worth reading: Does social purpose drive profit

Pro Alex Edmans write a post: Does social purpose drive profit ?  That’s quite a good post on how he thought about Harvard Business Review article ‘How Your Company’s Social Purpose Can Also Drive Profit’ .

I try to use AI get what that HBR’s article said:

  This article discusses the implementation of purpose-driven strategies in companies seeking both financial growth and societal impact. The study examined 12 companies that successfully achieved the dual goals of purpose and profit by adopting an advocacy-based business model. This model involves taking a stance on societal or environmental issues, leveraging products and services to address stakeholders’ challenges, and converting them into advocates. The article highlights two companies, A.P. Moller–Maersk and Royal Canin, which have effectively implemented this model. These companies extrapolated from existing processes, had strong leaders who accepted vulnerability, and fostered an enabling culture. By adopting an advocacy-based model, companies can create long-term impact aligned with their purpose while achieving sustainable financial growth.

And how Pro Alex reply is worth reading (I’ll make it short) :

  1. Lack of clarity in measuring purpose and profit: The article fails to explain how the study measures purpose and profit, making it difficult to assess the validity of the findings. Different studies use various metrics, such as purpose statements or quantitative outcomes, which may not accurately capture the true impact.

  2. Limited sample size and lack of representativeness: The study only investigates 12 companies, which is insufficient to draw general conclusions about the relationship between social purpose and profit. Overextrapolating from a small sample can lead to misleading claims. The article also doesn’t provide information about the time period considered, further undermining the generalizability of the findings.
  3. Flawed methodology and absence of a control group: The article claims that an advocacy-based business model drove the success of the companies studied. However, without comparing them to companies without such a model, it is impossible to establish causation. Other common factors or industry-specific characteristics could have influenced the outcomes.