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That Old Debate Again: Profit Vs. Purpose

Posted by Hemant Puthli on April 15, 2010

McKinsey & Co. launched a website called “What Matters” some time ago, where they aggregate “knowledge derived from convening some of the best thinkers from around the world” (in their words).

“The Debate Zone” under their “Social entrepreneurs” section recently featured the topic Should social entrepreneurs adopt the language and practices of business?with expert opinions presented on both sides, and inviting reader comments. Before reading the rest of this post, it may be useful to click on the link above and browse through the two main arguments presented by Matthew Bishop, responding in the affirmative, and by Bunker Roy, against the motion. My comment is reproduced below and addresses the arguments presented by both:

There should be little doubt in anyone’s mind that the methods, practices and disciplines of business management are universally applicable to all kinds of organizations/ initiatives/ projects, and are useful in improving the likelihood of success when applied to just about any human endeavor – be it in the private sector, public sector or social sector.

‘Best Practice’ business is not just about scalability, it is also about effectiveness and efficiency at any level of operation. About doing the right thing and doing it right. It is about a having a sound strategy and executing it well, regardless of whether you’re a small business or a mega-corporation, whether you’re fighting a war or fighting for peace, and whether you’re doing it for money or out of love.

Management sciences are not evil; profit is not a bad word. Inefficiency, corruption, exploitation and malpractice are. And they can be found in any organization. Social enterprises are not inoculated against such malaises.

Ethical rectitude is not the privilege of the social sector alone. A business can be run with as much integrity as an altruistic mission. Yes, with as much fire in the belly too! Passion is not a prerogative of the “purpose-oriented” (as opposed to the “profit-oriented”). There is as much fun (and romanticism) in starting a technological revolution from a modest suburban garage as there is in starting a socio-economic one from a rustic mud hut.

One tends to polarize such topics so that they result in good polemics, but quite frankly, both extremes are undesirable. Profiteering is as undesirable as sloppy philanthropy. Charity brings its own issues with it as elaborated in this post:

It is not impossible to seek profit through purpose. It is not so difficult for an enterprise to be purpose-driven and yet be profit-oriented. As individuals, we learn to achieve through our contribution to others. Similarly, mature businesses will seek to be successful through the success of their customers, stakeholders and other participants in their ecosystem.

At the time of posting this blog-post, my comment was submitted for moderation and yet to be published at the McKinsey site.


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