June 27, 2017

How To Measure Success

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A single black line at the bottom, regardless of its size, can no longer measure success. In truth, it never should have. Our whole world is quickly migrating toward an expectation that all efforts return something beyond a single bottom line.

Sometime back I read Conscious Capitalism by John Mackey (Co-CEO of Whole Foods) and Raj Sisodia. Every couple of months I read a book or see a video that I wish I had the capability of forcing the whole world to review and digest. This book is among the list.

The authors unfold the persuasive narrative for seeing any and all commercial activities as having a layered agenda and mission.

To their point, let me ask a question. What makes TOMS Shoes or Warby Parker so successful? Although there are any number of reasons, it surely isn’t because they make what is clearly the best pair of shoes or eyeglasses in the entire world. Among the reasons for their success is consumers are attracted to a layered bottom line, and in this case it is the “buy one give one” model.

How Many Bottom Lines Are There, Anyway?
For some time, people have talked about the double bottom line—aiming for profits and something else. In 1994 John Elkington coined the phrase triple bottom line (TBL). His three bottom lines were people, planet, and profits. In 2006, Andrew Savitz published The Triple Bottom Line and continued the dialogue emphasizing the social, environmental, and financial performance metrics for success.

I like these three categories, but I think people of faith can raise Savitz one more. Savitz doesn’t split the spiritual good apart from the social good, and I think that’s worth consideration. Therefore, I often talk about four bottom lines (4BL) that reflect money, environmental good, social good, and spiritual return.

Honestly, there are probably a number of possible bottom lines, but when I talk about “multiple bottom line,” I’m thinking about these four categories:

  • Profitability—The obvious one.  Are you making money?
  • Environment—Is your work replenishing the earth?  Is it sustainable?
  • Social Good—Are you providing jobs, opportunities, and social welfare for others?
  • Spiritual Return—Is faith strengthened? Is the Gospel being displayed as part of this work or intentionality?

Does It Really Matter that Much?
If you’re an organizational leader, multiple bottom line thinking is your protection against everything you don’t want to become, and it is your power to effect the change you dream of. It is one of the greatest differentiators for all the right reasons and all the best results.

The Nehemiah Project outlines these 4 reasons for thinking about multiple bottom lines:

  1. MBL pushes you to think holistically about your business.
  2. MBL looks to transform communities, not just display good citizenship as a public relations strategy.
  3. MBL provides greater financial stability in the long term.
  4. MBL produces more employee, shareholder, and customer satisfaction.

The Federal Reserve Bank of San Francisco noted that multiple bottom line companies are a good reminder to investors that money is always a means to an end. Investment, too, is a means to an end, so we should invest in companies and organizations that produce the end we want, not simply more money.

This is something we know deep down, but we forget it and we get sucked into more and more single dimension measurements.

I work with investors regularly who are engaged in this seemingly new (although it’s really been around for awhile) “impact investing.” They often invest in low profit structures because while the financial profit may be lower, the overall return is enormous.

Who Out There Is Doing This Already?
Although there are thousands of good examples, here are a couple examples from two friends I know well.

First is The Paradigm Project.

The Paradigm Project is a social venture company working to create sustainable social, economic, and environmental value within developing world communities.  They collaborate with local businesses to manufacture efficient cookstoves that reduce carbon outputs, thereby reducing environmental impact while also creating a revenue stream through the sale of carbon credits.

Investment capital is repaid, the lives of developing world citizens (women in particular) improve dramatically, and the environmental impact is reduced.  All in a sustainable way.

Tegu Toys is another example. Will and Chris Haughey created a for-profit toy block company that provides Hondurans with long-term career growth and development rather than simple, task-based jobs. To make sure that the production of the blocks doesn’t dampen the natural regeneration cycle of the forests, Tegu partners with local Honduran cooperatives who individually hand pick each mature tree for use. The Forest Stewardship Council (FSC) certifies these co-ops and their process facilitates the forests’ natural regeneration cycle.

A few years ago, another friend told me he was finished investing in and donating to companies or causes without a multiple bottom line. Joe isn’t alone. That is the future for all of us.

Consumers don’t simply want good products; we want products that do good.  We don’t simply want services of good quality; we want services that have a “multiplier” embedded.

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