The Purpose-Profit Paradox
June 13th, 2008If the reason for a company’s existence is just profit, they won’t be very profitable. Eventually the company probably won’t even exist. The dollar sign isn’t a cause. It doesn’t stir the soul. Operating margins and returns on investment don’t excite and inspire. As an ultimate objective on its own, the pursuit of profits is hollow and unsatisfying. Such naked greed is one-dimensional. It comes from, and leads to, the naked selfishness of “what’s in it for me?”
Few people today want to buy from, work for, or partner with a company that’s only out for itself. That’s like taking a set of elaborate architectural drawings for a huge, luxurious dream home into your team or organization and saying, “if you all work real hard, someday this will be all mine.” A few years ago we came across a mixed up manufacturer that had produced a slick little logo and published this mission statement “In Pursuit of Profits.” We haven’t heard of that company for a few years now. I don’t think they’re in business any more.
But if our company isn’t profitable and financially strong, it won’t exist long enough to serve any other purpose. We need clear financial objectives, goals, and priorities. We can’t afford waste and inefficiency. We need strong feedback and measurement systems to eliminate the “nice to do” activities and focus everyone on doing only the “need to do” work that produces profitable results.
That’s the paradox to be managed; companies that exist only to produce a profit don’t last long. And companies that don’t pay attention to profits can’t exist to fulfill their long-term purpose. Pursuing profits without a higher purpose or pursuing a purpose without profit are equally fatal strategies. These aren’t either/or positions to choose between. They’re and/or issues to be balanced. We need to get them in the right order. Many values studies have repeatedly shown that profits follow from worthy and useful purposes. Fulfilling the purpose comes first; then the profits follow. Profits are a reward. The size of our reward depends on the value of the service we’ve given others.
What Business Are We In?
“The leader’s job is to help people see beyond what the organization is now to what it could become.”
In The Achieve Group’s (my first training and consulting company) early years we were clearly in the training business. Distributing California-based, Zenger-Miller, training programs, we provided a well-designed “hardware” package of video tapes and participant workbooks. The “software” was the training of our Client’s own internal support staff and/or managers to train others in their organization following Zenger-Miller’s well-scripted leader’s guide.
The Zenger-Miller programs were award winning, highly effective training. They had a solid research base proving that, when used as directed, it could produce dramatic individual behavior change. But many Clients weren’t getting the full benefit of this powerful training. That’s because they weren’t using it within a larger organization context and improvement process.
So Achieve began years of difficult learning, experimenting, and searching for ways to reposition and support the core training programs within a larger organization improvement effort. We redefined our business. Our purpose statement became “Improving Personal and Organizational Performance.” We saw ourselves as needing to provide consulting services that helped Clients put together broad, organization-wide improvement strategies. But that took us far from our core competencies and into the consulting field. We soon found ourselves being drawn into a business in which we had much less experience generating revenue through billable hours rather than packaged materials.
Eventually an “Implementation Architecture” and supporting services emerged. This allowed us to use the focus of customer service and quality improvement to build a series of executive retreat delivery services and internal coordinator training to support the use of our core training. So we put a broader, strategic implementation framework around our core tactical training. This highly successful process built on Achieve and Zenger-Miller’s experience and expertise in packaging complex, dynamic, interactions and human processes and developing internal delivery.
Many companies define their business too narrowly. That means they often miss new market opportunities. Or they don’t provide a broader level of service support to their basic products or services. So customers start looking elsewhere.
At the other extreme, some companies define their business too broadly. That often takes them beyond their core competencies into businesses they don’t understand. The results are often very expensive (and sometimes fatal) learning experiences. As with so many aspects of life, we have to keep checking our balance for ever-changing conditions.
Jim Clemmer is a bestselling author and internationally acclaimed keynote speaker, workshop/retreat leader, and management team developer on leadership, change, customer focus, culture, teams, and personal growth. During the last 25 years he has delivered over two thousand customized keynote presentations, workshops, and retreats. Jim’s five international bestselling books include The VIP Strategy, Firing on All Cylinders, Pathways to Performance, Growing the Distance, and The Leader’s Digest. His web site is http://www.clemmer.net/articles