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The Business of Purpose

Has the purpose of business become a market in its own right, with more effort focussed on branding than being the change?  

It was 20 years ago in 1996 when founder Terry Hallman delivered his paper on people-centered economics to Bill Clinton, .  

Clearly some people were doing quite well. Capitalism had managed to create a flourishing middle class, yet its profit maximising focus had left many to suffer and perish.

With its fundamental predicate that no person is disposable, the P-CED position paper would challenge a widely held belief that the only responsibility of business was to return a profit to its investors, the Shareholder Value Myth   All profit could be applied to creating social benefit, if this was the will of the shareholders and directors and was declared in the company charter. We called it Profit-for-Purpose.

A persisent theme of the practical application that followed was that other people really matter, as in the case of Crimea's Tatar community in 2003.

Once a nation or government puts people in the position of defending their own lives, or that of family and friends, and they all will die if they do nothing about it, at that point all laws, social contracts and covenants end. Laws, social contracts and covenants define civilization. Without them, there is no civilization at all, there is only the law of the jungle: kill, or be killed. This is where we started, tens of thousands of years ago.

By leaving people in poverty, at risk of their lives due to lack of basic living essentials, we have stepped across the boundary of civilization. We have conceded that these people do not matter, are not important. Allowing them to starve to death, freeze to death, die from deprivation, or simply shooting them, is in the end exactly the same thing. Inflicting or allowing poverty on a group of people or an entire country is a formula for disaster.

These points were made to the President of the United States near the end of 1996. They were heard, appreciated and acted upon, but unfortunately, were not able to be addressed fully and quickly due primarily to political inertia. By way of September 11, 2001 attacks on the US out of Afghanistan – on which the US and the former Soviet Union both inflicted havoc, destruction, and certainly poverty – I rest my case. The tragedy was proof of all I warned about, but, was no more tragedy than that left behind to a people in an far corner of the world whom we thought did not matter and whom we thought were less important than ourselves.

We were wrong.

Profit With Purpose

Today purpose is business in itself.  In Huffington Post,  it's Profit-with-Purpose sponsored by PwC, a subtle shift reverting back to shareholder value, Companies are able to create social change without redirection of profit.  "What is the purpose of business?", asks Isabel Rimanoczy, reverting to CSR and the triple bottom line -.People Plenet Profit..  

Have you ever seen a business which delivers results in that order, putting people and planet before profit?

"Purpose beyond profit" is the mantra, with scant evidence of applcation by any corporation  Search Twitter for this term and you'll immediately find a sponsored ad from Richard Branson who is "proud to invest in business with purpose beyond profit"

Profit with Purpose clings to the belief that people will buy more from you, if you can persuade them that you're doing something other than maximising profit, Few have invested more  than Branson when it comes to doing that.

The New Bottom Line

My article for McKinsey  - Reimagining Capitalism: The New Bottom LIne related the arguments we'd made for business with a primary social objective,  It alluded to the inadequacy of consequential social responsibility when it came to the more intractable issues. In this case an escalating crisis in Ukraine:

This is a long-term permanently sustainable program, the basis for "people-centered" economic development. Core focus is always on people and their needs, with neediest people having first priority – as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine's poorest and most desperate citizens, rather than a "top-down" approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first -- not secondarily, along the way or by the way.

It was Pope Benedict in 2009, with his encylical Caritas in Veritate who would describe the need for a new entity where profit is applied for the benefit of society.

"This is not merely a matter of a “third sector”, but of a broad new composite reality embracing the private and public spheres, one which does not exclude profit, but instead considers it a means for achieving human and social ends."

Turning this on it's head, in the Guardian, "The New Bottom LIne" means profit is no longer a dirty word.

Becoming a B Corporation

It's The Guardian who asks whether becoming a B Corporation is only for the sustainability elite

We didn't want to become a B Corporation but in 2009, I did approach them seeking collaboration for our practical work in Ukraine, sharing our P-CED model of business for social benefit.  Taking this as a request to join, they told me they had no way to certify UK businesses.      

“Unfortunately we are not at a point yet where we are able to certify companies outside the US.  But many foreign companies are still using the B Ratings System to benchmark their own performance and help start similar conversations in their countries. “

What we shared in 2009 with B Labs resurfaced recently when one of the founders of the B Corporation movement asked - What is the role of business in society?.

"By practice or by law, the operating system and the culture of business and capital markets became Milton Friedman’s maxim that the social responsibility of business is to maximize wealth for stockholders. That operating system functions too often at the expense of the interests of society and even the long-term interests of stockholders. "

"We are beginning to see an evolution in capitalism, from a 20th century view that the purpose of business is to maximize value for shareholders to a shared view that the purpose of business is to maximize value for society. Significantly, this transition is being driven, not by government regulation, institutional blame, or partisanship, but by market-based activism and personal responsibility. We are witnessing an historical moment when, rather than simply debating the role of government in the economy or the role of business in society, people are taking action to harness the power of business to solve society's greatest challenges. "

That's a twenty year  gap between the practitioner and the observer, as we've also seen in Pamela Hartigan's revelation that mainstream capitalism is the real problem.

Torez in the Sunday Times

The state of institutionalised childcare in Ukraine featured in February 2011 when the Sunday Times and Kyiv Post published a story about Torez orphanage:

"Under the charter of the United Nations, of which Ukraine is a founding member, all people have rights irrespective of sickness or disability. But this does not seem to apply at the Torez children’s orphanage. The pervading understanding appears to be: “These children are no use to anyone so we may as well let them die.” This was the same excuse given by the Nazis for leading thousands of mentally ill patients to the gas chambers. It is not an attitude that can be tolerated in 21st century Europe."

Five years earlier  Torez had been the subject of Death Camps, for Children which as well as raising awareness of the problem. had sketched out a plan to place all these children in loving family homes. It made no secret of the root cause of the problem:

"Excuses won’t work, particularly in light of a handful of oligarchs in Ukraine having been allowed to loot Ukraine’s economy for tens of billions of dollars. I point specifically to Akhmetov, Pinchuk, Poroshenko, and Kuchma, and this is certainly not an exhaustive list. These people can single-handedly finance 100% of all that will ever be needed to save Ukraine’s orphans. None of them evidently bother to think past their bank accounts, and seem to have at least tacit blessings at this point from the new regime to keep their loot while no one wants to consider Ukraine’s death camps, and the widespread poverty that produced them.."

As you may read in the Sunday Times article:

"One champion of these needy children is billionaire Rinat Akhmetov. He has set aside millions to close down every state children’s home in Ukraine by 2017 and replace it with international-standard foster homes."
It hasn't happened of course. Yet the transition of children from institutions to foster care had been the primary focus of the 'Marshall Plan as I relate in Every Child Deserves a Loving Family Home
In 2014 the bodies of passengers on Malaysian Airways flight MH17 fell in the garden of the orphanage at Torez.
Before our approach to B Labs , we'd called on both USAID and the EU to support this purpose driven initiative.
In 2009, I'd offered to show thee way for Virgin Unite  after Richard Branson said business should focus more on social problems
"This is what we’ve been doing in Ukraine for 7 years to reach the point that our efforts have persuaded government to adopt changes to childcare policy. We’re a small business rendering 100% profit to do something about the plight of orphans and street children in Ukraine."
Branson has no more interest now than he did then in business with "purpose beyond profit", but he's there to opine on what should be done when Ukraine's revolution shifts to armed conflict and another of the "insanely greedy oligarchs" asks if capitalism can deliver social as well as financial return.