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Profit-driven Focus Enables Large Social Impact

I’ve been interviewing business leaders for my white paper on aligning mission and profit. I had the opportunity to interview the CEO of a start-up clean tech firm whose proprietary technology can be used in a variety of industrial, commercial and agricultural uses.

The CEO is an experienced investor and managing partner of an investment fund. In his role as an investor, he sees proposals from a large number of start-ups. One clean tech firm really excited him due to the enormous opportunities for both profits and impact. One of the applications for the technology is in the cleaning of waste water. The CEO feels that the technology and the company can stand on their own, without subsidies from governments, foundations or NGO’s. He invested in the firm, and eventually became its CEO. The firm is in fund-raising mode, and the investor/CEO still sees huge prospects for it.

I decided to dig deeper – If you had the opportunity to increase the impact fivefold but would make only half the profits, which would you do? The CEO thought about it for a moment, and then responded that he’d take the money and work on driving down the cost so that the technology could be used more broadly. The CEO indicated that his primary motivator is making a profit – changing the world comes second. He explained that he would choose not to personally subsidize the firm’s impact. He would rather take his personal profits, and invest a portion of them in causes that he cares about.

By focusing on the bottom line, he expects that the firm would keep driving costs down so that it can sell more products and services. The firm will then increase its social impact and its profits. Sounds a bit like Henry Ford with the Model T. (The social impact of the car is indisputable – for both good and bad reasons.)

So in the CEO we have an individual who, through his company’s products, has the potential for having a very significant social impact. Should socially-minded impact entrepreneurs look down their noses at him for not being sufficiently socially focused? Or applaud him for putting his investment and management efforts into an enterprise that can have a tremendous social impact? I choose the latter – the CEO’s efforts will make the world a better place despite the order of his personal priorities, and quite possibly due to them.

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