The Purpose/Profit Paradox

Posted on June 13th, by Mats Comments Off on The Purpose/Profit Paradox

Over the course of my career and my continued journey into the land of why purpose beyond product matters so much the most frequent question is around profitability. Will I make money doing this?

It is of course a viable question. In today’s landcape where CEO’s average life expentancy is shorter than time between political elections it is understandable that CEO’s feel the pressure to produce enough short term results so that they can extend their tenure and hopefully enhance the future prospects of the company they are leading.

Behind the anxiety of this question lies an interesting paradox. We are trained in a mechanistic, linear way and are not appropriately prepared for the quantum world we now live in. A world where there are connections beyond imagination and where order and chaos are more related than perhaps some of us thought. We are trained to “put our mind to it”. We are taught that if we focus hard enough the rewards will come. Of course this is true at a general level. Effort matters. But we need to be clear on what we are focusing on. In the world of rewards and returns we need to focus on inputs rather than outputs.

Most important outcomes are rarely the product of focusing on those outcomes themselves. Take love for example. We don’t experience love by focusing on being loved. The same logic is true for most sports. If we focus on winning rather than each shot or each play, we probably lose. The same is true for profits. When we focus on how a company better serves its constituents the result is often that profit growth. But companies or people that set out to “just make money” often don’t. Peter Drucker used to say that “most analysts don’t understand businesses. They think business make money but businesses make shoes”.

This is the problem and the power of purpose. If you set out to have a purpose bigger than your product in order to make more money you will be disappointed. It won’t work. But if you are genuine. If you are honest, transparent and passionate about how your company is contributing to improving the lives of its constituents you will build stronger connections, more loyalty and ultimately higher profits. Welcome to the Purpose/Profit Paradox.