For most owners I meet, there is more than one bottom line. Yes, we talk about target sales, pricing and markets, but there are always other goals that are kneaded into the plan: employment for family, contributions to non-profits, commitment to the environment, flexibility to be with children, and many others.
Unfortunately, many small business studies, and even advice experts, either ignore this fact or treat it as an impediment to growth.
Fortunately, the Startup Genome project has recently come up with a framework and continuing research to look at organizations along both dimensions: economic growth and the greater good of humanity.
Growth or Economic Impact is defined by the well-established metrics for economic value -- namely revenue, profit, market cap and ROI. Companies with high growth create products and services that have value, or are paid for, by large numbers of customers. This value creation in turn spins off other forms of value such as employment and investment returns.
Long Term Societal Impact is a more subjective measure but the authors do a good job of creating a checklist definition: Negative Long Term Societal Impact (off the grid in the negative direction)
- Persuade people to buy things they don't need or that harm them long term
- Exploit people
- Waste people's time
- Make people or the world unhealthy
- Give a false sense of satisfaction or accomplishment
Marginal Long Term Positive Impact
- Treat symptoms
- Incrementally improve relatively efficient areas
- Make people feel better about themselves
- Help people make a living
- Niche focus
Transformational Societal Impact
- Approach problems systematically, treating root causes
- Teach men to fish rather than giving them fish
- Focus on unlocking human potential
- Create more value than they capture
- Seek to empower people
- Improve people's relationships, their ability to create and ability to learn
- They nurture ecosystems and platforms
To make the picture clear, here is the grid with some well-known examples:
The truth is that most small businesses fall into the lower left hand corner because they are not interested in growth (70-80% say that growth is not a top priority) and their missions have limited societal impact. But this does not jive with the visions and aspirations I hear owners speak of in workshops. Our dreams see the possibility of more.
Can we strive and reach to become transformational entrepreneurs? By tapping into organizations like SCORE and supporting each other in our BHAGs, we definitely can. For the full article click here.