The ‘People Planet Profit model’ (PPP), also known as the Triple Bottom Line (TBL) model, has become a hot topic in recent years. This post explores PPP/TBL and what it means for strategic project managers.
What Is the ‘People Planet Profit Model’?
- People – Who are the organization’s stakeholders? This includes not just shareholders. It includes employees, customers, contractors, service providers, and people all through the value chain. ‘People’ refers to the broadest definitions of the communities affected by the organization.
- Profit – Making money is an absolute requirement in order for an organization to survive. While it is not the only bottom line, it is required! Making money for shareholders is pretty basic: shareholders invest their money in a company freely and expect a return for putting their capital to work. The companies that perform the best financially will be in the best position to attract investor capital.
- Planet – Historically, the environment was able to absorb abuses. However, not only have those abuses become intolerable on a global scale because of damage that affects everyone, but people, local organizations, and local governments have built a formidable force that simply will not tolerate environmental abuse as it once did.
People, planet, and profit are interconnected:
- Today, efforts in favor of the planet can positively affect people and profit.
- Healthy profit can benefit people and the planet.
- Keeping people first is good for profit and for the environment.
A More Formal
Triple Bottom Line (TBL) Definition
John Elkington, and British management consultant, coined the phrase “triple bottom line” as a way of measuring corporate performance more holistically. His concept of measuring performance more broadly has much in common with the balanced scorecard approach.
Let’s look at how to measure each of the three parts of the TBL:
There are numerous measurements that can provide a snapshot of the organization’s performance regarding people.
- Employees – How are employees hired, compensated, and treated on the job?
- Contractors – Ditto for contractors!?
- Customers – How are customers thought about beyond a means of selling and generating profit?
- Service providers and Vendors – People throughout the value chain with dignity and respect in similar measurable ways.
In all cases with people metrics, demographics is a major consideration.
Financial profitability measures are well-established. Although sometimes they can be controversial, shades of gray are generally well understood.
What can be different in the TBL paradigm is that even financial reporting can be driven by environmental and social concerns. For example, businesses can report sales in specific geographic areas, showing equitable distribution across various demographics. Businesses can also show financial investments in people and planet initiatives that go beyond the norm.
This may not always be apparent to companies, but thinking even for the first time about impact on environment helps to raise possibilities. Here are some potential environmental measurements:
- Quantity of waste generated – Measurements of the amount of waste generated lead to thinking about how to reduce waste. It could be through greater efficiency, recycling, or finding alternate uses for the waste.
- Energy consumption – It can be illuminating to develop a list of where the organization consumes energy. That can set the stage for identifying process improvements, efforts to reduce or eliminate usage, or substitutes for consuming the energy.
- Raw material usage – There are multiple dimensions to consider here. Where was the material sourced? What are the impacts at the source? Are there potential substitute materials? Could products be redesigned to accommodate a better profile for raw material usage?
All three factors work together – they are interdependent.
Strategic Fit and the Triple Bottom Line
Traditionally, a goal of business strategy has been to build a business that is sustainable – at least financially.
The three P’s extend that goal. However, as mentioned above, the three P’s work together; they can potentially feed each other positively. There are potential synergies that can improve performance along all three dimensions.
In the article “The Triple Bottom Line: What It Is & Why It’s Important” by Kelsey Millar in Harvard Business School Online, Harvard Business School Professor Rebecca Henderson is quoted as saying,
“In many situations, it’s possible to do the right thing and make money at the same time. Indeed, there’s good reason to believe that solving the world’s problems presents trillions of dollars worth of economic opportunity.”
The strategic and practical question is, what can be done for the business at hand? Some businesses can lend themselves beautifully to the 3P approach, but it can be substantially more difficult for others. Disruptive innovation surely plays an important role.
Here is how this might play out in a few different industries:
- Farming is being disrupted as ‘urban farms’ are on the rise. They are not subject to the weather, have a small footprint, can be located near large markets, and have consistent cost structures – unlike traditional farms.
- Metal fabricating is a tough one. Certainly companies can work on how they treat employees and other ‘people’ stakeholders. ‘Planet’ improvements o high impact appear to be limited.
- Consumer products companies can examine and implement people and planet factors related to their products. However, they need to be very careful not to lose focus and put their financial performance in jeopardy.
People, Planet, Profit…and Projects, Programs, and Portfolios
People, planet, and profit are also consideration for all things related to project management.
- Project – Do your project plans consider the touch points and impacts of the project on people, planet and profit?
- Program – Your programs have an overall strategic direction – like running a business unit. What are the people, planet and profit drivers behind that strategy?
- Portfolio – Prioritization of projects and programs involve making choices. What drives those choices? Do those drivers include all three elements – people, planet, and profit?
Like organizations, projects, programs, and portfolios are also responsible for taking into consideration effects on People, Profits, and Planet. In fact, some projects and programs are entirely focused on that – and others not much at all.
I think it is most important that managers maintain focus on delivering value. That means to consider the 3 P’s, but to not become distracted unnecessarily by the 3 P’s on their project, program, and portfolio objectives.
Taking People, Planet, and Profit to the Next Level
The Triple Bottom Line (TBL), 3 P’s, and even Environmental, Social and Governance (ESG) are closely related ideas that extend the responsibilities of for-profit organizations beyond just making money. The risk with the approach is that the organization over extends itself into these new realms, and that it loses its focus on the business. I have seen criticisms of companies for doing this and losing their way.
What do you think of the concept of companies taking the TBL approach?
The following video about John Elkington and the Triple Bottom Line adds some additional perspective: