Building Business Value Blog

The Triple Bottom Line Creates Business Value - Expand your Concept

I had lunch with an old colleague yesterday and he reintroduced me to the concept of the Triple Bottom Line. Alan Randolph is the Professor of Management and Global Business in the business school at the University of Baltimore and the author of "Three Keys to Empowerment". As our conversation drifted around concepts of empowerment and value drivers, Alan reminded me of the concept developed by Ken Blanchard, Alan and others at The Ken Blanchard Companies. 

It goes something like this. Companies should certainly strive to achieve results in EBITDA or the traditional bottom line. That almost goes without saying. But they should also expand their concept of a bottom line to include being considered the employer of choice and the investment of choice. So if it all comes together, you'll strive for the best profits, the best place to work and the best place to invest.

Privately held midmarket companies can easily measure EBITDA, but may struggle with measuring their progress on whether they are the best place to work or the best investment.

Consider turning behavioral goals like "best place to work" with metrics like retention rate and number of applicants per staff opening. Whether you are a good investment can be viewed as a return on investment on the ownership of your stock, but also by how partner firms working with you view their relationship. Is it a profitable venture for stakeholders such as your bank, suppliers, vendors and distributors to continue doing business with you?

So the next time you address your leadership team or staff and broche the topic of meeting bottom line objectives, remember the triple bottom line.  You'll satisfy your shareholders by building long-term value and meeting the objectives of your stakeholders by building a great company.