How “Purpose Before Profit” Can Doom EBIDTA
Is there a more nebulous catchphrase in business than “Purpose Before Profit (PBP)?”
Most seasoned CEOs and business owners that I have assisted make a contorted, pained face when the topic arises. Given the daily battles to win with revenue, inventory control, productivity and overall profitability, to name just a few important KPIs, PBP sounds like something from Lord of the Rings. It sounds and feels intriguing, yet removed far enough from reality that it causes discomfort – more like hemorrhoids than a blister in PBP’s case.
I believe this anguish occurs for numerous reasons. First, and this is exacerbated partially by the conscious capitalism crowd, far too many top dogs are fed erroneous definitions, that PBP is directly correlated to “social responsibility.” Nothing could be further from the truth.
As an example, Dimensional Innovations – a rapidly growing Design, Technology and Build firm in Kansas City, KS – truly lives its purpose statement: “We liberate people from mediocre experiences.” That higher calling has helped guide the business to exponential growth and geographic expansion the past three years (along with other key factors).
ArrivedOutdoors.com can claim similar success. “Helping transitioning business owners find their ‘next’” has allowed the firm to create significant demand, attracting a tough audience, the C-suite, into its membership fold at an impressive pace.
Both of these stellar organizations have used PBP the way it was intended, as the strategic operating plan. Neither focused on social responsibility, though I know that both “do good” in their respective communities.
To be clear, while one-third of consumers say that they prefer to patronize a “conscious, socially responsible” business, the converse is that two-thirds of decision-makers don’t give a rip! They prefer new truths; remarkable, experiential moments; and business partners that can help them fulfill their purpose, help them grow, and help them be more profitable … particularly in the B2B world.
To makes matters worse, if a CEO dons rose-colored glasses with PBP and conscious capitalism, “joining the crowd” that feels warm and fuzzy, the actual business almost always suffers. How do I know? I have seen their respective P&Ls. The metaphorical eye is taken off the ball, i.e. the important daily levers of the profit ecosystem.
Rest assured, nobody on the planet believes in PBP more than me. However, I’m constantly fighting the “feel good” crowd, trying to bring them back to reality, where purpose – when intentionally designed and developed to fortify the P&L (not social responsibility) – can be the most effective driver of profitable growth there is. And, as the enterprise grows profitably, more jobs are created, and communities prosper. In the end, isn’t that behaving in a socially responsible manner?
NOTE: If you’d like to learn more about how purpose can make your P&L shine, please refer to Chapters 7 and 11 in Clean Slate, now available on Amazon.
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