Businesses don’t make money, they make stuff like potpourri, peanuts and pillow cases. Why is it then that in the traditional definition of a business, they exist for the sole purpose of maximizing shareholder value, i.e. profits?
After the University of Illinois Social Entrepreneurship Panel, there was a really great presentation by Mats Lederhausen. He talked about how the biggest societal problems like poverty alleviation, the environment, energy, food, etc. are very long term in nature, but the purported solutions are super short term. In the traditional business model, profit is the key metric that drives short sightedness, but there’s so much more to it than that; we’re focused on measuring the wrong stuff. Mats talked about how ‘Purpose is on fire!’ and living in a hyper-transparent world makes it really hard for corporations to be bad.
Consumer attitudes are changing in a big way and they are caring about more than just price and quality (the key drivers of profit for companies). Consumers are people, they buy things and feel emotions. One could even go so far to say people buy things to feel certain emotions associated with that product or brand. Corporations, on the other hand, are legal entities that by and large do not have feelings and emotions. Good news though, this is changing right now. Corporations are responding to the shift in consumer attitudes and they are doing more to be good.
is paving the way making it easier to use to the power of business to solve social and environmental problems while making a profit. I know, it might sound kind of crazy, but you don’t have to decide between doing good and making a profit; you can do both at the same time! Business is the most effective tool to get things done and solve problems. Working business models are more efficient than governments and more strategic than non-profits when it comes to getting things done and making it happen.
Measuring good and social impact gets tricky. It’s clear we need to focus on measuring more than just profit, so what else should we measure? What else matters? Acumen Fund is spearheading the development of Pulse
, a tool to manage financial, operational and social data for social businesses. When you think about measuring what matters, what do you think is important? What makes a difference to you? What can business learn about measuring happiness like they do in Bhutan?
Businesses and even large corporations have the potential to do good while making a profit, but it’s really up to each one of us as consumers. We need to keep demanding more and having higher expectations of the businesses that we buy from. Businesses exist because we buy from them. Support the businesses you believe in with your dollars and make the decision to buy positively today. Make businesses more human and ask them to measure what matters to you.