What does it mean to be a purposeful leader? Well, it depends on who you ask.
There’s been a longstanding exchange happening in the business world for decades about what successful leadership looks like. Some would say the greatest leaders are measured by their prosperity. Some would say it should be how their employees revere them. And some might say it’s reflected in their commitment to sustainability efforts. But I would say, why can’t it be all three?
I’m not the first to want to marry these three components together. Entrepreneur and author John Elkington coined the term ‘triple bottom line’ in the early 90s to epitomize this concept. In short, purposeful leaders that will truly make a difference in their industries, communities, and society don’t just pick one end goal to focus on; they strive to create organizations that serve all three.
Despite being around for almost 30 years, the pool of leaders who’ve tasked themselves with carrying out the triple bottom line is relatively small, and, if I had to guess, there could be a few reasons why. Sustainability is often viewed as an altruistic accessory of leadership rather than a responsibility of leaders. In the “customer-first vs. employee-first” debate, the customer usually wins. And when it comes to money and social responsibility, many believe you can’t have the best of both worlds.
As someone who has implemented the triple bottom line approach into my own companies, past and present, I think a lot of CEOs are just struggling to figure out how to do this juggling act themselves. So, what can you do? First, you have to understand the problems of only focusing on one component, and then you can see how all three build off one another to create better organizations.
Yes, people must always be a priority in business, but putting blinders on to everything else can distract leaders from environmental consciousness and profitability, which will be the demise of any company, big or small.
In the ‘people’ component of a triple bottom line, the goal is to positively impact everyone — those who are directly linked to your business (your employees and customers) and those who aren’t (your local and global communities). But you don’t have superpowers. All of this can’t fall on your shoulders. So, to have the most significant influence, you must prioritize the people closest to you (your employees), and it will trickle outwards from there.
This is where some leaders struggle. They feel like they have to put their customers and shareholders first, but let me explain why putting employees first is a win-win. Organizations that are created to serve, nurture, and protect employees develop workers that are highly trained, highly knowledgeable, more empowered, and a lot happier than companies who don’t. This creates a snowball effect. Happier, experienced team members take better care of customers. Happier customers keep coming back to your business. This means increased profitability, which will lead to happier shareholders.
Companies that put their people first are 21 percent more profitable in the long run, making everyone happier.
If you’re a leader who takes corporate social responsibility seriously, that’s great. But if you’re only focused on environmental impact, your business likely won’t be sustainable, as it won’t be profitable, so then it can’t serve people or make a difference in the world in the long term.
Today, businesses get a lot of heat from society to be more sustainable, and for good reason. Larger corporations have been (and still are) able to get away with causing irreversible damage to the planet. In 1969, a river in Cleveland caught fire because it was so polluted and sparked a revolution. The same thing just recently happened in the Gulf of Mexico. So it’s no wonder people are holding businesses accountable for their environmental impact.
You can still be profitable and sustainable. In fact, you need to be profitable to be sustainable. Southwest Airlines is a remarkable example of this. In an industry that isn’t renowned for making money, they’re one of the most profitable airlines. Their commitment to saving the planet plays a significant part in this, but so does their dedication to their employees, which is why Southwest is consistently voted one of the world’s most admired companies.
Patagonia is another example of how companies can use their profits for good. In 2018, they donated the $10 million they saved from Trump’s tax cut to efforts that protect our communities and public lands and organizations that supply life-saving resources to at-risk areas. They could have easily kept that money and used it for internal initiatives, but they chose to invest in the planet instead. And every time they invest in their social mission, they see more growth.
Entrepreneurs who are only motivated by profits burden people and cause damage to the environment because they are willing to do anything in the name of money. And we already know that profit-hungry companies are never held in high esteem.
This isn’t to say that profits aren’t important, of course. We need them to grow, to be able to invest in our employees, and to be able to give back. But profits should be an outcome of our missions rather than the sole driver of our initiatives. I saved this component for last because it will be the shortest section. The previous points illustrate how purposeful leaders can still think about money while increasing their profitability. When we invest in our employees and live out our social missions, that is how we can grow our customer base and continue to grow our companies.
Leaders who only focus on one area are driven by short-term pursuits and solutions. Committing to people, the planet, and profits is how we can continue building truly sustainable and influential organizations.