The business cost of profit

We don’t often think that profit has a cost. After all, profit is what is left after all the costs are accounted for.

However, I’m not thinking about the traditional relationship between income and expenses. I’m thinking about what we lose when we make a profit. Or at least when we are perceived to me making a profit at the expense of all other values.

Essentially we lose trust. And that trust costs us. It damages our brands.

I was prompted to think about this when reading this HBR article by Rob Goffee and Gareth Jones (of “Why should anyone be led by you?” fame.) They argue there is a general deficit of trust in our community. The food company puts too much salt and fat into their products and the pharmaceutical charges too much for its drugs.

We are seeing the same phenomenon in Australian politics at the moment.

So my question is “What’s the business cost of this phenomenon?” Most directly our customers will do everything they can to purchase goods and services from anyone but us. When they get to the point where there is no-one left they will take it out on us with higher support requests or return everything they can. If they get a chance to screw us they will. They think we’ve been screwing them for long enough.

On a wider scale, distrust in our political systems leads to instability and that costs us dearly.

Perhaps if we demonstrated that we are motivated by a much broader range of factors than pure profit, we might start to win some of that trust back. And then we might just make more profit!