Forget the Triple Bottom Line, It’s Culture that Mattersby 3p Contributor on Thursday, Jan 3rd, 2013 ShareClick to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Google+ (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) Misfit Wearables’ first product is an an elegant, wireless activity tracker. The CEO argues that culture is much more important than the triple bottom line.By Kevin Owyang “The triple bottom line is ridiculous, I know it’s totally heretical to say that, but have you ever tried to build a business? Even just the financial bottom line is really, really hard.”When I heard this, I thought I was listening to the echoes of a 1970’s era Clean Water Act opponent, but the words came from Sonny Vu, CEO & Co-Founder of Misfit Wearables and creator of one of the Top 10 Gadgets of Consumer Electronics Show (CES) 2013. He shared his thoughts with me during a recent interview.“Get to financial success first,” says Vu. “If you build a culture that cares about its social purpose and its spiritual purpose on this earth,” you will realize the goals of social and environmental responsibility without “all the infrastructure and requirements that’s going to weigh you down.”Success follows VuVu is a New Hampshire-based serial entrepreneur, but global companies like Toyota embrace his message. His previous venture, AgaMatrix, created one of the first hardware medical devices that works with the iPhone. AgaMatrix is heading towards $100 million in revenue. Vu left as Chairman about a year and a half ago to start Misfit Wearables and has since raised over $8 million in financing.Misfit Wearables’ first product, the Shine, is an elegant, all-metal activity tracker that you can sync with your smartphone just by placing the device on the screen. It can track cycling, swimming, walking, and running.Purpose is different from profitVu says Misfit’s has two purposes. The first is “to provide goods and services that enable communities to flourish.” That means, “you’re making stuff that’s really useful for people… and as a result you earn the financial and well-being rewards to flourish [yourself].”The second is to “provide opportunities for people to express their innate capacity for productivity and creativity in meaningful ways.” For Vu, this has deeper meaning. “Does that mean job creation? Yes. Does that mean making work meaningful? Absolutely…Those two things are actually in our corporate charter at a very deep level and it’s actually repeated in every single [employment] offer at the very top.”Servant leadership delivers resultsVu has flipped the org chart upside down – putting customer needs at the top of the priority list. “One of the most distinctive features about Misfit is servant leadership. We believe that the customer is the leader. And scientists, engineers, and designers serve the customer, or the user, first and foremost.”Then, the company is organized to address those customer needs best. Say Vu, “The team leads serve the engineers, designers, and scientists; I serve the team leads and the board serves the company. So when you look on our website, you don’t see leadership or management.”And while Vu admits group dynamics are never perfect, “a servant’s heart exists across the organization,” and that makes tension constructive and healthy when it could otherwise be difficult.Meritocracy measured on cultural fitVu emphasizes “first and foremost is [corporate] culture.” “In fact, we will fire a person on a culture basis alone. “You know, we’ve had people who were superstars, very good at what they do and on top of their field. They were not a cultural match. And we let them go. It was a difficult thing to do but it was not a difficult decision to make.”Is Vu onto something? Steve Gandara, Co-Founder of ExcellentCultures works at the highest level of global companies like Toyota’s Scion Division. He notes that cultural solutions are in demand because “the most recent Gallup Employee Engagement Survey tells us that seventy-one percent of employees are disengaged from work and ineffective leadership style is the primary cause.What’s more, seventy percent of managers lead in a way that stimulates defensive behavior and destroys productivity and morale.”What about the environment?At this point, Misfit is not in production. Yet, Vu notes that thoughtfulness is a core value. “Put away the dishes. Push in your chair after you get up from a meeting. It’s very subtle, but what is expressed internally will be expressed externally.” And perhaps this is the basis for a sustainable supply chain – thoughtful about the environment and workplaces where Misfit’s products are manufactured.Vu will be appearing at Digital Health Summit with Dr. Sanjay Gupta January 8-11 and CES2013, with Arianna Huffington and Deepak Chopra January 8, 2013Kevin Owyang is Founder of B Jibe. B Jibe reports on people and companies that give back. B Jibe is a not for profit project of Avolusis, LLC where Mr. Owyang is CEO. Previously Mr. Owyang held various executive level positions in technology and telecommunications and was Executive Vice President, Risk Management at Kinder Morgan Inc. You can read more about him here. TriplePundit has published articles from over 1000 contributors. If you'd like to be a guest author, please get in touch! Follow 3p Contributor @triplepundit 9 responses The triple bottom line can successfully be integrated into your corporate culture, the question, is this a “sustainable” decision, should be asked every time you are making a decision. Sustainable for the business, employees, customers, stakeholders, and the environment… That is the triple bottom line. It isn’t hard just takes a different way of thinking and I agree it requires a change in beliefs / core values from the traditional US profit driven corporate structure where profits or responsibility to the stock holders is used as an excuse to do the wrong thing from small the exceptionally shocking ways. TBL is all about cultural transformation, a theory of mind regarding points of view often disregarded. This all-about-profit harkens back to pre-sustainability days, where “if we are profitable, we can do anything.” A systemic view and guiding principles, like those framed around the TBL, do just that – reshape the organization w. additional, yet positively reinforcing values that deepen and broaden how to get to profitability sustainably. Sustainability… Good article, but it sounds like Vu already has a triple bottom line philosophy and culture in his company, he’s just not calling it that. The 3bl doesn’t necessarily mean a literal set of accounting books, as other commenters stated, it’s very much a cultural concept in part. TBL is definitely about culture and profit. Social and environmental good without profit is philanthropy and is not sustainable. TBL can be built into the corporate culture by considering environmental and social concerns in every decision. But it has to start from the top or it won’t stick. He’s right, that fiscal sustainability is difficult. But he is failing to make the distinction between companies whose social and environmental bottom lines are in tune with their fiscal income, and those whose missions are separate.Case in point, Ben & Jerry’s. Clearly a TBL company, but one where the fiscal bottom line is based primarily on the sale of ice cream, while the social and environmental bottom lines are only part of the expense side of the P&L, i.e. in the operations of the company.In comparison, Zipcar has no separate mission vs. signing up members. Each Zipcar membership has a positive environmental impact on the planet, and a social impact in traffic, sharing, etc. Thus each customer adds to all three bottom lines at once, with no distractions to management vs. one bottom line.Given I’ve not seen this distinction spelled out in the multitude of books and articles on “social enterprise”, I’m not surprised Vu trips up with his analysis. This very distinction is what I’ve named as “conscious companies” vs. “social enterprise” (see http://fledge.co/2012/12/ignitebgi-5-minutes-20-slides-15-seconds-each/) There is validity in Sonny Vu’s points. You never want to build a business that is encumbered by ‘infrastructure and requirements that way you down’, and if you build a business that isn’t financially viable – well, you aren’t going to be in business very long.It’s great that Vu has hit upon an approach that works for him and his company, and it’s gerat that he is baking it into the DNA/culture of the company. Not every company is creating useful products/services (those that are inherently value-adding for customers) or delivering the kind of value that Vu aspires to. Most need to be much more mindful and intentional about their unintended social and environmental impacts, not just in their products, but also in the way which they create, deliver and follow through on value creation (i.e. through their supply chains and with their stakeholders). In this context, and recognizing that each business starts from a unique place, then some of the TBL frameworks, tools and approaches can be useful to initiate, facilitate and monitor change.Sure some tools and processes can feel cumbersome when they are used to pull businesses kicking and screaming to a better place or followed blindly. And perhaps there is a better way, one that taps into the uniqueness and potential of the businesses and the people within it. (See for example Carol Sanford’s work on The Responsible Business, and work I and others are doing with our clients around change.) We will develop many POVs as we reimagine the possibilities and forms of business. Mr. Vu’s is one such POV and I strongly applaud his comments on purpose. However, IMHO, his opening comments fail to encourage a broader, more generative conversation. I’d like to see leaders do better in this area. They could take the lead from visionaries like Sir Richard Branson. These leaders set the right tone by creating and sustaining businesses that let people approach business in unique and meaningful ways. If embracing a TBL approach makes sense for the business then they are cleared for takeoff. Bravo!!! This article fails to generate any new thoughts or insights. By Mr. Vu’s logic, the social and environmental part of a corporation’s societal obligations are just “too hard”, and should be ignored? So we should just hope that his secret sauce for culture (which, by the way is not elaborated on at all in this article) will magically address the social and environmental challenges we must urgently face now on planet Earth?Sorry, but this whole argument sounds like a justification by a leader who has not developed his mindset/ethics past a “businesses’ obligation is to make maximal money for its shareholders” attitude/belief. (An argument that has been strongly challenged through “created shared value” arguments that are much more inclusive and very much aligned with a TBL philosophy and operational approach.)TBL does not “weigh you down”. In fact, companies are finding added value and competitive advantage, not to mention greater resiliency in facing a VUCA environment, though adopting a TBL approach. Yes, culture is critical and the inverted, service-oriented org chart and culture can add value (although these are not new nor innovative as they’ve been done before). But the argument is flimsy. I would hope that TriplePundit would push harder in interviews like this. We need much better if we are truly to drive towards sustainability. “Enough… for all… forever.” Comments are closed.