Profit, Purpose & Social Impact: How Do They Fit Together?

South Africans are undoubtedly a passionately patriotic nation who have a deep love and concern for their country. This passion to see South Africa prosper to its full potential continuously fuels individuals and businesses to contribute to the development of the economic landscape in South Africa. But where does one start?

Business, which was historically about bottom-line profits, is being bombarded with codes of conduct, social responsibility and the buzzword ‘purpose maximisation’. It is no wonder that good intentions so often fly out the window or are mismanaged, resulting in a diluted or ineffective attempt to contribute to social development.

Three main aspects that contribute to effectively using business as a force for good.

  1. Profit
  2. Purpose
  3. Social Impact

What’s profit got to do with it?

Along with a clear sense of purpose and realised social impact, profit is the cornerstone of the three pillars for any business that wants to commit to a better and more sustainable form of business.

Profit is what gives any corporate organisation its credibility. Without a profit, no business can claim to be healthy, growing or making a difference in their sphere of industry. Profit is essential for ensuring sustainability and longevity – of the organisation and of its social impact.

It is from its pool of resources, skills and networks that business can invest in those with less. If social impact and a more prosperous South Africa for all is where we’re heading, a commitment to solid financial management and a regularly realised profit, is a good start.

Purpose

Lisa McLeod, a writer for Forbes, writes “People want to make money. They also want to make a difference. Creating a culture of purpose is how you do both.”

Business leaders who have had this revelation of the human bias towards wanting to be part of something bigger than themselves have much greater success in the marketplace due to passionate personnel with a drive to achieve a greater purpose.

In 2003, Dr Jeffrey Spahn wrote “A New Capitalist Manifesto? Imagining Business in the 21st Century.” It focuses on the need to – and value of – balancing profit with purpose, and it contained a prediction: businesses in the future will recognise that the most successful companies are the ones that recognise the relationship, and can strike the appropriate balance, between higher purpose and financial success.

And What About Social Impact?

Social Impact is broadly defined by the Centre For Social Impact as follows “the net effect of an activity on a community and the well-being of individuals and families.” All businesses have some kind of an impact on society, either positive or negative. If this is true, shouldn’t all businesses intentionally ensure that their impact is net positive?

It is the way in which any company or organisation succeeds in lifting the standard of living, by creatively and honestly investing in the prosperity and potential of any given group of individuals.

Social impact is far more than the clichéd understanding of what it means to ‘make the world a better place’. It is a real-world, on-the-ground, and hands-on approach to creating opportunities for ordinary men and women to reach their full potential, often against great odds.

Solid and sustainable social impact is neither removed from those being impacted or those making an impact. I fact, it creates a reciprocal beneficial connection between all parties, whether in the short or the long term.

For businesses to understand and strive towards a bigger and more meaningful social impact, is at the core of what nation building is all about. Being a part of the corporate core of South Africa that not only cares about profit today, but also investing into the fabric of society, is what will build our country into more than what it is now.

Three-Pronged Approach

Within a business’s strategy and vision, it is essential that profit and purpose be coupled with social impact to avoid the perception of self-interest, especially to the new generation of leaders who, according to Harvard Business Review’s book, Passion & Purpose, ‘aren’t entering business solely for financial gain, but as a way to find meaningful work and make a positive difference in the world.’

It can also be said that businesses focused solely on social impact and purpose without a focus on profit have great intentions, but lack the financial capacity and resources to achieve significant impact.

On the other hand, businesses that model themselves around profit and social impact without any element of purpose are driven by legal compliance. This often results in impulsive, ineffective contributions that meet bare minimum requirements, achieving diminished impact

It is essential that all three elements are addressed in a business’s strategy and diffused into the company culture. Omitting just one of these elements often results in quite the opposite effect being achieved, with perceptions and reputation being tainted as well as our country not benefiting in the long-term.

As Robert F Kennedy Jr said in 1966 “Few will have the greatness to bend history itself, but each of us can work to change a small portion of events. It is from numberless diverse acts of courage and belief that human history is shaped.” It is these acts of nation building which businesses are taking that will write the history of this generation as they focus on using business to make South Africa a better place for everyone.

Contact us to join the ranks of businesses taking our country from strength to strength, using business to build our nation.

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