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Does Doing Good In Business Imply Doing Less Well?

This article is more than 9 years old.

Many entrepreneurs still don’t understand that building a business culture today of doing good, like helping people (society) and planet (sustainability), is also a key to maximizing profit. Employees and customers alike are looking for meaning, not simply employment and commodity prices. Every company needs this focus to attract the best minds and loyalty in both categories.

I just finished a new book by Christoph Lueneburger, “A Culture Of Purpose,” which details how to build this new culture, and why it is becoming more instrumental in bringing about success, as well as sustainability, in organizations as diverse as Unilever and Walmart. He outlines a three-phase process to develop the necessary business culture of energy, resilience, and openness:

  • Nurture your current leadership strengths. Learn how to recognize, cultivate, and leverage the competencies of your current talent to develop your leadership team. Highlight leaders with business acumen as well as purpose as role models. Change leadership is a critical competency in the early stages of a transformation.
  • Hire the right team. Ask the right questions to identify the innate personality traits in potential new hires, regardless of level and function, to bring on board those most likely to succeed in and shape your organization. Employees with a purpose actually are easier to recruit and retain. They also tend to stay longer with the organization, reducing costs.
  • Craft your culture into an actionable plan. Create an environment that unleashes these competencies and trains and pushes them to the fore. Shape how people relate to one another and collectively go for what would be out of reach to them individually. Success is people moving from a reactive to a proactive focus on doing good.

In summary, the transformation starts with placing leaders with a purpose at the core, hiring talent with a purpose at the frontier, and then building and extending the culture of purpose both inside and outside the organization. I can think of at least five ways that this benefits the business, as well as customers:

  1. Products in a purpose culture more readily sell at a premium price. Evidence is growing that consumers are willing to pay at least a small premium for sustainability, and have started to demand a discount for “un-sustainability.” Companies can use this strategy to improve their profitability and competitive advantage.
  2. Doing good opens the door to a broader customer base. By adding to perceived value, a company attracts more sophisticated and demanding customers less expensively and more quickly. More and more customers choose a company based on their perceptions about the good that they do, as well as their price and service.
  3. Customer loyalty and trust go up for companies with a purpose culture. According to the Edelman 2012 Trust Barometer, 76% of global consumers believe it is acceptable for brands to support good causes and make money at the same time. We all know the cost of retaining customers is far less than the cost of new customers.
  4. Companies with a purpose culture have more productive teams. Doing business is a human process. Team members interact on a daily basis with the stakeholders of the company and the way they feel about the organization has a major and direct impact on how they perform their tasks and do their job at the end of the day.
  5. Investors like startups that foster planet and social responsibility. Investors believe these startups demonstrate more integrity and less risk, as well as being better positioned to deliver long-term, sustainable value to their stakeholders. Of course, investors still require a profitable business model, and the potential for high returns.

Thus doing good leads to doing very well, not less well. Lueneburger contends, and I agree, that the most effective and remembered leaders of our time, and the most successful companies, will be builders of cultures of purpose, which inspire the hearts and minds of people both inside and outside the organization. Is your personal leadership shining well or less well in this direction?