To all those who think you understand that the "profit motive" is evil:
I won't deny the evil that businesses have wrought over time nor will I
deny that there are businesses that continue to create problems today. [I
hesitate to mention this lest it distract you from my point, but one could
say the same about most other institutions, including religious ones.]
But it is silly and over-simplified to ascribe the problems sometimes
caused by businesses to "the profit motive." Many, if not most,
senior-level executives that I have ever met have a much more
sophisticated understanding of what profit is and isn't than do those who
rail against business.
Indulge me in a brief story. When I was just starting my working life I
was given the task of going all over the country and interviewing some of
the most successful salespeople and managers in the U.S. life insurance
business. I was idealistic (still am), fresh from the 1960's, still
thinking my father was wrong about nearly everything he ever said,
etc.,etc., and I REALLY couldn't conceive of being so "money-focused" as
the people I was about to interview. And, sure enough, they talked a lot
about money. Finally, in one interview, I got fed up. One of these
highly successful people had, once again, referred to the importance of
making a lot of money and I challenged him with, "Please help me
understand what you're saying. You have more money in your hip pocket
than I will earn this whole month. You've made more money this past year
than I may make in the next ten. What possible difference can it make to
you how much money you make next month??"
You see, I "understood" everything about money, didn't I? And I was ready
to lecture this person about his lack of understanding. Fortunately he
was very patient with me and he kindly explained, "John, it isn't about
the money. You're right, it really doesn't matter to my lifestyle if I
ever make another cent. We talk about it so much because it's the way we
keep score." You see, he was saying, it's about self-esteem, about being
successful, about doing the best job you can, about earning the respect of
your clients and your peers, about self-worth. How much good did I do for
society last year? It's hard to measure directly but, indirectly, it's
measurable by how much money I made. Because money is what society gives
me in return for providing a valuable service. It's my community's
measure of my value and that's why it's important to me.
I would say that many who complain about "profit" have about as shallow an
understanding of it as I had about "money" in the life insurance business.
Profit is not "the motive" (in the sense of "purpose") of business -- even
though some business people may seem to act as if it were. Profit (or the
"surplus" in a not-for-profit business) is several things to a business --
but it is not its primary purpose. It's, in part, like the time
registered on a stopwatch is to a runner. And, just like that time
measurement, it is not valuable in itself but only for what it means. If
you have a malfunctioning stopwatch that shows a time that is shorter than
the runner actually achieved, would the runner feel good about that
achievement? No. They don't want just the time on the stopwatch but the
accomplishment of actually running fast. It's similar with companies and
profit. Do they want the profit? Yes and No. They don't want just the
profit but the accomplishment of serving their communities well enough to
earn the profit. But, unlike the runner (for whom the time is no more
than feedback), businesses also need profit in order to stay in business.
So it's a bit more important than just as a measure of success.
Note that you can get a misleading answer (from either the runner or a
business) by asking the wrong question. You may ask, "Is the time on the
stopwatch your motive...is that what you're after?" and get the
(legitimate but incomplete) answer, "Yes." And you can ask a business
person, "Is profit your motive...is that what you're after?" and get the
(legitimate but incomplete) answer, "Yes." But if you continued by
asking, "What if I could show you a way to get a shorter time on the
stopwatch without improving your performance; would you be interested?"
you'd get a more complete understanding of what time does and doesn't
mean. And, yes, you might even find a runner who would say, "Show me; I
want to win at any cost, including by cheating." I don't think this makes
running "a bad thing" although I would condemn that particular runner.
I used to ask customers, in focus groups, "Does XYZ company provide you
anything of value? Would your life be more difficult, less joyous, less
successful, or otherwise not as good if they were not around?" If the
answer is "No," then XYZ company should cease to exist and probably will
in time if it doesn't improve. If the answer is "Yes," then it's in your
long-term best interest for XYZ company to continue to provide the value
you need -- and in order to continue to provide that value one of the
things they must do is to stay in business -- and in order to stay in
business they much achieve some level of profit. So then I say to my
clients (businesses): To the extent that you provide a valued service you
owe it to those you serve to run your business in such a way as to be able
to stay around to continue to provide the service. But the larger purpose
is paramount. Without that larger purpose you have no reason to live and
no justification for making a profit.
What does this say to business leaders and to us? Do it signal a need for
diminution in vigilance? Of course not. The opportunities for bad
behavior are legion and the need for more caring, more focus on larger
purpose, more sensitivity to unintended consequences of what we do has
never been greater. I only suggest to those who, like me, want to improve
businesses' stewardship of the world that we must learn to be more
sophisticated in our understanding of business if we ever want to have
influence. Just as we react to someone who comes to us with advice and,
in the process of giving it, demonstrates that they don't understand our
situation -- so do business people react to crusaders who don't understand
the "profit motive."
--"John Gunkler" <jgunkler@sprintmail.com>
Learning-org -- Hosted by Rick Karash <rkarash@karash.com> Public Dialog on Learning Organizations -- <http://www.learning-org.com>