Lately I’ve been thinking about money a bit more than I often do. It has to do with how close we are getting to our “first retirement”. For my wife, that is pretty much a complete departure from work. She doesn’t plan to do anything close to what she does now moving into the future. For me, I am planning a big shift from working as an executive leader to coaching and consulting independently.
I have this vision of releasing my lifelong identity of being an employee of an organization and by definition, pursuing goals defined by others. I see myself doing the things I love to do when I want to do them. I see myself pursuing a passion and being energized by the contribution I make to others. Yet something holds me back.
Over the past few months I’ve come to realize that I am allowing myself to be driven by protecting my income. Our family stakeholders have become accustomed to a certain standard of living, and I am measuring myself by my ability to meet that standard. Another way of saying that is that I evaluate my success financially by the simple assessment of this year’s income vs. last. If its bigger I’ve done well, if not it might introduce worry about my future.
Putting all of this together, the outcome of my focus on my personal profitability is that I take my eye off my true passions and purpose in life … that of supporting others through facilitating change as a coach.
There seems to be a parallel to this in the world of business.
Most business come into being driven by the passion of the founder or a unique value proposition. Then as they grew many turned to public funding and too often the original message was then lost. No longer was the conversation at the top table about remaining unique and adding value. It was now about the next analyst call and quarterly results.
I don’t mean this post to be a rant against public markets. However, it is instructive to watch mission driven start-ups challenge the status quo of a given segment with the passion borne of a worthy vision, only to issue an IPO and then begin to conform to the expectations of investors bent on short term returns.
That’s the rub. The market cares most about profits NOW! Sustainability isn’t an investment criteria.
So what’s the alternative to profitability for businesses? In my mind it is to shift our focus to sustainability, or a focus on the level of profits necessary to be able to continue to fuel the passion, unique value proposition and/or culture of the organization.
This concept of profitability vs. sustainability comes to me from the organization I work in now. It has never been about profitability for the organization, although as a privately held company there isn’t the same market pressure on us to deliver in that way. The mission statement reflects a social paradigm that focuses on the number of people for whom we can help create healthy lives and prosperous careers. That sounds like (and is) a meaningful reason for a company to exist. However, in order to support that mission there must be enough profits to sustain us in pursuing it.
Having realized this, I am now working on an alternate view for my own personal enterprise. That view needs to start with the end in mind. My personal mission is to shift the lives of people towards the possibility of living and leading essentially (hence the name of this blog).
As with any venture, keeping one’s eyes on the financial aspects are important. But what if I shifted my paradigm from one of profitability and measuring how much I earned to one of what amount is required for the continued sustainability of my vision? When I did that, it switched my attention from earning power to retirement financial planning which showed me how to make my vision sustainable.
I realize that this is what works for me at this point in my life. However, at other points in my life, sustaining my vision (providing for my family and creating comfort for them) would have required me to focus on earning power. What I can see now is that if I had understood this concept sooner, I may have introduced more balance into my life and that of my family by focusing on earnings required to sustain our family joy and passions vs. working to maximize our family profitability. This may not have been easy, as a family isn’t just about one person. There are multiple personal visions and passions that need to be accommodated. But companies are like this as well, and it would be interesting work to have a family join together in a shared vision.
How does this resonate with you? How might you apply this differentiation between profitability and sustainability?
As leaders of business units, how might we work to create a culture of sustainability for our teams, even within a corporation driven by short-term profitability?
5 thoughts on “What’s the Goal? Profitability or Sustainability?”
I love the idea of sustainability over profitability Ian. One can even put money away for a rainy day with sustainability. Profitability means there is never enough. One must always do better than the previous year. Like the banks. The money they make is obscene. It does not benefit the employees, but someone up top is surely lining their pockets! It all boils down to knowing what is enough.
Ian, this is such a timely post for me! As you know, I too will be leaving the corporate world for coaching. I have been questioning if now is the time or should I stay for another couple of years in a job that I’m no longer enjoying just to get the transitional financial nest egg a little larger before leaving. But to what end? Thanks for helping me to think more about the reasons for staying and to define more clearly my sustainability reasons for leaving!!
Very much a parallel (as we already knew)! The key for me is making compromises to know that the structure going forward provides for sustaining the passions of all stakeholders. This structure can be adjusted as many times as we need to.
Nice. Love the idea of sustainability for large and small organizations alike.
Thanks Sara. I love working for a private, closely held company. If the ownership is driven by a vision a sustainability model is likely!