What is the Purpose of Business?

Blog - UpAsk this question to most managers and they’ll respond, “To make a profit”.  If that’s your answer, then you might as well throw all your vision statements, mission statements, and principles out the window.

The real purpose of a business, any business, is to create value.  It’s to create something where there was nothing before.  It’s to do something better than what’s already out there.  When you create value, you better people’s lives and that’s something worth starting a business for.

Advertisements

2 Comments on “What is the Purpose of Business?”

  1. Scott J says:

    I believe you could combine these two thoughts in a more cohesive statement. “The purpose of business is to create value in way that makes economic sense to continue to provide value.” If I only provide value but receive no revenue, I am a philanthropist or charity, not a business.

    • Hi Scott, an excellent comment. I think this addresses a fundamental way of approaching business. In my view, I purposefully avoid adding a statement such as “in a way that makes economic sense” because this opens the door for a lot of the unethical behavior we see today. Economic sense, or profit, because the raison d’etre for any decision. It drives indefensible decisions such as not hiring a certain race because they will drive away customers or not providing insurance to your employees because it cuts into your profits. My fundamental belief, and what I think all great leaders inherently understand, is that if you truly provide something that adds value, you will not have to worry about business results. This is how Apple or Starbucks or Google operate. Their primary question isn’t what makes economic sense, their primary question is how can we do this better.

      Ultimately, if you truly care about creating value and improving on what’s already out there, it’s essential you sustain economic viability in order to allow you to continue providing that value. Focusing on value creation and contribution to the community doesn’t preclude streamlining your business to ensure a healthy organization, it just means that creating something great is more important than the bottom line.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s