The Paradox of Hedonism and What It Tells Us about Profit

Written by on January 2, 2013 in CSR, Entrepreneurship, Strategy - 2 Comments

Profit is to businesses in some respects what pleasure is to people.  They are both goals that are pursued and both are generally considered worthy of being maximized.  Because of their similarities insights into the pursuit of pleasure can also provide insights into the pursuit of profit.

Henry_Sidgwick

Henry Sidgwick described the paradox in his treatise “The Methods of Ethics.”

Pleasure seeking seems simple—if we want to maximize our pleasure, we need to figure out how our pleasure can be maximized and go for it.  The interesting reality however is that this framework is not quite true.  Known as the paradox of hedonism, people have recognized that pursuing pleasure can actually be self-defeating or self-limiting.  Directly seeking pleasure makes pleasure difficult to achieve and even more difficult to maximize.  (For an early explanation of the paradox, see “The Methods of Ethics” by Henry Sidgwick.)

For example, suppose Stuart picks up a hobby just because he believes it will maximize his own pleasure.  He is so focused on maximizing pleasure, however, that he does not actually enjoy the hobby and thus receives no pleasure from it.  Stuart then hears from a love-struck neighbor that falling in love is the greatest pleasure possible.  Unfortunately for Stuart falling in love is impossible because he frames all of his relationships in terms of his own pleasure and cannot care about anything or anyone else.

The solution: in order to get more pleasure, Stuart should stop directly trying to maximize it.  He must genuinely care about things distinct from pleasure and then let pleasure be felt as a byproduct.  Likewise, by genuinely caring about others he feels more pleasure in the long run.  This means sometimes choosing options that do not provide him with the most pleasure; instead of taking the whole of a much smaller pie he can get a part of a larger pie that exceeds the small one.

What does this say about businesses and the pursuit of profit?  Take for instance a food server who aims to maximize her tips.  The problem is a food server who only cares about getting the best tip is not a very good food server.  She cannot create a genuinely positive experience for her customers and she does not help the servers around her or their customers because she doesn’t really care about any of them.  Instead, a good food server would help when needed, get help when needed, and focus on caring about her customers and others, at which point the good tips will naturally follow.  Like food servers, businesspeople face the same problem—focusing too much on the bottom line might actually limit their bottom line.

It is counter-intuitive but taking a profit-maximizing approach for every business decision really can end up being profit-limiting.  Like Stuart, a business needs to recognize that profit is a byproduct and therefore must not ‘put the cart before the horse’ by focusing on profit and not what creates it.  This means focusing on the value that a business offers to the world.  A business can unleash their profit potential by balancing their own immediate financial interests with the interests of others—through CSR initiatives and by integrating positive impact-driven missions into the core of their business.  While these things won’t have an immediate or direct effect on the bottom line, they allow a business to jump the curve to a whole new level of opportunity by leveraging intangible drivers of growth like goodwill and reputation.  This is the approach of the benefit corporation movement, a network of businesses that combine the profit motive with a desire to create a public benefit.  In the long run, the fact that benefit corporations have other goals beyond profit could very well make them more financially sustainable and profitable than more short-sighted and single-minded businesses.

While a business could act as if they had non-profit goals even if they did not, such an approach will not translate to the success being discussed.  People and businesses who truly care will ultimately distinguish themselves from those who don’t—those who actually care can leverage the passion and fulfillment that comes from being a values-based organization into a thriving business overall.  Given the inherent difficulty in faking it, what reason would there be to do so when the alternative—genuinely caring—would be relatively easy and likely yield even better results?

The “business case” in favor of CSR seems to be made all of the time, concluding that CSR benefits a company’s bottom line.  The parallel I have drawn between pleasure and profit is intended to support that case.  CSR is a strategy for long-run profit potential.  Counter-intuitively, shifting strategic focus away from profit can increase profit overall.  By altering motives and intentions—by having an interest in the value and impact your business has on the world—you can actually get better financial results.  The paradox of hedonism teaches us that the best way to maximize profit is not just to take a more open-minded approach to profit-maximization, but to actually reduce the profit motive itself and let profit be the fortunate byproduct of everything else.  Businesses should therefore embrace a values based approach; by helping and caring about the world they can make themselves better off as well.

Photo Credits: www.smartpassiveincome.com / en.wikipedia.org/wiki/Henry_Sidgwick

 

Dan Osusky

Dan Osusky is an Associate at B Revolution Consulting, a benefit corporation consulting firm that advises social entrepreneurs in business plan development and strategy, and COO of B Revolution’s ezBcorp service, an online services platform that provides quick and convenient business solutions for social entrepreneurs. He has a graduate degree in Philosophy and believes that as a complement to the passion of social entrepreneurs it is necessary to develop an intellectual framework that can provide insight into the societal, economic, and moral implications of social enterprise.

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  • Kevin Owyang

    Dan, you make some great points here. It resonates with others like Sonny Vu, CEO & Co-Founder of Misfit Wearables and creator of one of the Top 10 Gadgets of Consumer Electronics Show (CES) 2013. When I interviewed Sonny, he pointed out how he had redefined the purpose of business as 1) “provide goods and services that enable communities to flourish” and 2) “provide opportunities for people to express their innate capacity for productivity and creativity in meaningful ways.” Through this redefinition, he says you will realize the goals of social and environmental responsibility without “all the infrastructure and requirements that’s going to weigh you down.” You can read his interview here and see why he says: Forget the Triple Bottom Line,
    It’s Culture that Matters

    Kevin
    Owyang is a contributor to Social Earth and Founder of B Jibe

  • Dan Osusky

    Kevin, that’s a very interesting interview (as is your own background). It definitely seems to mesh with my point here–that if you focus on the value you provide, success (whether defined financially or otherwise) will follow. Thanks for reading and commenting!