No Margin, No Mission

Written by Deborah Rozman, President and CEO of Quantum Intech, Inc. (dba HeartMath Inc.) Wednesday, 18 May 2011 14:22

News - Triple Bottom Line

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How many times have we seen idealistic CEOs put their social mission before their bottom line and go out of business? Too often. There seems to be, for some, a dichotomy between serving others and implementing bottom-line business practices that can fund that service.

Before presenting our investment opportunity at Investor’s Circle Spring Venture Fair and Forum in 2010, I was assigned a wonderful liaison from Calvert Social Equities Fund to help with introductions to impact investors. During one of our sessions he asked me, “Did you know you are a Triple Bottom Line company?” I replied, “What’s that?” After he explained what it meant, I told him the HeartMath mission and our for-profit and nonprofit HeartMath companies have always been about researching and providing measurable, ROI-based stress solutions to help people and the planet and I believe that you need profit to fund that. “No margin, no mission,” I quipped. Well, he was struck by that phrase — which I had learned 10 years earlier from a business advisor — and now shares it with other social entrepreneurs.

Social responsibility and sustainability include being responsible to grow revenue and profitability to sustain your mission. There is nothing wrong with building enough margin in your services and products to be sustainable. The market will guide you. If your price is too high, you will lose volume sales; if too little, you won’t make it.

Often I find there is a spoken and unspoken mindset in the social responsibility movement that deems profits impure for a social mission. I enjoyed Rod Schwartz’ recent article on this restrictive mindset in the Skoll Foundation’s April 5th Social Edge update, titled "The Destructive Search for Purity over Results.”

Schwartz states, “Somehow, we allow those who pursue profit maximization at all costs free rein, but those social businesses who seek balance, but perhaps make some profit or return to shareholders, we subject to scorn.” He goes on to ask, “Does this insistence mean that social enterprise remains an exclusive club of the exceptionally pure or those rich enough (or have rich enough spouses) not to care about financial reward?....Is it possible that sometimes the social business model, which allows for profits, yields both better social AND financial impact?”

I would add that perhaps this mindset is a reason why many entrepreneurs feel nonprofit organizations lack creative drive and energy and are therefore less effective than for-profit social enterprises in getting results. I would also suggest that it’s not profit per se but how the profit is used that should be scrutinized. Profit is “free energy,” and the true creativity and dynamism of social entrepreneurs come alive when they know how much profit they have to work withto sustain and grow their social mission.

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