24 May 2010

Triple Bottom Lines are bullshit

I gave a talk to sustainable MBA students last week [see this post for more] and said this as a warm-up. They did not agree, and I promised to bring the debate here, for you and for them.

Feel free to give examples, explanations and arguments for and against my position in the comments. Before you do, please read this:

I think that the triple bottom line (people-planet-profit) is BS because it's impossible to pursue three objectives at once (see these prior posts on greenwashing, farming efficiency and coequal goals.)

Try to date three people at once.

Try to deliver speed, quality and price.

Try to be smart, funny and charming.

Try to work, sleep and play.

Yes, I know that people can try to do all these things, but it's much easier to drop one or two of them and be single-minded about the remaining goal.

Want an example? Bill Gates made billions first, by being a ruthless capitalist. Then he decided to become a ruthless philanthropist. He did one thing well, and then went on to the next.

One speaker gave a spurious counter-example. He held up an iPhone, to indicate how technology could make things cheaper, smaller and faster -- compared to phones of 10 years ago. I agreed about that, but the relevant comparison is to phones today. I can get phones that are smaller or cheaper or faster than an iPhone now, but I can't get all three in one device. That's because making things smaller costs more, making things cheaper slows them down and making things faster makes them bigger. If you understand tradeoffs, you get it.

My point is not that we don't want to be nice to people or the planet -- that's why we have social and environmental organizations. My point is that a for-profit organization will not be able to add additional goals and still maintain maximum profits.

Bottom Line: Companies should make money first (by providing value). Distribute the profits and let shareholders make a thousand different decisions of how to spend them.

Addendum: I replied to the first 12 comments. Still no good reason to discard my headline. Some readers highlighted something I forgot, the problem of principal-agent dalliance with shareholder's money, either with BS "greenery" or with manipulation of quarterly results to get bonuses; see prior posts. Josh also provided a simplification: X + Y + Z = 100. If you want more Z, you must have less X or Y.