Inside the Profit and Purpose Economy

by Team Serious

Balancing profit and purpose can feel like an impractical tightrope walk, especially when we’ve been taught that compassion can’t pay the bills.

There is a magnitude of problems that the world faces on the daily. What used to be plot lines for Hollywood disaster films are now everyday headlines—from the climate crisis to political unrest. We’re way past the point where these issues can be eradicated by philanthropic endeavors or a viral prayer hashtag. However, the silver lining is that some of the private sector have come together to stop being the problem and start becoming the solution.

Many of today’s thriving companies have an underlying thread: their ability to balance profit and purpose. Gone are the days when a company’s success was solely measured by the novelty of their ideas or how many products they sold compared to others. At the end of the day, today’s consumers aren’t asking which brands give the most bang for their buck but rather who the billionaire CEOs behind it all are. And do they care what kind of impact they make on the world?

But while purpose mobilizes people in a way that financial gain alone never will, a company can’t forgo profits entirely if it wants to survive. It’s no surprise that B Corps—some 2,500 certified companies that set the benchmark for social and environmental performance—has become extremely appealing to buyers, professionals, and investors alike. Counting names such as PatagoniaBen & Jerry’s, and Kickstarter, B Corps is redefining success and making sustainable consumerism the new norm. Theirs is a well-oiled machine that just works—as reinforced by Patagonia’s recent valuation as a $1 billion retail powerhouse, and Kickstarter’s revenue of $7 million per quarter.

Of course, the question of “to B or not to B?” isn’t meant to magnify the silos between for-profit and for-profit only businesses (and by no means is it a prerequisite to be a “good” company either). Instead, the rise of such companies proves: 1.) That businesses have no excuse to ignore their social responsibility, and 2.) That you don’t have to choose between being the good guys and putting food on your table.

More than a tagline

Today’s definition of “purpose” stretches far beyond robotic “mission statements” and taking your staff on a tree-planting weekend once a year. You have to integrate it into your company’s very DNA, using it as the glue that binds everyone to create economic and societal value together.

America’s leading yogurt brand Chobani is a prime example of a business that reaps generous rewards from investing in a purpose-driven company culture. On top of their strategy of hiring refugees and paying them twice the minimum wage, founder Hamdi Ulukaya also launched an equity sharing program that gives employees a 10% share of the business. It’s easy to see how it can benefit refugees, but it’s as much of a win for Chobani, too. And true enough, their factories—lined to the brim with a welcoming optimism—are a far cry from the ruthless sweatshops of yesterday.

Start with a “why”

There are other ways to build a purposeful company that don’t involve giving away brand equity. Oftentimes, it’s your company’s origins that will help point you to your core and reveal the “why.” Take Sephora, for instance. The beauty brand started out with the desire to sell cosmetics, but that desire is further mapped out to their social impact purpose, which is to “inspire confidence and fearlessness.” Sephora looks at the entire customer journey and determines how best to deliver—from their diversity-focused ads to the way they greet every person who walks into their stores. It’s a cause that’s certainly much bigger than make-up. All in all, a good purpose is grounded in something your brand can authentically deliver—even if your poster child is a tube of lipstick.

Create shared value

Like we said, a key trait of profitable and purposeful companies is that they’ve found a new way to achieve economic success—one that includes providing more seats at the table for everyone. Case in point is e-commerce platform Etsy known for their focus on handmade goods. In 2013, the company made a commitment to support new job opportunities through their Craft Entrepreneurship Program, which sponsors free courses for unemployed folks. Among some of the classes is how to set up and manage their own store on Etsy, thus adding more artists and artisan sellers to their platform. Indeed, this is shared value at its finest. With some creative thinking, any brand can address gaps in society while adding to their economic growth.

Walk the talk

Achieving profit and purpose is an uphill journey, and there will be many skeptics along the way. With terms like “greenwashing” in people’s everyday lexicon, it’s clear that customers can sniff out a fraud from a mile away. This is particularly true for companies who have been known to be more profit-driven in the past, so it’s important that you’re prepared to engage even the cynics. For Levi’s, a denim brand that prides itself in democracy and inclusion, it means maintaining a track record of principled decisions—no matter how hard. In 1992, the denim brand became the first Fortune 500 company to provide same-sex partner benefits to its employee when no one else was doing so. To this day, they continue to express their democratic roots through campaigns like their recent “Use Your Vote,” which urged citizens to maximize their voices in exacting positive change. And in today’s political climate where it’s easier for brands to stay neutral and avoid pissing off Trump fans, this valor is exactly what makes any brand a cut above the rest.

 

At the heart of everything, this newfound “purpose economy” creates purpose for people. It satisfies the critical need for humans to belong to a community, and achieve something bigger than themselves. In turn, companies are rewarded with better performance too. Yes, it sounds like the stuff of fairy tales, but there is hard proof in nearly every industry throughout our culture that this radical shift already in progress. It is not charity nor is it the workings of billionaires pressured by angry Twitter users into distributing their wealth. It is simply better business, the way that it should be.

The Serious Review Vol. 001: Outliers is finally out. Get first dibs here.

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