Profit's not always the point by Harish Manwani

[Yong John]

Profit's not always the point by Harish Manwani

The entire model of capitalism and the economic model that you and I did business in, and, in fact, continue to do business in, was built around what probably Milton Friedman put more succinctly. And Adam Smith, of course, the father of modern economics actually said many, many years ago, the invisible hand, which is, "If you continue to operate in your own self-interest you will do the best good for society."

 Now, capitalism has done a lot of good things and I've talked about a lot of good things that have happened, but equally, it has not been able to meet up with some of the challenges that we've seen in society. The model that at least I was brought up in and a lot of us doing business were brought up in was one which talked about what I call the three G's of growth: growth that is consistent, quarter on quarter; growth that is competitive, better than the other person; and growth that is profitable, so you continue to make more and more shareholder value. And I'm afraid this is not going to be good enough and we have to move from this 3G model to a model of what I call the fourth G: the G of growth that is responsible. And it is this that has to become a very important part of creating value. Of not just creating economic value but creating social value. And companies that will thrive are those that will actually embrace the fourth G. And the model of 4G is quite simple: Companies cannot afford to be just innocent bystanders in what's happening around in society. They have to begin to play their role in terms of serving the communities which actually sustain them. And we have to move to a model of an and/and model which is how do we make money and do good? How do we make sure that we have a great business but we also have a great environment around us? And that model is all about doing well and doing good.

 But the question is easier said than done. But how do we actually get that done? And I do believe that the answer to that is going to be leadership. It is going to be to redefine the new business models which understand that the only license to operate is to combine these things. And for that you need businesses that can actually define their role in society in terms of a much larger purpose than the products and brands that they sell. And companies that actually define a true north, things that are nonnegotiable whether times are good, bad, ugly -- doesn't matter. There are things that you stand for. Values and purpose are going to be the two drivers of software that are going to create the companies of tomorrow.

 And I'm going to now shift to talking a little bit about my own experiences. I joined Unilever in 1976 as a management trainee in India. And on my first day of work I walked in and my boss tells me, "Do you know why you're here?" I said, "I'm here to sell a lot of soap." And he said, "No, you're here to change lives." You're here to change lives. You know, I thought it was rather facetious. We are a company that sells soap and soup. What are we doing about changing lives? And it's then I realized that simple acts like selling a bar of soap can save more lives than pharmaceutical companies. I don't know how many of you know that five million children don't reach the age of five because of simple infections that can be prevented by an act of washing their hands with soap.

 We run the largest hand-washing program in the world. We are running a program on hygiene and health that now touches half a billion people. It's not about selling soap, there is a larger purpose out there. And brands indeed can be at the forefront of social change. And the reason for that is, when two billion people use your brands that's the amplifier. Small actions can make a big difference.

 Take another example, I was walking around in one of our villages in India. Now those of you who have done this will realize that this is no walk in the park. And we had this lady who was one of our small distributors -- beautiful, very, very modest, her home -- and she was out there, dressed nicely, her husband in the back, her mother-in-law behind and her sister-in-law behind her. The social order was changing because this lady is part of our Project Shakti that is actually teaching women how to do small business and how to carry the message of nutrition and hygiene. We have 60,000 such women now in India.

 It's not about selling soap, it's about making sure that in the process of doing so you can change people's lives. Small actions, big difference.

 Our R&D folks are not only working to give us some fantastic detergents, but they're working to make sure we use less water. A product that we've just launched recently, One Rinse product that allows you to save water every time you wash your clothes. And if we can convert all our users to using this, that's 500 billion liters of water. By the way, that's equivalent to one month of water for a whole huge continent. So just think about it. There are small actions that can make a big difference.

 And I can go on and on. Our food chain, our brilliant products -- and I'm sorry I'm giving you a word from the sponsors -- Knorr, Hellman's and all those wonderful products. We are committed to making sure that all our agricultural raw materials are sourced from sustainable sources, 100-percent sustainable sources.

 We were the first to say we are going to buy all of our palm oil from sustainable sources. I don't know how many of you know that palm oil, and not buying it from sustainable sources, can create deforestation that is responsible for 20 percent of the greenhouse gasses in the world. We were the first to embrace that, and it's all because we market soap and soup. And the point I'm making here is that companies like yours, companies like mine have to define a purpose which embraces responsibility and understands that we have to play our part in the communities in which we operate.

 We introduced something called The Unilever Sustainable Living Plan, which said, "Our purpose is to make sustainable living commonplace, and we are gong to change the lives of one billion people over 2020." Now the question here is, where do we go from here? And the answer to that is very simple: We're not going to change the world alone. There are plenty of you and plenty of us who understand this. The question is, we need partnerships, we need coalitions and importantly, we need that leadership that will allow us to take this from here and to be the change that we want to see around us. Thank you very much. (ted.com, 2013)