The shareholder approach to social responsibility, formulated by Nobel-Prize winning economist Milton Friedman, and succinctly put forward in his 1970 New York Times Magazine piece:
“There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game”
Unsurprisingly, a mantra which draws its critics, yet an approach which still sits at the core of businesses, industries and whole economies.
For the past 50 years the sole objective of maximising profits has become conventional wisdom, but at what cost? Escalating global warming and growing wealth inequality – as the richest 1% own half the world’s wealth – to name but two.
The foe to profit is purpose, and this has given rise to the profit-purpose paradox.
Point in case: Elon
No one perhaps feels this paradox more than Elon Musk. An individual who ideologically has a great purpose to save our world through his Tesla, SpaceX and SolarCity organisations. Yet his ambitions are time and time again hamstrung by shareholder scrutiny, over whether his organisations are making money.
An “excruciating” and “the most difficult and painful” year of his career Musk emotionally stated over the past fortnight, and the need for him to continuously fight the profit-purpose paradox perhaps sits at the core of his challenge.
Ending the Paradox
Beyond Musk, CEOs collectively changing the paradox top-down is unlikely, a bottom-up approach is much more likely. The past week has seen GCSE results being released across the UK, and the latest round of Gen-Z’ers embarking on their next career step, with many opting to enter straight into the world of work.
This next generation of workers are the canaries in the coal mine for the short-termist, profit focused way of work today.
The unequal and volatile nature of the world they are inheriting is leading to them demanding a purposeful connection with companies they work for and buy from. For them, having only an objective of profit maximisation is pointless and uninspiring.
Enter the purpose-for-profit organisation, a new type of business. The Salesforce 1-1-1 model a brilliant example of this, which has sat at the core of the organisation since its beginnings and a catalyst as it has grown at incredible rates.
The Activist Communicator
Regardless of your generation, the role communicators must play in delivering change, and ending the paradox, is significant and two-fold.
Firstly communicators must help ensure that an organisations purpose sits at the core of their company narrative, their branding and be a lead message they communicate to both internal and external stakeholders.
Communicating your existence is fundamental to your future success. Why as an organisation do you exist? And do your stakeholders know this?
But it does not end there, communicators must also be activists. That agent of change which helps ensure the purpose of an organisation is not diluted by profit-maximisation.
Communicators must work with internal and external stakeholders to drive purposeful change and create and deliver initiatives to demonstrate this.
Aligning purpose and profit is the art of today’s business, an exciting time we are entering where organisations compete to be the best for the world. Making sure you are part of it is will be vital to your future existence.
Image source: Pxhere