Contributor, Korn Ferry Institute
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You Haven’t Combined Purpose and Profit… Yet
Daniel Goleman is a senior consultant at Goleman Consulting Group, author of the best seller Emotional Intelligence, and host of the podcast First Person Plural: Emotional Intelligence and Beyond. He is a regular contributor to Korn Ferry.
“We can’t all be Patagonia.”
Beth Thoren, director of environmental action at Patagonia, says she hears that a lot from companies. “While most modern companies now boast a slew of environmental and social programs,” she reports in Fortune, “few genuinely challenge the primacy of quarterly returns.”
This points to a fairly pervasive myth—that purpose and profit are mutually exclusive. The thinking goes that companies like Patagonia, which both do good in the world and turn a profit, are outliers in the business world.
But as myths go, this doesn’t clearly mirror reality. One Korn Ferry study found that over four years, purpose-driven consumer-products firms grew their sales at an average annual rate that was 6.5% higher than their peers’. And another study from the National Bureau of Economic Research showed that workers who knew they were pursuing social purpose were 24% faster and had 43% less downtime, without any impact on the quality of their work.
At its core, embracing purpose is a shift in how companies position profit. Of course, in most companies profit is the central goal—the benchmark by which a leader makes decisions and determines what to pursue or eliminate. In a purpose-driven organization, profit is closer to a by-product—the outcome of making smart choices in the service of social and/or environmental values.
So why does “being Patagonia”—being a company with steadfast environmental commitments and growing annual revenue—seem so unachievable for most organizations?
Part of the answer may have to do with mindset. Stanford University researcher Carol Dweck coined the terms “fixed mindset” and “growth mindset” to describe the range of beliefs that affect our willingness to learn, take on challenges, and try new things.
A growth mindset is "the belief that an individual's most basic abilities and skills can be developed through dedication and hard work—brains and talent are just the starting point."
A fixed mindset is "the belief that an individual's basic abilities and skills, their intelligence and their talents, are just fixed traits."
“We can’t all be Patagonia” is a prime example of a fixed mindset. It implies that Patagonia is unusual or gifted —an exception to the norm, rather than a trailblazer of a new one.
While a growth mindset inspires people to practice, make effort, and persist, a fixed mindset stifles the embracing of possibility and innovation. In 2009, the Harvard Business Review conducted a six-year study to determine just what makes an "innovator." They discovered that true innovators have a high level of creative intelligence in which they utilize a combination of listening, ideating, testing, and networking to bring about new ideas. True innovators see possibility and put in the hard work to achieve it.
For a company to pivot towards a purpose-driven model, they need a growth mindset. They need to believe that with hard work, they can do good in the world while still making money.
When working with individuals to cultivate a growth mindset, one common technique is to encourage them to use the word “yet” every time they encounter a limiting belief.
Instead of “I can’t do this,” they may try saying, “I can’t do this YET!”
Businesses may want to try something similar. Instead of insisting that they can’t make money while doing good in the world, they may want to acknowledge that they just haven’t done it yet. This opens up a different future for an organization: one in which hard work and effort make purpose and profit both possible.
Co-written by Elizabeth Solomon