Principled Innovation LLC

Profit is a gift

October 3rd, 2010

In a world of infinite opportunity yet increasingly limited resources, association leaders need a new way of thinking about profit.  Arguably the most counterproductive tenet of the non-profit orthodoxy is that profit-making is an impure, deeply heretical thought.  This belief system encourages its followers to disregard the necessity of profit, and to view non-profits as superior to for-profit businesses because the former are committed to meaningful social enterprise, while the latter are about nothing more than the accumulation of individual wealth.  On this occasion, I will leave the job of explaining the motivations and methods of our business world brethren to others.  Let us instead explore three reasons why profitability is critical to the 21st century association.

+Profit can invigorate purpose–If purpose is the animating force of the 21st century association, then profit is the energy source required to sustain its strength.  Associations struggling with profitability undermine the enduring importance and impact of purpose by making survival the focus of organizational activity.  These organizations will waste precious time and energy debating theoretical questions of relevance within narrow boundaries while the rest of the world keeps moving forward, and then wonder where everyone went.  Meanwhile, associations committed to thriving and flourishing will make profitable and purposeful growth a top priority in the design of new strategies and robust business models.

+Profit can inspire people–Not all profit is created equal.  Profit that extracts and exploits will damage organizational reputation and credibility, and deflate staff, members, and business partners.  On the other hand, a responsible approach to profitability, one based on building trusted relationships and the creation of thick value, can unleash a palpable sense of optimism among all stakeholders.  In the 21st century association, profit can and should be invested in nurturing the emerging creativity and imagination of dedicated and engaged individuals who want to make meaningful contributions to organizational success, instead of financial markets that can offer, at best, an uncertain return.

+Profit can induce possibilities–The profitable organization will quickly discover the power of the possible.  Profitability will make the 21st century association a stronger and more attractive partner for collaboration and innovation.  The breathing room created by profitability will allow for the exploration of the white space, and the serendipitous discovery of valuable relationships and compelling opportunities.  Unfortunately, as we have seen in the association community over many years, the absence of profitability creates a severely proscribed environment for serious and sustained experimentation.

Association staff and voluntary leaders must recognize that profit is a gift, one given (or not) by stakeholders to the organizations with which they choose to have relationships.  Achieving profitability is an intentional act, and a true measure of both present-day organizational resilience and the potential for future success.  Far from heresy, an enduring commitment to responsible profit-making is an essential part of the thrivability imperative for the 21st century association.

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