The world urgently needs businesses that have a higher purpose than profits.
The problem with industrial capitalism today is not the profit motive; the problem is how the profit motive is usually framed. There is a persistent myth in the contemporary business world that the ultimate purpose of a business is to maximize profit for the company’s investors. However, the maximization of profit is not a purpose; instead, it is an outcome. We argue that the best way to maximize profits over the long term is to not make them the primary goal. Profits are like happiness in that they are a byproduct of other things. Happiness, for example, can stem from having a strong sense of purpose, meaningful work and deep relationships. Those who focus obsessively on their own happiness are usually narcissists — and end up miserable. Similarly, companies need a purpose that transcends making money; they need sustainability strategies that recognize that you can make money by doing good things rather than the other way around. Purpose is not about corporate strategy or tactics; these are both means to ends. Purpose is also not about social responsibility, which is simply a tool for managing reputation. Purpose is not even about corporate mission, which might be nothing more than an aspiration to dominate a particular marketplace. Rather, purpose is a spiritual and moral call to action; it is what a person or company stands for. Many traditional industrial corporations have been constructed around extrinsic motivations like financial reward or recognition or fear of reprimand or losing one’s job. It has long been known that extrinsic motivation can only take you so far: Weaving intrinsic motivation into the fabric of an organization’s culture is therefore crucial. There is mounting evidence that employees throughout the world are hungering to find and bring their values to work. But they have not felt comfortable in doing so, as it may not appear “businesslike.” We believe it is possible to build and lead companies that retain a deeper purpose. For example, the Tata Group had been conscious of its spiritual purpose from its start in the 19th century. Founder Jamsetji N.