Can Companies Pursue Profit While also Making a Positive Impact?
Contributing positively to society while simultaneously running a business that makes a profit. It’s a nice idea, but is it really possible? Can you really combine genuine responsible business behaviours with a healthy bottom line? The question businesses may well find themselves asking is can we afford not to be thinking and behaving in this way. Why do I say this?
1. New Reality
The status quo is no longer sustainable. Business is changing fast, with rapid advances in technology, particularly social media and communications, disrupting every facet of organisations and companies. The ever-volatile business environment will continue to challenge, making it increasingly difficult to find sustainable growth opportunities. Similarly, attitudes within society and market forces are shifting.
Of course, profits are the lifeblood of any business but they are also the outcome of a business delivering value. There’s now a realisation that it’s not just perception of value but also the transparency of that value that is more complex. It is becoming a much more multi-faceted equation in the eyes of all stakeholders – whether that’s consumers or employees, investors or suppliers and partners, or governments and communities.
Doing well commercially can no longer be at any cost. Bolt-on CSR initiatives or marketing-led approaches alone will not justify an organisation’s credibility and credentials under an ever-watchful spotlight. Consumers are more switched on and sophisticated than ever before and can spot insincere attempts at so-called doing good. Businesses need to be authentic and must think and act differently to achieve sustainable success.
2. New Expectations
Organisations can no longer rely on or expect blind loyalty from customers and employees alike. With eroded levels of trust, organisations will find it harder to succeed simply on the basis of what they sell. Customers increasingly aren’t just buying the product or product brand, but buying into the company behind those products and brands.
A recent study by global information, data and measurement company Nielsen found more than half (55%) of online consumers across 60 countries said they were willing to pay more for products and services provided by companies that are committed to positive social and environmental impact.
Of course, the best businesses are driven by the needs of their customers, but they also understand the demands of the wider communities that enable them to operate.
And there is increasing evidence that customers will reward businesses who do that. But they need to be clear about what they stand for. Call it corporate ethos or purpose, it’s the north star that can become a source of distinctive competitive advantage if properly embedded and used as a driver of how the organisation conducts business at every level.
Likewise, attracting the best talent has always been a key driver to company growth and success, and these days employee engagement, especially with a millennial workforce, is fuelled not just by what you pay, but also what you say, and what you do.
Numerous studies, including the Millennial Impact Report from The Society for Human Resource Management, reveal millennials put company values high on their list of priorities when it comes to choosing an employer. Ninety-four percent of those surveyed said they wanted to use their skills to benefit a cause.
3. New Approaches
The real opportunity is to challenge the status quo, which requires new and progressive thinking. Organisations that are prepared to look beyond the confines of their own walls will find new opportunities for co-operation and progress.
US academic James F. Moore pioneered the “business ecosystem” approach which has been widely adopted in the tech community. Simply, organisations are embedded in a (business) environment, which coevolve with other companies and end up developing mutually beneficial relationships with customers, suppliers, and even competitors. Companies increasingly understand this and the limitations of unilateral behaviour. They do not exist in a vacuum and there is an acceptance that momentum and value delivery can be created by multiple contributors working in unison – including other commercial companies, governments as well as impact investors, and in the case of emerging economies, donor organisations.
More than a decade ago, an Economic Intelligence Unit survey found a clear majority of executives saying business model innovation was more important to their companies’ success than product or service innovation. Today, it appears most strategists are now tweaking, challenging or reinventing existing business models to keep up during a time of rapid convergence of enabling technologies, customer desires and business ecosystems.
Moving beyond business-as-usual approaches may feel uncomfortable, even radical for some, but those with the vision and courage to explore and adopt new thinking and models may well be surprised at the rewards and benefits that ensue.
We need to see business models that improve lives while still making a profit for shareholders.
4. New Frontiers
Yes, these may well be uncertain times and there are uncharted waters ahead, but the potential rewards are exponential in terms of re-shaping the dynamics and growth trajectories of markets and society alike.
In the book Green Giants, How Smart Companies Turn Sustainability into Billion-Dollar Businesses, the author E Reya Williams refers to companies which generate at least a billion dollars through services or products that have sustainability or ‘doing good’ at their core.
Tesla, Chipotle, Ikea, Unilever, Nike, Toyota, Natura, and Whole Foods are all compelling examples of how profit and positive impact can be combined.
The book’s findings were summarised by Forbes, and looking at Unilever specifically, the firm said in 2015 its sustainable living brands – companies contributing towards its goal of doubling business while reducing environmental footprint and increasing positive impact - were growing at twice the speed of others in its portfolio.
Whether you’re a large and established organisation or a young start up, embracing the Positive Impact mindset is an opportunity to go beyond traditional boundaries with new models and approaches that will outpace the old economy.
Thinking and approaches that are implemented and well- executed become the future leaders of their markets and categories.
It is my belief that we now have momentum towards a new model economy. The Impact Economy and a new age of companies powered by positive impact are leading the way – purposefully and of course, profitably.