If the reason for a company’s existence is just profit, they won’t be very profitable. Eventually the company probably won’t exist. The dollar sign isn’t a cause. It doesn’t stir the soul. Operating margins and returns on investment don’t excite and inspire. As an ultimate objective on its own, the pursuit of profits is hollow and unsatisfying. Such naked greed is one-dimensional. It comes from, and leads to, the naked selfishness of “what’s in it for me?”
Few people today want to buy from, work for, or partner with a company that’s only out for itself. That’s like taking a set of elaborate architectural drawings for a huge, luxurious dream home in to your team or organization and saying, “If you all work real hard, someday this will be all mine.” A few years ago, we came across a mixed-up manufacturer that had produced a slick little logo and published this mission statement — “In Pursuit of Profits.” We haven’t heard of that company for a few years now. I don’t think they’re in business any more.
If a company isn’t profitable and financially strong, it won’t exist long enough to serve any other purpose. We need clear financial objectives, goals, and priorities. We can’t afford waste and inefficiency. We need strong feedback and measurement systems to eliminate the “nice to do” activities and focus everyone on doing only the “need to do” work that produces profitable results.
That’s the paradox to be managed; companies that exist only to produce a profit don’t last long. And companies that don’t pay attention to profits can’t exist to fulfill their long-term purpose. Pursuing profits without a higher purpose or pursuing a purpose without profit are equally fatal strategies. These aren’t either/or positions to choose between. They’re and/or issues to be balanced. We need to get them in the right order. Many studies have shown that profits follow from worthy and useful purposes. Fulfilling the purpose comes first; then the profits follow. Profits are a reward. The size of our reward depends on the value of the service we’ve given others.
Tomorrow we publish September’s blogs in the October issue of The Leader Letter. This month’s issue features research on companies that are managing the purpose-profit paradox so that everyone benefits. You’ll also find insightful thoughts from leadership researchers and thinkers on the purpose-profit paradox. And this issue contains a bonus of “Thoughts That Make You Go Hmmm on… The Purpose/Profit Paradox” that wasn’t published in a blog.
A lifelong personal purpose of mine has been to help make people better for organizations and organizations better for people. That’s one of the reasons we partner with Zenger Folkman. Their leadership development work is on the leading edge. You’ll find more information in this issue on their upcoming Leadership Summit
Developing a personal, team, and organization purpose that’s aimed at serving others adds a richer sense of meaning to our lives. It taps into the deep craving we all have to make a difference. We need to feel that the world was in some way a little bit better off for the brief time we passed through it.