Balancing purpose and profit – and why they belong together
January 12, 2023
Steven Mallon of Waypoint Partners
Purpose has become a hot topic in business circles, permeating its way into the agency sector and providing the centre piece for industry commentary and events.
Whilst much time is spent on reappraising, redefining and restating (in some cases rediscovering) purpose, the concept itself is not new.
Every agency and business is started with an intention. This is usually a blend and alignment of commercial ambition and the wider reason for being, and how that might represent itself in the identity, culture and behaviours of the agency.
As agencies and other businesses grow, mature, develop and scale, that ideal alignment – the balance between purpose and profit – can get knocked out of kilter, forcing agency leaders to take stock and appraise their decisions and identify actions to regain equilibrium.
Big thinking is rooted in ambition and purpose
Both purpose and profit are essential foundations of any agency. They form the basis of its ambition, identity, mission and vision.
But they are seemingly disparate; purpose is at the root of our reason for starting an agency – the very essence of why we do this, whilst profit is the outcome of the commercial performance of the agency.
Purpose seems like an input, but it is also slightly ethereal, hard to define, quantify and measure. As agency leaders, how do we know that we are progressing towards achieving our purpose?
Profit, on the other hand is entirely logical and rational. It can be measured, benchmarked and assessed against our commercial ambitions.
Understanding the concept
At Waypoint Partners, we see and work with agency leaders grappling with this concept at various stages of their development journey. To think about balance, it’s sometimes helpful to consider ambition and purpose together at the highest level:
- Ambition: What we want to do and what we want to achieve
Often this is expressed as the commercial monetary aspect (a profit objective), and is both logical and quantifiable
- Purpose: What we want to be, what our role is
This of tends to be more emotive, values driven and less tangible than the ambition – for example, how we behave and engage with the world
The important point is we need to think about both because they are symbiotic, they co-exist. And so deriving balance of purpose can stem from this definition that happens at the most macro level of our thinking as agency leaders.
How purpose manifests
Whilst purpose may be more difficult to measure and benchmark against, it does manifest tangibly within agencies. We can see areas where our vision of what we want to be comes to life. For example:
- In our Employee Value Proposition – pay and benefits, long-term incentive schemes, potential employee ownership and other enterprises that promote and harness wellbeing like the 4-day working week.
- We can also see purpose come to life in the reinvestment that we make in our agency through service development expansion to help the agency scale, perhaps creating the opportunity to pay back more through our purpose initiatives in the future.
- And lastly there is ‘doing good’ – our charitable and philanthropic initiatives that uses the time, skills and money available to our agencies to support and create wider positive change.
The commonality between all these manifestations of purpose is that they need to be funded.
Profitability becomes a driver of our ability to bring purpose to life in tangible, realisable ways. The balance between profit and purpose, therefore, is inextricable – one facilitates the other. But it works both ways.
When things get out of sync
For purpose and profit to successfully co-exist, we need to measure progress against each, both individually and together, to ensure that both aspects of our ambition – the commercial and the purposeful – are on track.
But often we reflect on that balance only when we know it’s drifted off course, when decisions that we have taken as agency leaders have created an uncoupling. Most commonly, those are decisions that favour profit, particularly short-term gain over purpose and the realisation of the long-term ambitions.
Perhaps we decide to take on work with a client that doesn’t fit or share our values. Perhaps we take on projects that are not in our natural set of capabilities. In these scenarios, by placing profit at the forefront of activity, we compromise the purpose itself.
The impact of losing this stability
When we get the balance wrong – even though we may have chosen profit above purpose, both elements suffer. If we take decisions that compromise purpose it increases the chance of profit suffering too.
These negative impacts can materialise as:
- Low quality of work
- The need to re-work and over-service
- Loss of client faith
- Client churn
- Negative impact on our people
- Cultural erosion
- Reputational loss
All of which could lead you to a place whereby the decision to prioritise profit to fuel the growth ambition is simultaneously compromised by the de-prioritisation of purpose in the decision making.
Why impatience is your enemy
All too often, it’s the desire to realise the long-term strategy more quickly that causes the problem. The end result is that we move even further away from that ambition. Why? Because we didn’t stay true to the purpose and didn’t appreciate the link and connection between our purpose and profit, growth and ambition realisation.
When agency leaders compromise purpose and long-term ambition in favour of short-term boosts to revenues, they consciously or unconsciously place profit over purpose. The result is that both become eroded and the path to growth becomes that bit longer.
By revisiting ambition and purpose regularly, agency leaders will be better equipped to manage, monitor and benchmark the fine balance between profit and purpose. Continued reflection can help ensure the right decisions to maintain the heading towards their eventual ambition – both commercial and purposeful.
What’s your challenge? Contact Waypoint now to start a conversation.