Last week I ordered People Over Profit by Dale Partridge. As you can expect the premise is that companies need to care about more than just the bottom line, profit. It is a very interesting read because it addresses the great void that we have with the market and our desire for something better. I think that there are a number of things that are very interesting and may write about a few of them as I go through the book but there is one central theme that permeates all of these kinds of books and articles. That companies will be more profitable if they care about more than just profit.
Think about that. The assumption is that companies only care about profit and they will do anything to be more profitable. People Over Profit states a number of times (even alludes to it on the back cover) that companies will be more profitable if they focus more on people. They we must ask: If companies only care about profit and focusing on people leads them to more profit, why don’t they care about people on their own?
The argument collapses on itself. If a person only cares about X but are able to get more X by focusing on Y then they will focus on Y all on their own. The real question is that if we believe that companies will be more profitable by focusing on people or planet or purpose (insert buzzword) then why don’t they do it. Either the assumption that they only care about profit is wrong or the assumption that people over profit will be more profitable is wrong. They can’t both be true because the world doesn’t make sense if they are.
Businesses are focused on profit. I don’t think that there is much evidence to think that assumption is wrong and I think you would agree. The assumption that people over profit will yield more profit sounds very fishy because companies don’t do it and they only care about profit.
With anything in life there are trade offs. Some companies are able to find a way to look like they care about people but are financially and competitively able to do so without harming profit and sometimes enhancing it. But those are most companies. Patagonia is a higher end outdoor retailer which focuses on quality. Patagonia can be praised for donating 1% of revenue but they have a strong niche that doesn’t compromise their competitive edge and one could argue enhances it because it is perfectly in line with their niche. It makes sense for them but wouldn’t make sense for a discount retailer that competes on price. Not because they don’t care but because their customers don’t care.
Companies care when their customers can afford to care and the process happens on its own. Perhaps through profit good things can be done. Focusing more on Y to get X is happening but on its own. Not because we suddenly care more about people. The dangerous assumption though that is being made and not challenged is that good cannot be done through a focus on profit. That is not kosher will millennials today but I would argue Patagonia makes much more sense if we view the company through that lens than the one Dale Partridge advocates. Still an interesting read and recommended though with a critical eye of course.