Three Weeks In: The profit dilemmaPosted on: March 1, 2015
We are heading to the end of the third week of the Impact Program.
As my pen ran out of ink today, I realized how much content we have been exposed to during our classes and lectures. We are constantly trying to get all of the information we are give down on paper. So, my advice is; if you are thinking about designing for social change, you’d better get yourself a bunch of pens first.
We have been hearing a lot about nonprofits and social entrepreneurs, which I think is awesome, since so far in my career I’ve only worked for large corporations. It’s been great for me to learn first hand how smaller companies and non-profit organizations develop their business plans, raise funds and set goals for the social impact work they want to execute. I am touched by the people we have met who live up to their mission and purpose in life. This is something that I can definitely relate to.
One thing I have come to learn is that companies are usually motivated by PR to do social good. It seems that companies not rarely are trying to buy forgiveness when they engage in addressing social issues. Moreover, it’s also said that companies’ main concern is to generate as much profit as they can, because they are shareholder driven, right?
Or maybe not right.
Let me share with you a several random thoughts on this issue:
It’s an often unspoken yet well-known truth that companies often engage in doing good because they think it will give them a facelift. Companies often work with social issues which aren’t related to their business at all. They’ll invest in a social cause using a filter of criteria like “what kind of a campaign can I create around it?” or “will my customer like it?” or “is it fashionable?” At the end of day, it’s all about promotion.
For many companies CSR comes from a marketing budget. My experience from working in the corporate world has taught me that most of the time you can tell a company’s intention based on where the money comes from. Still it seems to me like a very fragile investment. It’s hard to measure return on social related investment and most companies can only guess that it does good for it’s image. If business is bad one quarter and they have to cut expenses, it seems to me that a company will close the faucet where it’s draining money usually on a return they can’t measure.
I care about people, and as an individual working within a big company (in Brazil), I never think of giving up my urge to make a difference in people’s lives. I’ve never doubted the power of for-profit organizations to support solutions to social issues. They have the resources and I don’t just mean money, they have people power and knowledge.
I’m very interested in finding a way to combine social needs with business needs, so that both can benefit in a meaningful way. So, my question is this: what if companies could make more money by doing good? What if addressing social issues could help them bring competitiveness to their businesses? When societal issues become business issues, it’s not about promotion and reputation anymore. It’s about what companies do for a living.
If we criticize business, it’s because it’s plain to see that it’s not as good as it could be. I believe that in every problem resides an opportunity. There is nothing wrong with working for profit. Profit is not the purpose of any business, profit is the result and it keeps the machine running. One may criticize a company’s operations and business strategies, profit alone does not make a company bad.
What makes a company bad is not being accountable for the externalities of its business, is it being short-sighted or even blind when it comes to the responsibility they have on the network of stakeholders involved in its operation. In order to engage companies in doing social good we should meet them where they are. Denying profit won’t lead us very far, since it’s the fuel companies need to keep on going, it’s a condition for their existence.
It seems more effective to me to encourage them to consider a different approach. Making them aware that not all profit is equal. And that a profit that generates social good can actually help them be more sustainable way.
If any of this makes any sense to you take a look at this great article “Creating Shared Value” by Michael Porter and Mark Kramer. They say it’s a new business approach. I say it’s my new religion.