Beautiful Leadership – Purpose and the Corporation

people planet profit

Graphic highlighting the “triple bottom line” concept of People, Planet, Profit

As regular readers of my daily posts know, I am focussed on #BeautifulLeadership, asking leaders:

“how can your leadership, your business, be more beautiful?”

This immediately brings up the question: “what do you mean by more beautiful?”

My response ?: “great question, what do you think?”

It certainly is an invitation, a provocation to consider how you can do and be more.

Today I will muse on the following statement, one that has already resulted in multiple carefully considered articles in and letters to the FT, and one that I would ask of any leader considering my provocation around being more beautiful in their leadership and with their business.

“Why should the citizens of this world keep companies around whose sole purpose is the enrichment of a few people?”

~ Paul Polman, outgoing CEO of Unilever, asked in Feb 2018

Perhaps inspired by that question from the CEO of one of the world’s largest corporations, Martin Wolff, chief economics commentator for the FT, wrote an article in the FT, Dec 11, 2018 :

“We must rethink the purpose of the corporation”

This piece quotes several recent books. Here I give you only two thoughts from Martin from his article:

“Profit is not itself a business purpose. Profit is a condition for — and result of — achieving a purpose.”

“These books suggest that capitalism is substantially broken. Reluctantly, I have come to a similar conclusion. This is not to argue for the abandonment of the market economy, but for better companies and more competition.”

Purpose and the Corporation

At the top of my article today, there is an image that refers to the now oft considered “triple bottom line”:

  • People
  • Profit
  • Planet

What sits more powerful than all of these, as Martin notes in his article, is that Purpose is the reason for a corporation to exist, not Profit.

I spent the first two decades of my career in corporations with a profit motive, during which time I found, empirically, that those businesses that had a clear Purpose, and those that also focussed on their People, were those that made the most sustainable profits.

Now, in recent decades, humanity has become, belatedly, more and more aware of the impact of our economic activity on the Planet we live on, and any business looking to be more beautiful must always consider their impact on the Planet.

I, therefore, ask businesses I work with to consider a different type of triple bottom line:

  • Purpose
  • People
  • Planet

Yes, I always ask them to focus on the Profit they will make, yet Profit, to me, is the outcome of a corporation, a business focussing first and always on their Purpose, their People and our Planet.

Recently I wrote about Patagonia’s Righteous Flywheel, noting that this corporation:

“The more it invests in its beliefs and its products, the better Patagonia performs, develops creative solutions, and maps out a blueprint for other businesses, big and small, to follow. “Doing good work for the planet,” Marcario (CEO of Patagonie0 says, “creates new markets and makes [us] more money.” That’s the Patagonia way.”

Purpose + People + Planet = Profit ? Discuss

Profit as Ugly Leadership and what Adam Smith really meant

In 1970, Milton Friedman famously said:

“There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits.”

Whilst I can understand any Economist working as an academic taking polarising views such as this, my opinion is that this is ugly leadership in our modern world.

Friedman’s views have broadly been at the centre of capitalist thinking for approaching five decades, and, I argue, has fostered a growing lack of connection to society and planet that has led to symptoms such as radically growing income inequality as well as loss of faith in capitalism as a model and so the rise of ugly populism across the world.

Now, Friedman is thought in this statement to reference the views of the founder of modern Economics, Adam Smith, yet as I outlined in “CEO Pay and Ugly Leadership“, Adam Smith’s work on such concepts as self-interest in “The Wealth of Nations” must always be taken alongside his other great work, “The Theory of Moral Sentiments”.

I consider the absolutist Friedman to be someone who clearly largely apes Smith’s economic thinking while ignoring his moral and societal thinking.

Now, in 2018, Jesse Norman wrote: “Adam Smith: What He Thought, and Why it Matters“, attempting to create a broader sense of how all of Smith’s written works integrate.

In “How Adam Smith would fix capitalism” in the FT in June 2018, Norman wrote of Smith’s philosophies :

“markets constitute a socially constructed and evolving order that exists and must exist not by divine right but because it serves the public good.”

“how can your leadership, your business, be more beautiful?”

Now, back to the top of this piece, in considering the question: “how can your leadership, your business, be more beautiful?”, let me ask you then, how could you put my triple bottom line first (Purpose, People, Planet), recognising Adam Smith’s concept of serving the public good, whilst still balancing the need for profit?

I’d love to talk to you about these questions, do contact me to talk them through. Perhaps it can be a podcast or an interview for a future post?

Also published on Medium.