Sunday, March 31, 2013

The For-Profit Core Purpose is Not Just Making Money

Coming from a nonprofit background, I assumed that a strategic plan for a for-profit company would solely focus on making money and maximizing shareholder value. I was surprised to read about companies working together to create a "Core Purpose" in the article Building Your Company's Vision by James C. Collins and Jerry I. Porras. I did some of my own research about developing a strong core purpose and came across a very insightful blog post titled Purpose Beyond Profit at The article talks about how a great company creates profit as a result of good strategic planning and strong sense of purpose. If profit is the driving purpose for a company, staff losses motivation and strategic planning has less direction. The blog lists 6 reasons why profit should not be the primary purpose. They are as follows:
  • Profit is an output and a symptom of success, not the cause.
  • Profit is temporary and can be wiped out in an instant.
  • In tough times, profit can be hard to come by.
  • You need more purpose than profit to make it through.
  • Profit doesn’t motivate the salaried staff who make success happen.
  • Customers don’t appreciate being seen just for their revenue.
  • Consumers are increasingly focusing on values and contribution to society when choosing who to do business with. 
These 6 statements seem like they could easily apply to nonprofits as well. Actually, these would probably be more likely found at a nonprofit strategic planning meeting than a for-profit company, which leads me to the next article I found relevant to this topic. The paper is titled What Corporates can learn from Not for Profit Strategy Setting by Steven Bowman of the Mt Eliza Business School in Australia. In the first part of the paper, called "Creating a Vision Filter", Bowman discusses how nonprofits use their vision (or core purpose) to "filter" their activities to align with the mission. For-profits should participate in the "vision filter" in order to create a stronger company purpose and better position themselves while creating an unique brand. For example: Walmart's core purpose is to "Save people money so that they can live better." Therefore, any activity of the company must create a good value for their customer. When Walmart began to sell music online, they should have used a "vision filter." By selling music online, they were not helping customers save any more money than if they bought music online through another website (aka itunes). It would be a better plan to drop this service and focus their efforts where they can save their customers money and stay true to their purpose.

In summary, it doesn't matter if the organization is nonprofit or for-profit. Customers/audiences are more likely to be loyal to a company that knows its purpose and stays true to it. Plus, customers probably wouldn't like it if they found out that purpose is "taking their money."

1.) Bowman, Steven. "What Corporates Can Learn from Not for Profit Strategy Setting." Australian Strategic Planning Institute. Web.
 2.)  Stocker, Matt, Ltd. "Purpose Beyond Profit." Web log post. Matt Stocker Ltd. N.p., 10 July 2012. Web. 31 Mar. 2013. <>.

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