Beyond profit: inspiring companies that are doing good and doing well

Feel good brands alone do not create value

Last year, I visited Balliol College at Oxford University. One of their famous alumni students is Adam Smith. Father of our modern day economics. The system that most of the western countries use.

One of Smith's most famous theories of that of the invisible hand. The invisible hand is a metaphor for how, in a free market economy, self-interested individuals can promote the general benefit of a society at large. In other words, many things organize themselves in a free market. Where supply and demand flow freely. Taxes are low and there are few trade barriers between countries.

Much has been said about the whether our current free market and economic system is broken, or not. Some believe that it is out of balance. Some believe that companies, especially those seeking to maximize profits alone are often unhealthy for our planet.

But what I find interesting is the question: are there companies that seem to strike a good balance between serving their shareholders, and serving all their stakeholders? Can we get more inspiration from these companies?

So, let's address one of the key questions of our time: how does a for-profit company balance between doing good for society versus the need to generate a healthy profit? In the last few years, vision and mission have often been replaced by purpose statements. Or, in other words: what would the world miss if we were not around as a company? Because, if we turn the question around, it becomes clear what our added value is.

Profit is for a company what oxygen is for a human. Every company needs it. Profit to invest in the future.

There are no perfect companies. We all have issues. But we can identify a number of companies are the frontrunners of balancing this Purpose versus Profit tradeoff.

I believe that it’s a bit easier for private companies to find a good balance. These companies don't have to show their numbers each quarter to the financial markets. They can allow a bit more time for their investments to pay off. The shareholders of Mars Inc. for instance take roughly 10% dividend from the company profits each year. The rest is reinvested into the business. Which is a significant number and allows its management to develop the company.

A short list of some companies that are interesting to follow and have proven to be economically successful and are holistic in their approach.

1. Patagonia (privately owned)
2. Ben & Jerry’s (public via their parent company Unilever)
3. Electrolux Professional (public)
4. Icebreaker (private)

Most of these are well-known. But there are many more! Some really great companies. Perhaps in your area. Companies that are small and work under the radar of the general public.

B-corp

If you're seeking more inspiration, it's interesting to check if a company has a B-corp certification. B Lab is organising this. They are a nonprofit network transforming the global economy to benefit all people, communities, and the planet.

Go to their website to learn more, and to search in their database for more inspirational companies: https://www.bcorporation.net/en-us/

Feel-good brands alone will not create value. There must be a real and proven value proposition. They have to generate a healty profit. It's the way we have structured our markets.

In my view, free markets have brought us many good things. Like the efficiency of the invisible hand. Good companies grow. Bad companies get into trouble. It has lifted many people worldwide from poverty to middle class. Poverty is a terrible thing for people and for societies. Free markets challenge people to give their best. It forces companies to be innovative in order to stay relevant. And of course our goverments need to apply corrections to keep the system healthy.

Let's continue to learn from companies that have found the healthy balance within our current economic system. Oh, and don't forget to buy things from them! Spend some of your money with them. It's how you can contribute directly to their value creation and make a positve difference.

Hope this inspires.

Paul Donkers

Paul P.J. Donkers is a sought-after global business coach and management consultant. More about his work and projects can be found via www.tencompany.org and via www.ikigaicoachinginstitute.com

Paul and his partners work since decades with?leaders to?assist them create more value. If you want to have a confidential conversation, just reach out to us via [email protected]