PROFIT WITH A PURPOSE

Post independence we were cast in a socialist mould and so 'profit' became a taboo word. We failed to realize that profit in a business should not be condemned as greed but applauded as development. If companies do not make profit then how will they reinvest and grow and thereby create jobs for the society and prosperity for the country? This realization is gradually sinking in with globalization. 

As the World Economic Forum in Davos completes a golden jubilee we are now understanding a very vital point - companies do not do well because they make a profit, they make a profit because they do the right things. They don't work for only their shareholders but for all stakeholders including the employees, suppliers, communities, environment and of course the consumers. Successful businesses are not just patronized by consumers but are loved by the communities and are an object of pride for the nation.

How many times has your driver or your maid complained that it is becoming exceedingly difficult to make both end meet and they will have to pull their children out of school? And how many times have you interjected and reassured them that they need not do anything so stupid and you will take care of the schooling of their children? This is individual social responsibility. No, you are not doing it because of milk of human kindness but because you realize that if your employees are not satisfied your work will suffer. Your comfort and your growth is simply not sustainable otherwise.

Companies which are smart also think along similar lines, justifiably at a higher scale. Starbucks takes care of the health benefits and college tuition funding of its employees. Apple has a larger goal, it is committed to environmental protection.  Unilever has adopted a Sustainable Living Plan for developing countries. Tata has invested heavily into fundamental research and cancer care. They have all realized that profit should come with a higher purpose than just boosting the bottom line. 

Capitalism has resulted in 26 richest people of the world acquiring as much wealth as 3.8 billion of the poorest and so quite naturally it has fallen into disrepute. Add to this the carbon insult to the environment and capitalism appears even more villainous. This is neither fair nor equal and certainly not sustainable. And that is why their focus should change from shareholders to all stakeholders. 

Will having a purpose beyond the profit hurt the bottom line? This is what mediocrity teaches us and keeps us in a cesspool. Companies that embrace a broader mission and integrate that purpose into their corporate culture invariably outperform and punch above their weight. To them there is no difference between doing well and doing good. Klaus Schwab, the founder and executive chairman of the World Economic Forum has very aptly stated that 'A public listed corporation is not just a profit seeking entity but also a social organism'. Profit with a purpose is the new mantra of capitalism.