Single Bottom Line Sustainability
Doing Business on Purpose
Defining a company's social purpose helps
define its business strategy as well.
by paul gilding
In a global survey of trust in institutions
conducted for the World Economic Forum by research firm Environics,
companies ranked almost at the bottom, just above politicians and
below lawyers! In the same survey, key critics of companiescommunity
groups and NGOsranked at the top alongside the armed forces
and educational institutions.
This is by any measure a serious problem for the corporate sector.
But why is there this deep lack of trust; why this assumption that
companies will not act in the best interests of society? There are
First, its true. In recent decades, many companies have acted
in their own short-term self-interest at the expense of the society
that feeds them. They have pursued gain with an approaching of taking
value from society and their customers, rather than creating value
and taking a fair share of what they created.
Secondly, the perception has been driven by the internal and external
rhetoric of companies. The obsessive focus on shareholder value
has become a mantra of sorts. It has been painted as a reason for
existence of companies, rather than as a critical outcome and measure
The answer to this problem is not, however, more effective communication.
Spin wont fix this one. Yes, the problem is partly one of
crosstalk, but it is far more importantly a problem of intention.
The reality is that most companies are organized around the intent
to create shareholder value, and this permeates the entire corporate
apparatus, including language, incentive structures, culture and
Now lets be clear, creating shareholder value is a good thing!
It is an essential outcome if we want companies to flourish and
build value for society, and in doing so create opportunities for
their employees and communities. But, ironically, focusing company
strategy on creating shareholder value is actually a lousy way to
create it over a sustained period of time.
Its the same at a personal level. Money and material possessions
are definitely good to have. But if your life revolves around acquiring
them, rather than seeing them as useful contributors to a good life,
then youre likely to end up a very unhappy person.
At a personal level, knowing why youre herewhat you
stand for, what you hope to achieve, what values you hold and whats
important to youprovides an important framework for your life.
It provides a context for making sound decisions and balancing competing
demands on your time and resources.
Its no different at the corporate level. A company needs to
know why it exists. What is its purpose in society? What does it
want to achieve? What does it believe? How does its existence improve
the quality of life for the people it interacts with?
Once a company knows the answers to these kinds of questions, it
has the framework it needs to make decisions and run its businessand,
therefore, the framework it needs to create value for shareholders.
Another way of thinking about it is this: a companys role
is to create real value for society (not only financial value, but
more broadly improving quality of life). In return it receives a
fair share of the value it creates, by making a profit.
For example, does an auto company exist to make a profit by selling
cars? Or does it exists to provide people with safe, clean, convenient
and fun transportand because doing so is good for society
and for customers, the community wants the company to succeed and
is happy for it to make a profit?
So by defining a companys social purpose, we are really defining
its business strategy. Why? Because it answers the question: What
real and sustained value will we bring to society, through the hard
and inspired work of our people, and how will we gain our fair share
of that value?
Sounds like a sustainable approach to business to me.
Paul Gilding (firstname.lastname@example.org) is the founder and CEO
of Ecos Corporation, which provides strategic advice to corporations
on how to create value through sustainability.