Iliyana's Blog

Making Profits Is The Only Reason Why Businesses Exist, Or Is It?

[fa icon="calendar"] 27-Dec-2012 08:03:00 / by Iliyana Stareva

An anonymous company executive once said:business and profits “Profit is like health. You need it, and the more the better. But it’s not why you exist.” I would agree with this quote 100%. A successful company is not defined by its profits. Especially today, with resources becoming more finite, companies need to reevaluate the core of their business purposes – is it simply just profits that matter, or is it finding a win-win solution that would correspond with the triple bottom line ‘people, planet, profit?’

In my opinion, Milton Friedman’s philosophy “the social responsibility of business is to increase its profits” no longer holds true because society increasingly demands corporate conscience.

Understanding how business and society are interlinked is now crucial; companies need to find win-win solutions for both as the Earth’s resources are becoming scarcer. It is not about reducing consumption, but about finding sustainable alternatives that benefit nature, our community and organisations.

True, sustainability efforts and their results are hard to measure, but becoming a truly sustainable organisation would for one mean increased public approval and understanding as well as improved brand reputation and faith in the company. These can lead to happier customers that would buy more, i.e. generating more sales.

Furthermore, social responsibility can improve employee commitment, loyalty and work satisfaction too, which can lead to increased work performance that would have an impact on production and so on the volume of sales. It is a cycle – one leads to another.

The benefits are numerous…

An example of a company that’s making great efforts in sustainability is Unilever – one of the most successful brands in the world.

Two years ago Unilever launched their Sustainable Living Plan aiming to reduce the environmental footprint of their products and to source 100% of their agricultural raw materials sustainably by 2020. So far Unilever has made some great progress achieving 24% sustainable sourcing by the end of 2011.

What’s absolutely impressive is that this multinational organisation has not only realised how the current prevailing ‘take, make, waste’ business paradigm is no longer fit for purpose, but is making real efforts for sustainability to become the living, essential driver of everything Unilever does.

In today's volatile marketplace, with everything changing at such a fast rate, it is the companies that avoid short-term harmful and environmentally wasteful behaviour that will secure long-term economic growth. 'Business as usual' will not survive.

As Michael Porter said at a conference in New York: "The old models of corporate strategy and capitalism are dead... [there is a need for a] paradigm shift from hurting to helping, with externalities turned into opportunities.” (Note, I know of this quote because I attended a lecture by Giles Hutchins, an absolute expert in sustainability; in fact it was his lecture that got me into sustainability. I fully recommend reading his book The Nature of Business: Redesigning for Resilience and following his blog.)

Fully adopting sustainability and embedding strategic CSR into the core of the business is, I believe, the model of the firm of the future; just as Richard Branson said “Those that continue with ‘business as usual’, focused solely on profit maximisation, shall not be around for long (and don’t deserve to be.)”

It’s not only about profits anymore…

New Year is just around the corner - I am hopeful that a lot of progress will be made in 2013. Are you?

 

Image courtesy of nokhoog_buchachon / FreeDigitalPhotos.net

 

Topics: Sustainability, Brands and Business

Iliyana Stareva

Written by Iliyana Stareva

Iliyana Stareva is Global Partner Program Manager at HubSpot, focusing on aligning HubSpot's expanding global teams to better service the agency partners and smoothly roll out changes to the program. She spends her free time dancing salsa or writing about Inbound PR, Inbound Marketing and Agency Business, expertise gathered from years of agency experience and agency business consulting across Germany, the UK and Ireland.

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