Let's Be Honest

We have a profit problem. Do businesses make too much profit? Too little profit? On one side of the spectrum profit looks like greedy investors exploiting people and the world. On the other side of the spectrum, it is the central metric that propels both business and the economy as a whole. And in between we have a growing population of people who are skeptical and unsure.

A couple of years ago there was a study that showed 54% of Gen Z adults had a negative opinion of capitalism. And if you look on the surface at many of the problems in the world - and the role of business within them - it's understandable. But the angst is misplaced. In fact, this growing skepticism about capitalism and the profits that fuel it will create a problem in our future, if not our present.

Most of us know profit is not inherently bad. It simply represents the value created - and captured - by organizations as they seek to create valuable goods and services for others. The creation of value for others is itself an act of service (even when being paid for it). And while profit can be a source of much greed, it's also the necessary fuel that enables the growth and impact of healthy organizations. Take the best human-centered, high-impact, stakeholder-oriented organization and remove profit long enough and it will cease to exist.

The question really isn't whether profit is an important driver for healthy, high-performing organizations (it's essential) or whether it is good or bad (it's indifferent), the question is how to think about - and lead towards - healthy profits, profits that are not egretiously extracting, or what I would call "Honest Profit".

Here's a framework for consideration. Honest Profit has four defining characteristics, each progressively more challenging. I believe that conscious leaders committed to healthy organizations neded to be committed to Honest Profits.

Honest Profits are

1) Law abiding - as a society we define the boundaries of business value creation and define what organizations can and can't legally do. It seems basic, but clearly there are too many organizations that skirt the laws, often very deliberately. Operating in the confines of the law should be table stakes for any conscious organization. Rationalizing paths around them should be unacceptable.

2) Value creating...and not just value extracting. While this also might seem obvious there are many businesses and individuals that mostly extract financial gain from positions of power, undue influence, or the manipulation of information while not adding anything of productive value through the work. The manipulation of "the system" for personal gain is in fact a problem in capitalism (and even more so in other economic systems); it is what is sometimes referred to as "crony capitalism". We should all reject this and call it out when it's visible.

3) Transparent - This should be a critical expectation that most leaders need to commit to getting better at. It includes transparency about inputs and ingredients, how a product is made, quality of workmanship, and how employees are treated. If you have something to hide, there's a good chance you're doing something wrong. If companies production or employment practices are such that they wouldn't be something to proudly market, then they need reconsideration. This is where real Conscious Leadership comes into play. An honest self-assessment about how we work and what we produce and our willingness to share it openly with others is a necessity for healthy organizations and Honest Profits.

4) Regenerative - That is, committed to creating a better future. This means both being responsible in the current state and being committed to reducing negative exploitation. This is a very subjective one and a critical one to embrace. No business will be perfect. As a society we have to acknowledge that; businesses are simply a reflection of humanity. In fact, nearly every business is doing something today that down the road may seem wrong. It's a journey, and as leaders we have to continually commit to embracing the journey. We can't simply wait for "others" to protest or to tell us what is wrong. Conscious leaders have to continue to explore and question our own approaches to work, continually seeking to learn and create better organizations. I saw a leader from Patagonia speak last year and he talked about how over the years their leadership "stumbled into virtue"...what a beautiful expression. They would discover things they "weren't proud of" and then seek to make them better. This is emblematic of what I mean here. You don't always know if everything you are doing is right or wrong or where it lies on a spectrum. And there often isn't an objective answer to that as there are many opinions. But we need to remain open to the exploration and dialogue and committed to the work. And all stakeholders need to give input and perspective while also giving grace in the process.

Here's my point:

Profit is not something to be ashamed of. In fact, done right it can be representative of value creation by our businesses and positive impact on the world. But if we're going to have human-centered leadership in a for-profit world - and we're going to get a younger generation of workers aligned with that - we need to be clear about what conscious, honest profits look like. We are human beings running organizations that support the complex and varied interests of many other humans beings. The sheer nature of all that will lead to differences of views about what's appropriate. That's okay and it can be healthy. Conscious leaders need to lead through it honestly and courageously.

How does this point impact you? What resonates? What's missing? What might you add?

"Points of Impact" is a publication expressing thoughts on how we might approach our work differently to have a better impact on others and the world. For more related perspectives, check out the book Impact with Love: Building Business for a Better World.