What does success mean?
What makes a business successful? Profit might be the obvious answer. But what if that financial gain comes at a cost to employees, communities or the environment?
As businesses face growing social and environmental challenges, measuring success based on financial performance alone is becoming more difficult. Increasingly, the question isn't simply whether a business is profitable, but how that profit is generated and who benefits from it.
These questions were at the centre of our recent Socially Responsible Business: Impact Beyond Numbers webinar, which brought together academics from across Alliance Manchester Business School and sustainability professional Agnes Chruszcz to explore what responsible business really looks like.
Looking beyond profit
Businesses don't operate in isolation. They rely on employees, customers, communities, natural resources and wider economic and social systems to function.
During the webinar, Professor of Finance, Ning Gao highlighted the importance of considering this wider group of stakeholders, stating that businesses should "not only think about financial stakeholders, which include the shareholders, but also the non-financial stakeholders like employees, community, society, the government and the environment."
This raises a more complex question about how we define value in the first place.
Jeremy Brice, Lecturer in Sustainability and Innovation, challenged the idea that short-term financial success necessarily translates into long-term value. If a business is generating profit through activities which damage natural ecosystems or negatively affect its customers, can it really be considered successful?
His argument was simple: "An unsustainable business can't be a successful business over the long term."
Does sustainability come at a cost?
One of the biggest challenges for organisations is balancing financial performance with their wider social and environmental responsibilities.
But the panel questioned whether these two goals should always be seen as opposites.
Agnes Chruszcz challenged the idea that profit and positive impact necessarily have to compete. As she put it, "it doesn't have to be one or the other." The challenge for organisations is often in demonstrating that value and bringing different stakeholders on board.
Huw Morgan, Programme Director for BSc Accounting, also highlighted the difficulty of measuring the benefits of responsible business. While financial costs can be relatively straightforward to identify, the social and environmental benefits of decisions made today may only become clear in the future. This makes measuring and communicating that longer-term value particularly important.
However, there will inevitably be situations where the interests of different stakeholders are in conflict. For some businesses, making meaningful progress may therefore require more than introducing a new sustainability initiative. It could mean fundamentally reconsidering how the business creates value and understands success.
Rethinking the business model
Jeremy Brice discussed this in the context of business model innovation.
For organisations whose core activities have negative social or environmental impacts, those impacts cannot necessarily be addressed through changes elsewhere in the business. Instead, organisations may have to rethink their products, services and revenue models.
He gave the example of an electronics company moving away from continually selling new devices towards a model based on repairing or upgrading existing products. For an energy company, it could involve moving away from fossil fuels towards renewable energy.
This is where sustainable business becomes a question of innovation rather than simply a reporting exercise: how can businesses continue creating and capturing value while addressing the impacts created by their existing way of operating?
Preparing for long-term change
Sustainable business isn't simply about making an organisation appear greener. It involves difficult questions about how businesses operate, who they create value for and how decisions made today affect their long-term future.
For postgraduate students preparing to take on these challenges, that means developing the ability to work across disciplines, understand competing stakeholder interests and reimagine existing business models for a more sustainable future.
Ultimately, rethinking success means asking more of businesses than whether they are profitable. It means asking how that profit is created, who benefits from it and whether the way a business operates can succeed in the long term.
Find out more
Watch the Socially Responsible Business: Impact Beyond Numbers webinar to hear the full discussion or explore MSc Sustainable Business at Alliance Manchester Business School.
Register for upcoming Original Thinking for the Next Generation webinars >>