alone will never create value. There must be a real value proposition!
Hope this inspires.
Paul Donkers
