Pursue profits + Impact with the same passion

September 12, 2020

A core part of your brand strategy should be to dedicate a part of every dollar you earn and/or spending part of your time in creating the world you want to live in.

In India, there was a law a few years back that mandated companies who are earning more than Rs 5 crores in profit/Rs 1000 crores in revenue/ Rs 500 crores in networth to spend 2 percent of their average profits on corporate social responsibility. While the law had the right intention and many wonderful non-profits in the country really benefited from this law. But the law came from an assumption that companies are not naturally aligned to create the society they themselves want to live in. Hence for profit companies have to be forced by a law to spend atleast 2 percent of their profits towards development of the overall society. Obviously a lot of companies found ways and means to not do it or worse still, spun off their CSR contribution into very distasteful and cringeworthy PR exercises.

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To reiterate my point, this CSR law comes from an assumption that profits and purpose lie at the opposite end of the spectrum. Companies are by nature only going to chase profit at the cost of everything else and more importantly, that is what will have companies thrive. Milton Friedman, one of the architects of modern capatilistic economies famously wrote an article that declared ‘The Social Responsibility Of Business Is to Increase Its Profits’. The underlying wisdom is that, chase profits and watch your company and society grow grow and grow. But every single indicator at our disposal shows otherwise. (I don’t like to quote data, there is too much of it floating around so I will leave it to your judgement to agree with me or not). Just look around you and you will see companies dealing with at-least one if not all 3 of these chronic problems:

1. High levels of customer churn (Sometimes over 60%)

2. Shorter lifecycles of companies and diminishing profitability

3. Very poor to non-existent employee loyalty

I find it impossible to not conclude that Friedman was completely off the mark. Infact, chasing profit without purpose or an inpsiring cause goes against human design. We are just not wired that way. We are and will remain emotional beings. We need purpose in our lives to thrive and to truly live. And so do companies we work for. I will go so far to claim that purpose and profit need to go hand in hand for any organization to thrive. It is not just a good way to do business but it is the only way to do business.

And companies around the world have started waking up to this very aspect. Aligning purpose and profits is essentially an exercise to expand who our stakeholders is and moreover, to relook at how are we going to add value to each of our stakeholders. Companies who are aligning profits with purpose is showing significant sustained success and in my opinion, will continue to see for the simple reason is that it works!

I am highlighting a few companies who have incorporated a clear purpose as part of their core business model. In other words for every dollar earned they spend a percentage towards their purpose.

1. Who gives a crap — 

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This australian toilet paper company is sustainable and eco-friendly and all of that. But they donate 50% of their profits, yes 50% of their profits towards building toilets in lower income communities around the world. To put this in perspective they donated $1.7 million in 2019 and $4 million in 2020. That is an over 100% growth in their profits in one single year. Considering they are a B certified corporation, I believe their numbers.

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2. Divine Chocolates — 

A Ghana based farmer owner cocoa company which has launched its own chocolate bar brand and supplies fair farmed cocoa beans to companies around the world. It has recently been certified as a B corporation and is a model being celebrated worldwide for equitable distribution of revenue leading to a strong and trusted brand. It became profitable in 2006 and has been steadily growing its presence globally.

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3. Love your melon — 

An aparrel brand in the US has this as their mission statement: “Love Your Melon is an apparel brand dedicated to giving a hat to every child battling cancer and supporting the fight against pediatric cancer.” They have followed it up by donating 50% of their profits after taxes to specific non-profits. According to their website, they have till date donated over $8.3 million.

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While I can go on and on with more wonderful examples, these brands are still outlier brands even though they are doing extremely well and will hopefully become more mainstream brands in the future. However, very large brands are also starting to understand the importance of aligning themselves around their purpose. While their steps are small, they are significant. Unilever has launched a massive campaign around reducing food wastage and delivering positive nutrition by reducing calories, salt and sugar across all their products. Check out this page by Unilever where they have clearly laid out their promises and intention. Coco cola has started centering its business around water stewardship with a host of initiatives around replenishing and recycling water. While both these companies have been at the forefront of practices that have been damaging our planet, it is clear that they are starting to realign themselves around a purpose that will inspire each of their stakeholders to create a world they want to live in.

I am starting to see a future where companies are measuring both their profits and impact created with the same zeal. Pursue both as they will compliment each other instead of eating into each other.

(Main Image Credit: Photo by Aleksandar Pasaric from Pexels)

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