Making Enough

Making Enough

Several years ago, I participated in the Global Alliance for Banking on Values conference that was taking place in Paris. One element that the GABV always incorporates into its program are learning journeys. These are typically group excursions to meet a client of a values based bank and hear about their story. I’ve been lucky enough to do these in several countries including Bolivia and Germany, and they are always amazing. 

For this particular learning journey we set out to meet local entrepreneurs who had been running a local organic food store for many years. They had over time grown tremendously and shifted their business model to include some production, more distribution, and more retail. We checked out one of their retail locations and then headed back to their head office for some q&a with the management team.

The presentation they provided was great. It showed the history of the company, how they had progressed, and some key partnerships they had formed. The group that was listening was a broad mix of values based bankers from around the world. From CEOs to business account managers to human resource experts - all from values based banks or credit unions. The group started asking some questions. They started out mainly focused on what the company presented. Then the group shifted to the financials because the team hadn’t actually talked much about them.

• What is your profit margin? 
• How much do you make? 
• What is your gross profit?
• How do you determine best pricing?
• What is your profit margin? (yes, again!)
• How much do you make? (yes, again!)

At first, the management team answered a little but without many details. Hence the group kept asking the same questions. As someone in the audience watching the back and forth, it was quite fascinating. Something was happening between the management team and the audience. There was a clear gap occurring despite the fact that everyone was very supportive of the model.  Clearly this organization knew how to run a business given their history and growth, and yet they hadn’t provided much financial detail at all.

After quite a few minutes of this, the CEO took a deep breath, paused and looked at the group. He said very calmly: “We make enough”.

Pin drop moment.

He repeated: “We make enough”.

The room went silent. Everyone took it in.

He continued:

“Our purpose is to maximize the number of people who can access local and organic food, and lead a healthier life. We make enough to be sustainable as a business and to maximize our impact. If we raised prices as high as we could, we would maximize profit but not our impact. We make enough.”

The group listened and, given how quiet it was, they were likely all repeating the phrase in their minds. I suggest you reread it again too. Go ahead….

Simple and clear.

At the time of this conference several years ago, I had already spent many years allocating capital for social change and believing and understanding that you can focus on both purpose and profit. Frankly, everyone in the room had also been doing this for some time. And yet, this individual summarized it so clearly, so crisply that his words remain front and center ever since.

Over the past several years it has become clearer even in mainstream business that your true purpose as a business cannot simply be a tag line. It is about stakeholder value creation being embedded in the business model. Cooperatives, and credit unions, of course are more inherently designed to support stakeholders by focusing on people planet and profit. There of course still needs to be profit. Profit itself isn’t a bad thing. But linking it to purpose finds the right balance between the value components being maximized.

It is easy to get caught up in focusing on maximizing profit. I have found over the years that this one entrepreneur’s clarity has always kept me on track to make the right decision to “make enough” while maximizing impact in the community.