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Does your business have a purpose beyond profit?

Let me ask you these 4 questions!

  1. What is your business’ purpose?
  2. Have you set a growth target for next year?
  3. At what point will you have grown enough?
  4. What is the social and environmental implication of you growing an extra 1%?

Most people I meet struggle first of all to articulate their business’ purpose in a sentence. If they do define the purpose, it’s usually a bland statement along the lines of to be number one in such and such marketplace”.

They will then quote their growth target, and tell me all their underpinning assumptions before defining “too much growth” as when they can’t support that growth with the necessary business infrastructure and inputs (IT systems, processes, human resources etc). Finally, I usually get a rather blank expression to the last question because it’s not something they’ve thought of before and “it’s impossible to measure”. In essence, they have implicitly and mistakenly assumed that all growth is good.

mh1This, for me, is unconscious capitalism; an addiction to economic expansion. An addiction which has left us chasing profits, constantly striving for more and never feeling satisfied.

In psychological terms, this is called being on the hedonic treadmill, i.e. as we make more money, our expectations and desires also adapt and rise in parallel, so that we’re caught in a trap of chasing growth without any permanent increase in happiness.

It’s no coincidence that human consumption is now outstripping what the earth can produce. According to the New Economics Foundation (nef) we need 1.5 earths to match our current demand for renewable ecological resources and services.

In 2014, we went into deficit with the earth in August and we’re on track to require the resource of two earths well before the middle of this century.

We’re quite simply living beyond our means and turning resources into waste faster than waste can be turned back into resources. The image above illustrates how individual countries are contributing to this ecological debt. It’s embarrassing to see the UK on the leader board, needing a land area 3.3 times the size of the UK to support our lifestyles.

There is good news however – we can all do something about it! But I think it’s helpful to understand how we ended up in this position in the first place.

Our preoccupation with profit was borne out of the industrial revolution and the creation of a new academic discipline – Economics. According to the economic model, business operates like a machine. You put resources in (capital, labour, land), process these inputs and get profits out. The purpose of business, as most economists see it, is to transform factors of production into profit for the benefit of the investors.

This view of the world is based on scarcity, win/lose, either/or, and survival of the fittest.

However, the world has become much more complex and inter-connected since those simple machine metaphors were first developed. Technology has increased the breadth, depth and speed of connections and we can travel to places faster than ever before. While economics is now evolving as a discipline such as with the rise of behavioral economics, the legacy of industrial economics lives on.

Compounding this view are common myths around money. Money was never meant to be something we accumulated. It was simply something we could trade. It was invented to bypass problems with the barter system as a substitute store of value. E.g. if you had a goat but needed fabric, you had to find someone with fabric that wanted a goat. It was much easier to exchange a goat for money and then to use that money to buy fabric from anyone with fabric to sell.

In Conversation with Nigel Dodd from Nesta UK on Vimeo.

This is something echoed by Dr. Nigel Dodds, professor of Sociology at The London School of Economics and author of the Social Life of Money. He argues that we’re experiencing a moment of realignment in the world’s monetary landscape and our perceptions of money are strongly influenced by language and culture. We talk about money as a noun (something we have and can accumulate) rather than a verb (something we do and exchange).

If you have 7 minutes, I thoroughly recommend watching the highlights from Dr. Dodds in conversation with Nesta where he talks about what money means to us and the rise of alternative currencies like bitcom, time banking and the Brixton pound.

I’m not saying that we shouldn’t make profit or that capitalism is bad. What I’m saying is, that we need to look beyond creating profit to creating “value” and add the value we create for people and the planet alongside the value for shareholders, i.e. the triple bottom line. This might be valuing social impact in terms of charitable donations and hours spent training people, or looking at ecological impact in terms of bags of paper waste per year, kilometers travelled by bike and your carbon footprint.

I strongly believe that a small shift in our thinking like this can have a BIG impact on our behaviour and create a better, more sustainable model of business. I’d like to leave you with a quote from John Mackey from Wholefoods which I’ve carried around in my diary for years to remind me of what matters;

Just as people cannot live without eating, so a business cannot live without profits. But most people don’t live to eat, and neither must businesses live just to make profits. 

I know that many of the business owners in the Women Unlimited community already have a purpose beyond profit and I’d love to hear if you have any advice for people in defining their purpose and how you measure your triple bottom line.

Thank you for all your ideas and contributions as always!

photo credit: deathtothestockphoto

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About Michelle Hawkins

Michelle is the Head of Happiness at The Flying Dodo. She designs spaces and experiences that promote greater Wellbeing and happiness in healthcare & hospitality using her knowledge of positive psychology, service design and behaviour change. Designing for happiness should be at the heart of every organisation. When people (staff and service users) feel happy, they become more resilient, motivated and engaged. To find out more about Michelle's story click on the icons below."

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