Purpose and Profit

My MBA was focused on "doing good while doing well" and this book accurately and fairly succinctly summarizes the key points of such an education and presents it in such a manner that many businesspeople and entrepreneurs will find approachable and thought-provoking. Of course, this is just one book covering a wide variety of topics, but I do believe that those who are truly interested in finding ways to do good while doing well in their business ventures will find this to be a useful foray into the subject matter and will encourage further research on the topic.

In addition to the sources in the endnotes, the book offers a bibliography in the back for further reading for those who are truly invested in learning more. My only gripe is that George Serafeim has written or co-authored every single one of them with the exception of only one title. Surely there are other worthy sources he could recommend (and there are).

Is it possible for companies to work towards a purpose of environmental, social, or civic good while also making a profit? And if so, what are the roles in bringing about a shift towards purpose for those outside the executive level—staff, consumers, and investors? These are the questions Harvard Business School professor George Serafeim sets out to answer in Purpose & Profit. Drawing on his own research and those of his colleagues over the past decade and change, Serafeim illustrates a rapid shift in the corporate mindset while also emphasizing the importance of skillful and gradual execution for individual companies and highlighting some of the failures.

As someone with a non-profit background, I have a somewhat different lens than the typical reader. Rather than wondering “is it possible to profit while doing good?” I came into this book more interested in “is it possible to do good while focusing on profit?” While the rapid shifts Serafeim describes are encouraging, I wouldn’t stay this book shifted my mindset on the fundamental evils of capitalism. However, I do think the concepts he sets forth are important for the system we’re currently stuck in, and some would transfer cleanly to a different economic model (one, for example, with depreciating currency). For the more typical reader, this book lays out a convincing argument and is also imminently practical.

Serafeim is critical of planned economies, having grown up in Greece, but also admits that capitalism as it existed in the 90s and early 2000s proves that many of the criticisms of increased regulation also apply to free markets. This openness to criticizing some of the dogma of profitability is a refreshing perspective from someone in the business world, and I would certainly recommend this book to those who are skeptical about the interrelation of doing good and making money.

Personally, I was most interested in some of the ideas for investors, including the concept of impact-weighted accounting that Serafeim co-created. This initiative aims to elevate companies’ impact reporting to the point that environmental, social, and governance impact is considered just as important as risk and return in making business decisions. “The impact-weighted accounts movement insists that we need to redefine as a society what success means, and in fact what profit means,” Serafeim explains. When companies use an impact-weighted metric, they’re stating the value of the company in dollar terms with an adjustment based that takes into account value contributed to society (or harm caused).

Given our current state of collective crisis, this kind of reporting seems particularly crucial, and if governments mandate it there might be a chance for a turnaround such as what Charles Eisenstein describes in Sacred Economics, where companies are motivated by their bottom line to repair the planet and minimize harm caused. This also seems like a pipe-dream, but Serafeim’s survey of the landscape from 2008 to the 2021 shows that even our current limited metrics represent a very rapid shift from an attitude of social good being completely irrelevant to business to one where companies at least make an effort to convince the public that they’re doing good work, and so a similar leap ahead might indeed be possible. He also focuses on the role of institutional investors such as pension plans, and how these might be a driving force for change.

Obviously aligning environmental incentives with financial ones is a good thing, and this approach is a practical one that acknowledges corporate focus on the bottom line. While I personally question whether valuable contributions can always be reduced to a dollar value, it’s a step in the right direction that speaks the corporate language.

Serafeim suggests in this book that folks in all sorts of roles can influence businesses, and provides recommendations for staff, investors, and consumers as well as leaders, but concrete information for leaders is probably the most valuable. Executives who are skeptical about sustainability or who want to “do good” but aren’t sure how, exactly, would benefit most from the book, as would students and more junior employees with executive aspirations. Serafeim doesn’t take an overly idealistic approach, and is honest about some of the challenges and companies that have not succeeded, as well as those who have, so those in decision-making roles will find his advice practical to implement.