For-Purpose Business: Vote With Your Dollar

November 22, 2017

 

Business is good. When we hear that phrase, we usually think that things are going well, there are no major setbacks or crises, money is being made, times are profitable. But what if we change the emphasis a little to, “Business is good”? All of a sudden we move from stating how business is doing to what business actually is.

 

Historically, having a successful business platform came first. If that meant pursuing excellence or exhibiting professionalism, fine. But the point was making money and the belief was that you could only make money if you upheld certain values. You took pride in your work not based on what you were doing, like filing reports or making sales calls, but because you worked for a reputable company and you were well compensated. It did not matter if you were miserable, your day-to-day work was meaningless, women and minorities were being treated unfairly, and your company regularly exploited poor populations worldwide. If you worked for the General Electric Company in the 1950s, you were at least partially responsible for dumping thousands of pounds of polychlorinated biphenyls (PCB’s), an incredibly disruptive toxin, into the Hudson River every year. There was hardly any time for enlightened thinking. You did what you were asked to do and hopefully you were able to lead a safe and satisfying middle-class life outside of work.

 

One movement that has gained traction in recent years is “for purpose business.” Through this lens, business is seen less as chasing the dollar than putting values into action. As the how-much-money-are-we-making shifts into how-we-are-making-this-money, the question arises, why do business in the first place?

 

For Mark Zuckerberg, the well-known founder and CEO of Facebook, it is all about building community.  In a recent interview with Fast Company, Zuckerberg said, “I didn’t start Facebook as a business.” He added, “I built it because I wanted this thing to exist in my community.”

 

 

As with all for purpose business, Facebook is mission-driven first and foremost. Facebook strives to build a more connected, globalized community through the proliferation of free speech.  However, Zuckerberg knew early on that he would need to make money to satisfy this bold desire. “I came to the realization that the only way to build it out to what I wanted was if it had a good economic engine behind it,” he said.

 

I think an engine is a nice metaphor here. Rather than have a mission that works from within the framework of a business, the business works within the framework of a mission.

 

So why the shift in perspective?

 

One potential cause for the recent rise in for purpose business is that younger generations are more educated than ever. According to the U.S. Census Bureau, as of 2015 only 27% of Americans who are 65 or older reported having attained either a bachelor’s degree or higher while the same statistic is 32% for the 45-64 age range and a substantial increase of 36% for the 25-34 age range. Surely, a more highly educated workforce means that younger people, and younger companies in general, are going to be less willing to partake in meaningless work.

 

Zuckerberg experienced this when he started recruiting college graduates. “It became very clear that they wanted to work somewhere that wasn’t just about building a business, but that was about doing something bigger in the world,” he said.

 

A second catalyst of for purpose business, and perhaps tied in with higher levels of education, is the rise of what Neil deGrasse Tyson calls the “cosmic perspective,” or looking at our planet as less of a place to exploit for our own needs, and more of a place that we have to protect and preserve, knowing that we make up a tiny, albeit potentially destructive, part of it.

 

The advent of sustainable business practices makes the impact of the cosmic perspective apparent. According to the University of Wisconsin, this is when businesses focus on things like energy-use reduction, resource conservation, recycling, and pollution prevention. In 2014, 43% of executives saw sustainability as part of their companies’ mission, up a whopping 30% from 2012.  

 

Even investors have taken notice of this trend with the introduction of Environmental, Social, and Governance (ESG) criteria. Many investors no longer want to throw their money around as long as it provides a handsome return. Rather, people want to invest in companies whose practices align with their values, by taking care of their workers, having equitable hiring practices, giving back to local communities, and lowering their carbon emissions. “Green funds” and “socially conscious funds” that screen for these attributes now make this possible.

 

There is no evidence that doing the right thing is somehow less profitable. In fact, by putting purpose before profit, businesses like Facebook are able to create a work environment that fosters productivity and creates a positive impact in people’s lives. Such a business is bound to turn a profit as long as it runs a tidy operation and consumers are compelled to use its services, either because of their overall quality or by choosing them over another company’s based on ethics alone. After being embroiled in recent scandals, the folks over at Uber are experiencing a backlash from consumers who would rather rideshare with Lyft, even if the services themselves are not all that different.

 

Finally, a third and likely cause of for purpose business is the Trump presidency. Trump represents the kind of person that makes money ruthlessly and does it in a chauvinistic kind of way.  When we see his name emblazoned on buildings, when he talks about building walls, and creating jobs by continuing to exploit natural resources, we think to ourselves, is that really what making money is?

 

For purpose business is the flowering achievement that unequivocally says, “No!” Business can be a good thing, but we are the ones that have to make it that way. We can all do this by caring for what we do and make, for who we work with, for who we work for, and for the natural world. Profit will happen anyway.

 

-Sebastian Kolaj

 

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