Rethinking The Bottom Line: From Profit to People
Hi All!
Hi All!
Here is my weekly email with some insights and ideas pulled from conversations I had on my podcast.
If you enjoyed the newsletter, please share it with a friend who’d find it useful.
Share Scott D. Clary’s Newsletter
Or… invite friends to the newsletter through our referral program for Amazon gift cards.
– Scott
Sponsor: Clay
Clay Helps You Be More Thoughtful with People
Clay is a beautiful and private home for your relationships, built automatically from your email, calendar, contacts, LinkedIn, Twitter, and iMessage. Set reminders to check in on certain dates, take notes on your conversations, and more. Clay helps you stay in touch and have better conversations.
Rethinking The Bottom Line: From Profit to People
As someone who speaks and writes about business on a regular basis, I revel in any opportunity to look at business from a fresh perspective. After a while, the same topics get tired; how to come out on top financially, the best way to drive a profit, how to beat the competition.
It was in a recent interview that I realized why these topics feel so tiresome. They are hellbent on the financials, and nothing else.
It feels like every business conversation ultimately comes down to how much money can be made, and in a world where so much more is at stake — our environment, our socio-economics, our wellbeing — this myopic focus no longer feels sustainable.
Abby Falik is, among many things, a social entrepreneur. Her life’s work is focused on changing our perspective from money chasing to the pursuit of curiosity, courage, and conviction. I was enamored by her beliefs about leadership, and in particular, the idea that our bottom line should be people — not profit.
If you listen to my podcast, or if you’re yet to give it a crack, this one is bound to get you fired up. Let’s dive into some of the key points Abby made.
Abby Malik’s Mission to Change Our Entrepreneurial Mindset
How can I summarize Abby’s career? From my point of view, she’s one of the most accomplished people I’ve met — and not because of profits or growth.
Abby is the Founder & CEO of Global Citizen Year, a nonprofit using the power of a global immersion between high school and college to unlock curiosity, conviction, and courage in our next-generation leaders. Her conviction began right after she finished secondary education.
“When I finished high school, I was so tired from the treadmill. I had been an excellent sheep; I’d ticked all the boxes, I’d gotten into college. But I knew something was missing.”
What Abby saw was a gaping hole in her education. She’d learned how to cram for tests, and to regurgitate knowledge — but at no point had she been taught about authentic and purpose-filled leadership. She hadn’t learned about contributing to the world around her, or about shaping her values.
“I desperately wanted to spend some time outside of the classroom in the real world in a way that would shape my values and perspective and identity and sense of purpose — in a way that I knew my freshman year of college couldn’t.”
After recognizing that our education system is fundamentally flawed in the way it prepares young people for the world, Abby was fixated on this idea of helping young people become global citizens.
She founded GCY to give students access to a year of global education; one that would teach them how to be citizens of the world, and to gain resilience, empathy, agency, and leadership.
The Purpose of Global Citizen Year
In founding GCY, Abby’s mission was to intercept young people right at the point of influence; those formative years when ideas are being flung at them from all angles.
“Once they’re then in college and being swept along, [young people need] a counter-force to all of the pressures that say, ‘Optimize for your own personal advancement. Maximize profit generation for yourself or your entity.’”
Because this is what young people have impressed upon them from a very young age; you exist to make money, and to get as wealthy and comfortable as possible. You start a business in order to drive profit for yourself and those involved.
As an adult and businessperson myself, I’ve experienced the outcome of this mindset. Every board meeting is focused on the financials; what are the sales, what’s the profit margin, how can we do better?
But Abby and GCY believe that there is a different way. A bottom line that is people-centric; one where business decisions are made with the wellbeing of everyone involved in mind.
“What does it look like to embed a sense of civic responsibility that extends so far beyond yourself and personal gain, but to hold people in our planet as, as your bottom line?”
This is what Abby’s organization is trying to impress upon the next generations of leaders. But it isn’t just our young people who need to shift their mindset — there’s plenty we can learn from Abby’s mindset and ideology, too, and it’s never too late to pivot.
The Problem With A Financial Bottom Line
Before we launch into some business theory, here’s a disclaimer: I’m not here to slam anyone for wanting to make money. It is, after all, how we survive — and as Abby informed me in our interview, even the most non-for-profit organizations still have to think about revenue strategy.
The problem that Abby wants to tackle, and the issue I see so clearly in the business world, is this endless drive toward making more money and nothing else. Every business move is made for the ultimate goal of maximizing profits.
Even decisions that might be bad for the environment, or workers, or customers — as long as they increase the bottom line, they’re seen as viable moves. And that mindset simply isn’t sustainable in the world we currently live in, especially if we want to preserve any kind of future.
“I think so many businesses have been founded with a very singular, and focused, and easy to measure profit maximizing purpose — period,” Abby explained. “What you measure is what gets done; it’s what you manage toward, and the form and the function of what you’re actually oriented around.”
How It Hurts Society
If what you’re oriented around is driving a profit, there’s little room left for social responsibility. Some organizations exist under the guise of having a double bottom line, one that focuses on both profit and people; however, when push comes to shove, the people tend to lose out.
“I don’t mean that the profit maximizing oriented orientation is necessarily bad. I think the problem is when you’re not then accounting on your balance sheet for all the externalities or harm you may be causing.”
I loved the way Abby clarified this. You can make a profit, and you can set your team up for a comfortable life. But where it goes wrong is negligence toward the impact you have on the world at large.
“It doesn’t work for society to have companies that maximize profits for shareholders whilst ignoring other stakeholders, including humans, and health, and the planet’s sustainability. Out of those profits, you might give some of it away to help; you’ve made the money in one hand, and you’re giving it away as band-aids on problems that you may have contributed to.”
Sadly, problems don’t go away when we throw money at them. We can’t have our cake — financial monopoly — and eat it too. Somewhere along the line, our businesses and our leaders need to switch from a mindset of ‘make more’ to one of mutually benefiting society.
“It’s a much more holistic way to see the role of the corporation in society: as accounting for its positive and detrimental contributions.”
What’s At Stake?
In the Western world, we live in a green-washed society. Our chocolate is stamped with a free trade symbol. Our meat is ‘RSPCA approved’. Cars are going electric and companies are going carbon-neutral. We like to think of ourselves as responsible global citizens, and our economy reflects that with a focus on sustainability and social responsibility.
But scratch the surface, and it’s clear that profit is still the be-all and end-all for many businesses. Take a look at the headlines — companies going bankrupt, mass redundancies, tax avoidance schemes. Behind the PR gloss, it’s clear that profit is still taking precedence over people.
The problem is that this short-term focus on profit can have devastating consequences for both people and the planet. When businesses are forced to make decisions based on profit rather than people, we see things like:
Low wages and precarious work: Household incomes have been steadily decreasing since 2019.
Poor working conditions: Unsafe and unhealthy working conditions cause 7,500 deaths every single day.
Sweatshops: For up to 16 hours per day, 250 million children between 5 and 14 are forced to work in sweatshops.
Factory farming: Globally, 50 billion farm animals are raised for consumption each year.
Toxic pollution: 310 Kg of toxic chemicals are released into the air and earth by industrial facilities every single second.
Climate change: The rate of temperature increase has more than doubled over the past 40 years, and continues to rise.
And the list goes on. At a time when the world is facing some of its biggest challenges — from climate change to inequality — it’s clear that we need to rethink our bottom line. But the illusion of corporate social responsibility makes us feel as though we’re already doing enough, and that’s how we get caught out.
“In an era when big tech and social media hijack our attention and sell it, unless we know our ability to choose how we invest our time and energy and resources — if we are just carried along without a sense of our own — we end up in a spot where there’s a threat of authoritarian leadership. We are the product,” Abby explained.
“We live in a time that requires every human to know their responsibility to contribute to solving problems, big or small. Because without all of us having that orientation, we will just get swept along and swept off a cliff. We need everybody to see their power as change agents.”
Of course, I’m not saying that Elon Musk hasn’t made a difference with his electric cars, or that the free trade initiative hasn’t made a difference. But how much more could we achieve if businesses put people first, and solely first? It’s a chilling thought.
The Alternative: Social Entrepreneurship
You may be wondering — so what’s the alternative? How do we put people first, whilst staying afloat and achieving our financial goals?
What Abby advocates for is social entrepreneurship. And no, it isn’t just corporate social responsibility (CSR) — which is often seen as a PR move, and a way to greenwash dodgy business practices.
Social entrepreneurship is the real deal: it’s using business as a tool for social change. It’s creating innovative solutions to social problems, without the guarantee of a significant financial outcome.
I particularly love Abby’s broader definition:
“My favorite definition of entrepreneurship is the pursuit of an opportunity, independent of the resources under control. It’s this notion of stepping off a cliff and having confidence that you will assemble the airplane or the parachute as you before you land. But it’s a pursuit of an opportunity before you know where the resources come from.”
Going Against the Grain
When you think about it, this is so counter-intuitive to our current business model, which is all about certainty and control. We want to know what the return on investment is going to be, we want to minimize risk. Our biggest corporations pay billions of dollars for incredibly precise predictions of consumer behavior, so they can plan and strategize to the nth degree.
“In social entrepreneurship, I think that the opportunity you’re pursuing holds people and our planet and a sense of social purpose as your bottom line,” Abby explained.
What a noble goal to pursue. It’s one in which financial success is not the only — or even the primary — measure of success. It moves us away from egocentricity and towards a more holistic worldview.
And if we’re honest with ourselves, it’s probably one of the most sure-fire ways to feel that you have succeeded as a human. We are naturally wired toward contributing to the greater good. We derive a lot of satisfaction from helping others and making a difference in the world.
It feels good to see our efforts contribute to the betterment of society as a whole. Even something as simple as giving a thoughtful gift sends tingles up our spine. If you know the principles of Ikigai, you know that we feel most fulfilled when our work connects to our passion, supports our community and contributes to the world around us.
This is what social entrepreneurship is all about. So how can you get involved?
How To Shift Your Bottom Line
According to Abby, our best bet at shifting toward a people-centric bottom line is to ‘change the world from the inside out’. You might have heard of this concept in leadership circles; to benefit others, you must problem-solve from within.
The problem is, change rarely comes about from these lofty ideals. Abby’s goal is to impress upon people the importance of this concept. Her theory of change is that in order to change the world, you need to change individuals first — which is where her concept for GCY came about.
As business leaders, we can take this concept into our own companies and organizations, too. Let’s close out the article with a few strategies and mindset shifts you can walk away with.
Alter Your Company’s Mission
As we’ve been talking about, your bottom line is the thing that drives your company. It’s what you use to make decisions and it’s what you’re ultimately responsible for. Therefore, this is the element you should start with when looking to change your company culture and make it more people-centric.
Take a good, hard look at your mission statement. Is it profit-driven or people-driven? Are you acting with the intention of benefiting others, or just your shareholders? Change truly comes from within, so look at the internal parts of your company and make the necessary tweaks to reflect a people-centric mission.
Change Your Mindset From ‘Should’ To ‘Must’
Abby touched on something that I feel is crucial to making such pivotal changes within our businesses: the mindset of ‘should’.
“As you’re talking, you’ve used the word ‘should’. I think that’s a really hard place to respond from, because it feels like an obligation or a responsibility. And so there’s something that needs to shift from the ‘should’ to the ‘must’. I must do it this way because of experiences I’ve had, and because of the way I see the world.”
It’s true — taking responsibility for our impacts on the world is not really an option if we want to see real change. It’s not optional if we want our people and our planet to thrive; and not even thrive, but simply survive. It’s a must.
Don’t Miss The Moment
The recent pandemic has presented us with a unique opportunity to change our business models, and to change the way that we view the bottom line.
“What I would say to anybody who cares about contributing to a future that looks better than the present, is that we can’t miss this moment.
Arundhati Roy wrote about the pandemic is a portal, a door that we’re walking through from one era of history into the next. And we choose what we carry, and we choose what we leave behind. I think so many sectors and industries are missing the opportunity to rethink everything.”
I think that’s a pretty strong note to leave today’s newsletter on; seize the moment. Don’t let this opportunity pass you by to take initiative and rethink what the bottom line means to you and your company.
If you want to connect with Abby Falik, you can find her on all of the usual platforms — and don’t forget to listen to our interview, because there are plenty more gems on changing education, leadership, starting a company, and more.
Thanks again for reading!
Success Story Podcast
If you enjoyed the content in this newsletter, you’ll love my podcast where I draw out insights from incredible individuals and tell the stories of some of the worlds most prolific thinkers and doers.
If you enjoyed the newsletter, please share it with a friend who’d find it useful.
Thank you for reading,
-Scott