As I navigated business school in the ‘90s, one concept seemed to cycle through almost every management class: We were taught that the primary purpose of a business was to maximize profits for its owners or stakeholders. I don’t recall spending mental energy debating the merits of that principle, but I accepted it as true. And why not? It makes sense, doesn’t it? Those who have invested money in an enterprise should expect leaders to maximize their return. The concept was popularized in the ‘70s by Nobel Prize (Economics) winner Milton Friedman and was advocated by many leaders across the world at the time.
After leaving school and finding myself employed by an education publishing company my leadership experience has not been what I expected it to be. I have not been able to stay true to the profit principle, and maybe that has more to do with the mission of our company than anything else. Maybe if I were helping to lead a company that manufactured flooring products I wouldn’t have such a concern; I can’t be certain. I will say, however, that I believe that a firm focus on profit introduces risk that is detrimental to efforts to make a difference for people first.
I recently debated the merits of this idea with a successful entrepreneur. After 45 minutes of “back and forth,” we had to agree to disagree. He was not going to sway me to put profit first, nor was I able to move him closer to my purpose position. His argument was that making a profit would allow a company to make a greater difference. I didn’t disagree that profit helps drive change. I suggested, however, that profit-centered business practices would eventually come in conflict with purpose—and which principle wins when that happens?
I came to Reading Horizons as a young and ambitious, recently graduated business student who was looking for an opportunity to hone my skill set. What I learned quite quickly was that we had a revolutionary product that could make a significant difference in the lives of teachers and emerging and struggling readers, as well. Reading Horizons’ purpose, to eradicate illiteracy, pressed on me, and I quickly became a strong advocate of the literacy cause. How could profit ever trump that purpose?
Allowing purpose to remain in the pole position at Reading Horizons has produced some interesting results. Not only has it allowed us to make dramatic improvements to our products but also it has helped us to focus on markets that have traditionally been ignored by publishers of literacy materials, such as adult and correctional education. We have also been able to promote causes such as improving teacher preparation programs in our colleges of education, where we provide free online training for pre-service teachers. We are asked frequently how and why we don’t charge for the service. The answer: Literacy comes first, and teaching our teachers the rules that govern our language, before they even enter the classroom, will pay huge literacy dividends in the future. We have also been able to make significant donations to nonprofit entities worldwide who are focused on improving education services for desperate populations. We have never turned away an organization in need.
My colleagues at Reading Horizons can attest that we don’t just talk about staying true to a social cause or just pay lip service to a purpose other than profit; we live it, and it feels great. It should also be noted that not allowing profit to taint purpose has resulted in profitability in all but one of the past 20 years.