Company Value: An Alternative Approach

Ethical business and social entrepreneurship are more important topics than ever, but how can you strike a harmonious balance between profit and responsibility?

Whilst working to set up an ethical business-rooted startup, I’ve lost track of the conversations I’ve had where someone decides to play devil’s advocate. “In the end, all companies are about profit. Why should businesses ‘give back’?”

My first reaction used to be to argue my own case, passionately. Increasingly, though, I question that logic. We need to understand that there’s more than one kind of value when we talk about companies, and it’s not always financial.

If there’s one thing I’ve learnt in my own journey, it’s this: there is a better way of doing business, and it’s priceless.

A company exists to create profit

Capitalism incentivises invention, creation and ideas. It encourages us to work harder, to strive for bigger and better rewards. Companies grow and compete, and the lucky, clever survivors thrive in a free market designed for their expansion and success.

This is the story we’re fed, but when if we accept the dry, bare-bones view that a company’s only obligation is to its own bottom line, it’s easy to conclude that anything goes.

A company exists to create profit by whatever means possible.

From an ethics stance, this is where it gets more complicated, because it’s not just about money in the abstract. It’s about the way that profit was made: how products are made and who — and what — is affected by the generation of revenue.

Capitalism, as we know it, is selfish. When corners can be cut to increase profit, they will be. Fair wages and ethical production are suddenly inefficiency, and the alternative — unethical as that may be — is presented as an unavoidable byproduct of a consumerist society. Sure, it’s not great, but let’s just not look. The benefits — profit — outweigh the human or ecological cost.

Looking into selfish practices and trying to combat them can seem like a chore. It’s something toted by hippies and anti-capitalist protesters, inconvenient and yet another thing to feel guilty about.

In her recent study Professor Reczek noted a hypocrisy amongst consumers: we don’t agree with or accept unethical practices, but we’d rather be uninformed and carry on as we are. Reczek even drew a conclusion I’ve been afraid of for years: people who care deeply about ethical business are viewed as boring.

That wilful ignorance, however comforting, only encourages businesses to continue to behave unethically, and it ignores the amazing things that can be achieved when businesses and entrepreneurs decide to bury the idea that profit needs to be selfish.

Yet, every day there’s a fresh crop of news stories citing company fraud and unethical practices, but the outrage only lasts until the next scandal hits. There’s little accountability and so little backlash that it’s worth companies taking the risk of short term bad press and insignificant fines to take advantage of the profitability that doing business “by any means possible” brings.

For companies, behaving badly is smart. It’s efficient. It’s their business.

I believe — and I know I’m not alone in believing — that this really isn’t the best we can do.

So… what if we could change the way we look at the bottom line?

A company exists to create value.

Reframing the purpose of a company as a value creator, rather than profit creator, has the power to shake up the whole system and dramatically change how society functions.

Value creation is beautifully simple, and it’s not an exaggeration to say it works for everyone. Owners, inventors and shareholders benefit financially from their ambition, risk and work. The production staff and workers earn fair wages and are valued for their skills and effort. The consumers can purchase a product of guilt-free value, and there is global value in the ecosystems and raw resources that are conserved and managed.

The move to a value-driven economy will be slow, but I believe to fight it is to fight the future. Fat cats only concerned with the bottom line, at any cost, are slowly going extinct, and those of us concerned with the health and happiness of the planet are an exponentially growing breed.

So here’s our new bottom line: we need to leave behind the idea that for some to benefit others must suffer. We need to understand that there are far better ways to provide for all without exploiting the many. We need to push forward, not to make improvements on what already exists but to invent and explore new possibilities.

In our rapidly shrinking world, we’re running out of room. We’re becoming more intolerant of ‘stuff’: fast fashion, unethical plastics and casual disposal will soon be relics of days gone by. Not to mention the frankly mind-boggling developments that are being made in the fringes of science and design to build new tools, ideas and products that are changing the way we consume.

You don’t have to dig too deep to find examples of people already championing ethical practice: Zady are setting a New Standard in the huge fashion market; Thinx have revolutionised the feminine care industry, cutting down on plastic waste and helping millions of girls stay in school; even the giant Adidas, supported by Parley for the Oceans, have made trainers using thread developed from plastic previously dumped in the sea; and countless companies are thriving on the model of giving whenever they gain. These people, and the companies they create, simply need our support to believe that what they are doing has meaning, has purpose, has value.

Encouraging a system where value creation, not profit creation, is our goal, could help us to take charge of the future. We just need to get started.

What are your thoughts on alternative company values? Reach out to me on Twitter, or comment below.