Dear John,
In regard to your recent post-
>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.]
-I get the distinct opinion that I am being painted into a corner here!
It is one thing to say "the profit motive is evil" (however I don't
believe anyone on this list has actually said this), it is quite another
to believe as I do that that organisations create value in a number of
ways including profit or financial capital. To me it is not "either-or"
(that is either profit OR social and other goals), it is "both profit AND
other important outcomes". It is a symbiotic relationship: we need profit
to finance social progress and equity, but profit in an of itself without
a higher purpose is somewhat hollow...
Perhaps one way of seeing the world differently is viewing an effective
profit or not-for-profit organisation as striving to maintain a
sustainable balance between the various "capitals" it creates including:
-financial capital
-social capital
-cultural capital
-intellectual capital
An adequate capital value creation strategy for each of the above is
important in different ways at different times in different organisations.
Ghoshal and Bartlett in their book "The Individualized Corporation" have a
whole chapter on value-creation titled, "A new moral contract: companies
as value-creating institutions." The title itself is interesting I think.
They write:
"Because markets have no purpose or vision of their own, they can
ruthlessly weed out inefficiencies by reallocating resouces among the best
available options. (the upside of the profit motive) But for the same
reason, markets are not very good at creating innovations that require new
combinations of resources." (p278) (one of the business downsides of the
profit motive)
They then go on to cite the fact that a number of the case study companies
in their book have purpose statements that go beyond profit:
Eg ABB's purpose- "to make economic growth and improved living standards a
reality for all nations throughout the world"
Kao states- "We are first of all and educational institution"
I interpret the above to mean that at least in espoused terms, profit AND
other goals are important to these organisations.
By the way Rick, I have found the whole emerging literature on social
capital very worthwhile. Those interested can find a huge literature and
bibliography on social capital on the World Bank site at:
http://www.worldbank.org/poverty/scapital/index.htm
Regards,
Philip
Philip Pogson
Leadership Development Strategy Consultant
Staff Development Branch
University of Technology Sydney NSW 2007
Australia
ph: +61 2 9514 2934(w)
fax: +61 2 9514 2930(w)
ph/fax: +61 2 9809 5185 (h)
mobile: +61 0412 459156
"Loosening horizonatal boundaries...calls for integration, not
decentralization; process, not function; and teamwork, not individual
effort.
When an organization is viewed integratively as composed of shared
resources, it puts an end to the structural questions about power,
authority and priority raised in the centralize/decentralize debate."
-Ron Ashkenas et al
--Philip Pogson <ppogson@uts.edu.au>
Learning-org -- Hosted by Rick Karash <rkarash@karash.com> Public Dialog on Learning Organizations -- <http://www.learning-org.com>