What is Business For?

You may or may not know that this blog is an assignment for a business class called, Intro to Entrepreneurship. We've learned about what it takes to create a business, particularly within ourselves. This week we're focusing on "Becoming a Changemaker" and a critical question we've been asked to anser is, what is the purpose of business?

Ostensibly, everyone taking this class is considering starting their own business, but even those who aren't will likely work for a business, and everyone will buy from or interact with businesses during their life. 

So, why?

That's a terrible sentence, but a compelling question. Does a business exist simply to make money? There are probably some that do, but I doubt they're very successful. One of the first pieces of advice entrepreneurs tend to give is to recognize a need and then find a way to fill it. This helps the company succeed and make money, but it only does so by fulfilling a need in some part of society. In other words, by making their customer's lives better. 

When you think of the business world, though, do you think of something that helps you or a faceless conglomerate wanting to fill their pockets at your expense? I expect most of us fall into the second category. We know there are ethical companies, but they don't make the headlines nearly as often as the scandals and horror stories of greed and intrigue. People simply don't trust business leaders. And, as Charles Handy suggests in his article for Harvard Business Review titled What's a Business For?, “Trust…is fragile. Like a piece of china, once cracked it is never quite the same.” 

Handy goes on to assert his own opinion on why businesses should exist: "The purpose of a business...is not to make a profit, full stop. It is to make a profit so that the business can do something more or better. That 'something' becomes the real justification for the business." 

He also quotes David Packard, co-founder of Hewlett-Packard, saying, "I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a company’s existence, we have to go deeper and find the real reasons for our being. As we investigate this, we inevitably come to the conclusion that a group of people get together and exist as an institution that we call a company so that they are able to accomplish something collectively that they could not accomplish separately – they make a contribution to society, a phrase which sounds trite but is fundamental."

Imagine how society would be impacted if every mom-and-pop shop and huge corporation had the primary goal of contributing to a better world, with profits viewed as the means to accomplish their goals rather than the goal itself. Sounds wonderful, but not likely, right? But, I believe, most people are generally good. Think about it, how many really, truly evil people have you met? I know they're out there, but I can think of hundreds of decent people for every one who might be considered "evil." I'm not sure I've ever met anyone whom I'd classify as evil. 

So, by changing the focus of business we can change the culture surrounding it so the idea of trusting businesses and those who run them will no longer be laughable. That's why starting with virtue and integrity is paramount. Virtue in the form of bringing value and improving lives; integrity by doing so ethically, honestly, and transparently.

Handy cites companies like Merck who decided not to charge for a medicine to cure river blindness which affects people in developing countries because their core belief was that medicine was for the patients, not the profits. Now, Merck can't give away everything, but they can use their profits to find cures for more things and occasionally decide that this one is for free. He also spoke of Unilever and Citicorp finding new ways to bring affordable commodities and financial services to the underserved population of India. They're making a profit, but not necessarily at their customer's expense because they are providing services that improve lives. 

After all, that's what business is for.