While traveling with some of the most high-profile corporate leaders deep into their supply chain origins, I have always felt overwhelmed with emotion experiencing the moments of human interaction that take place. When business leaders are able to see with their own eyes who produces the products that makes the millions of dollars for their company, and the realities of the lives they live and struggles they often face, there has not been one moment where I haven't seen their empathy come through.
The realization is that there is something more than business happening.
Seeing the realities of the world around us transforms business leaders, and thus the businesses themselves, from exemplifying that the acquisition of money is a priority, to a place where decisions are made based on the impact of its dollars. With this evolution comes an entirely new approach to business.
The simple truth is that it should not be difficult to make choices for a company about doing the right thing, giving back to communities, or working to change the planet. Companies are making the shift at a rapid pace. Yet many still see businesses as out only to make money.
Therefore I wanted to share the 5 biggest myths about combining purpose and profit for any businesses contemplating whether there is in actuality a difference (can you tell I don't think there is?!)
1. Purpose doesn't resonate
Simon Sinek wrote a best selling book called "Start With Why." The book is about finding fulfillment and inspiration in our every day (including, and especially in our careers.) The book has found itself a massive cult following, and Sinek travels the world teaching business leaders how to find their 'Why.' People want purpose! No longer is a regular 9-5 job cutting it. Employees want to feel they are contributing to something bigger. Any company that doesn't recognize that, or starts building this employee drum beat into their business operations, just has its head in the sand. Purpose is here to stay.
According to Forbes' analysis on Cone Communications’ 2017 CSR Study, letting employees lead around social and environmental sustainability issues from within helps a company evolve into a true leader. This goes beyond being purely philanthropic…it’s identifying ways for company employees to feel vested in the future of the company and not just “what it stands for…but what it stands up for."
2. Purpose is the same as philanthropy
Being philanthropic is not the same as being a social impact, leader. If a company seeks to acheive some sort of social, environmental or economic development goal, philanthropy won't cut it alone. Those businesses that have truly ingrained purpose and mission into their way of operating are doing more than giving away money or time. They are learning slowly that changing their operations to address social impact challenges is pivotal to making the world better through their day-to-day business decision making, not just by writing a check. When companies recognize that there are other needs outside of the philanthropic domain for their active engagement, and they take ownership of their role to steer the ship in a direction of positive change, making the world a better place is not only possible, it’s inevitable. And guess what?! Companies are making money this way too!
3. Companies will stay profitable no matter their view on "purpose"
Companies must answer to many constituents: employees, customers, partners, shareholders, boards, etc. This puts pressure on companies to be almost everywhere at once and be everything to everyone. They must make good products, provide an excellent level of service, and also invest in employee engagement and internal operations, processes, etc. It’s no wonder that many companies scoff at the added responsibility and cost of investing in other programs around "purpose." The realization that many companies have made, however, is that these “outside” programs are way more than “nice to have.” They are indeed critical for many consumers that prioritize this level of commitment to issues other than making money. This is especially true of generations younger than mine. There are more articles and research studies than one could possibly read about the way Millennials and even younger generations make purchasing decisions. It’s undeniable that companies are responding to the trend in appealing to the smartphone generations that believe social goodness is integral. If they don't, there's no profit.
4. Bigger companies don't need to worry about purpose because they are already making so much money
Off the top of my head I can name six massive companies investing in social enterprises or socially-responsible, purpose-oriented brands, not just because it's the right thing to do, but because these brands are making (more) money from them. General Mills and Annies. Kelloggs and Kashi. Clorox and Burts Bees. I could go on. Companies recognize that to evolve and stay relevant, and to make an impact in a long-term, sustainable way, they must consider different types of models, like social enterprises or B Corps, as viable and necessary partners. The notion of purpose is evolving as new ways of doing business take into account the personal and professional impact of doing the right thing. Companies, and their leaders, want to invest in decision-making and innovative programs that have a long-term positive impact on the world around us. Newer business models, like the B Corp, make this possible.
5. Businesses are putting purpose before profit
Last year I was in Kenya for a convening of big brands and social enterprises. I was asked to facilitate a session with the big brands on partnership for social impact, and as I sometimes do in these scenarios, I led the 50 or so attendees in a “four corners” exercise where participants self select which corner of the room to stand in based on their response to: “What is the main role should business play in society?”
The answers were: (1) produce goods for consumption; (2) advocate for pro-business government policies; (3) inspire change in local communities; (4) invest in innovation.
These are tough questions for business execs to answer, especially those who work on social and environmental impact strategies for their companies. The conundrum of which answer to pick was intentional. The exercise encouraged the brand reps to truly think about what their role should be, even though many may believe their role is all of the above.
Which answer do you think everyone picked?
Of the 50 or so participants in the room, 49 traveled to the corner assigned to “produce goods for consumption.”
I asked several of the corporate execs participating to explain their answer. Generally, the rationale centered around the framing of the question: When you ask a company about its “main” role, it cannot deny that its main function is to produce goods (or services). That is why a business is a business (and not a charity, or government). When I pressed some of the attendees on the portion of the question that reads: “should play in society,” most agreed that at their core, businesses exist to provide a good or service in exchange for money. That is what makes their entity function.
A few did change their answers after we discussed what a business role in society looks like. That’s because while businesses exist to produce goods for consumption, they also exist for all of the other reasons we gave in our exercise. This may seem lofty, but it’s happening. The growth of social enterprise models is just one example of the recognition that making money and “doing good” are not mutually exclusive.
Joanne Sonenshine is Founder + CEO of Connective Impact and author of Purposeful Profits: Inside Successful Businesses Making a Positive Global Impact, out May 22.