Companies with a purpose beyond profit tend to make more money

By Simon Caulkin, originally published in Financial Times on January 24, 2016. 

One of the paradoxes of business is that the most profitable companies are not those that are most profit-focused.

In a survey titled “The Business Case for Purpose”, a team from Harvard Business Review Analytics and professional services firm EY’s Beacon institute declares “a new leading edge: those companies able to harness the power of purpose to drive performance and profitability enjoy a distinct competitive advantage”.  This is a reprise of the findings of Jim Collins and Jerry Porras, who in 1994’s Built to Last found that between 1926 and 1990 a group of “visionary” companies – those guided by a purpose beyond making money – returned six times more to shareholders than explicitly profit-driven rivals.

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