What is the profit vs. purpose argument all about?
For much of the history of business, companies have been able to operate on a purely money-making basis. However, with stark realities coming to light about how organizations impact their immediate surroundings and the planet as a whole, leaders have come to see that profits can’t be the only goal.
As information has become more freely available, the media and the general public can hold companies to account more easily. This means that smoke and mirror tactics are on their way out as organizations realize that honesty, integrity, and transparency are unavoidable.
Instead, businesses need to consider all stakeholders affected by their practices, not just their shareholders’ financial interests. Marion outlines what businesses are now asking themselves: “What is it that we bring? What is it that we contribute to society? And how do we integrate that into our strategy?” (00:39)
Europe as a leader in putting purpose first
Located in Brussels, the seat of the European Commission as well as many other EU institutions, Vlerick Business School has a front-row seat for purpose-driven initiatives. Marion points out, “For example, we see that in the European Green Deal which has been established and which clearly pushes organizations and companies to think about how we tackle the big challenges that we see as a society and that we see very much on the agenda of CEOs today.” (01:18)
Another clear example of the EU prioritizing purpose over profit is the June 2022 ruling that all new electronic devices sold within its borders must have a USB-C charging port. The thinking behind the ruling was entirely purpose-led – reducing costs for consumers and reducing waste on the planet.
By taking steps like this ruling, the EU is showing that it is not afraid to take on tech giants who veer towards the negative side of the profit vs. purpose argument. However, while some purpose-driven efforts are led by governing bodies, as we’ll go on to see, companies are also implementing similar efforts without external pressures.
How CEOs react to the question of profit vs. purpose
While companies can’t survive without profits, the need to make a positive contribution to society is also hard to ignore. Customers have never had more information at their fingertips, and the ethics of a company have become an increasingly important factor in customer loyalty.
Nowhere is this more obvious than in the Gen Z demographic. A massive 96% of consumers born between the late 1990s and the early 2010s said they were more likely to be loyal to brands that shared their values. For this group, the importance of topics such as social injustice, climate change, and plastic pollution is immediate and real. Therefore, they use their purchasing choices to enact change and sweep aside companies that work against their ideals.
In the midst of changing social perspectives, Marion frequently speaks to CEOs on the topic of profit vs. purpose, and sums up the mentality that links them all. “Clearly, performance has to be there but it should be combined with a strong purpose,” she shares. (01:44) A common mistake in organizations is focusing on the marketing side of their purpose without backing it up with substance. In the age of information, disingenuous efforts are hard to hide for long.
Marion briefly outlines how to successfully implement a purpose-over-profit mentality: “Today in the challenge of combining purpose and profit, we see how sustainability very much is embedded in the core activities of the organization, in the strategy of the company, and how basically purpose becomes a driver of value creation.” (01:50)
With consumers using purchasing decisions to support their ethics, the line between profits and purpose is blurring. Courses like the European Executive MBA at Vlerick Business School offer a roadmap for future CEOs to strike the profit vs. purpose balance and promote both financial success and social impact.
Vlerick Business School: Creating business leaders of the future
Inspiration from EU efforts is a key driver behind Vlerick Business School’s European Executive MBA. “The European Executive MBA will prepare aspiring leaders who want to understand what is going on in Europe and how Europe is leading the way in sustainability by being immersed in different ecosystems around Europe,” Marion explains. (02:07)
Each cohort learns through a blend of online and in-person classes, but the program is far more hands-on than simply hitting the textbooks. Students travel to Brussels, Paris, Copenhagen, Dublin, Madrid, and Zaragoza to dive deep into how cutting-edge European businesses are leveraging sustainability throughout their companies.
The European Executive MBA’s immersive experiences use real-life cases and simulations to explore topics such as:
- Business and its role in society
- Sustainable finance
- Purposeful and resilient organizations
- Innovative and sustainable venturing
- Sustainable supply chains
- EU horizons and social project
As a final note, Marion says, “We invite everybody who wants to be that leader that drives business forward to create a positive contribution to society and combine purpose and profit to join the European Executive MBA.” (02:35)
If you’re interested in learning more about Vlerick Business School, its innovative teaching methods, and student life, talk to past students directly on the MBAGRADSCHOOLS Ambassador’s Page.