Are Profits the Only Business of Business?

March 15, 2011

Last week I had to write a paper on a pretty interesting article for school (Yep, I’m still in college.) I was told to evaluate the opinions of an economist and decide for myself if he is crazy or brilliant. The article in question was Milton Friedman’s “The Social Responsibility of Business is to Increase its Profits.” All in all, he believes that businesses should only be responsible for making a profit.

As long a firm does not break the law, it is encouraged to go to any means necessary to make the most money. Aspects of a business such as the vision behind the founder, the happiness of the customers, and its impact on society should not be its main concern.

Of course, sticking to DeepSky’s #2 core value “Be A Hero”, I decided to see if what he was saying had some legitimacy. So, after carefully reviewing his points, I see where is he coming from, but it is clear that he did not value the words “passion,” “inspiration,” or “why.”

So, Milton Freidman, with this blog post, I challenge your views on business and propose a different way of thinking. With that said, sit back and ask yourself, why do you do business? What makes you get up at the crack of dawn with a smile on your face (alright, that may be pushing it) to start a long day of work, whether you own a business or you work for someone else’s.

Of course, so many people out there will probably be compelled to answer with something along the lines of “It’s for the money.” But because you’re reading this at the DeepSky Blog, I have a feeling that you’re smarter than that. Profit is not your why; it is only a result of your why.

That last statement leads me to one of DeepSky’s bibles, Start with Why, by Simon Sinek. The wisdom in this book taught me how to inspire myself, my team, and the world. It shows how being a leader is different than those who lead and how becoming the most successful company does not necessarily mean you made the most in sales. He encourages ALL people to find their “Why,” which is basically a term for the single, all-important thing that drives a person or a company.

So let’s go back to that lingering question:

What is the purpose of business?

The truth is, the answer is different for each individual business and each person within the business. The key is to find out for ourselves what is important. Some professions have it much easier, such as doctors, teachers, and scientists. They are able to easily answer that their purpose is to save lives, educate children, or make new discoveries, respectively.

However, entrepreneurs and business executives have a much harder time with this. Their day to day activity mostly consists of dealing with and making a profit, so they are led to believe that this is their entire purpose. Rakesh Khurana and Herbert Gintis do a great job of illustrating the problems within the business world when it comes to this topic. Their article titled “What is the Purpose of Business” shows how countless business schools are putting too much emphasis on profit and not enough on social responsibility. They encourage us to return to the mindset that most business schools were founded on.

Our purpose should be to “surmount incredible challenges and accomplish extraordinary goals”, not just to make profits. Businesses are created to make the world a better place. You will notice that countless great and inspiring companies have something in common: Their vision or “why” comes first. Their profit comes from the vision.

Examples

Companies like Apple, Facebook and Zappos have become leaders in their industry by starting with one simple vision or idea. However, once in a while even a great company loses their way. They become caught up with the money and release the passion that was there from the start.

For example, Steve Jobs, the founder of Apple Inc, was forced to leave the company sometime during the late 80’s / early 90’s and with that, the vision of the co-founder was lost. His successor was perfectly capable of running a business and making a profit, but he lacked the passion and ability to inspire that was within Jobs. Apple suffered greatly during the time of Jobs’ absence until he returned to apple in 1996.

This example can be applied to several other companies such as Microsoft and MySpace (Yes, I do remember MySpace!) So, I’ll end this post with a quote directly from Start with Why: “For those who have an open mind for new ideas, who seek to create long-lasting success and who believe that your success requires the aid of others, I offer you a challenge. From now on, start with why”

Resources:

Milton Freidman’s Article: http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html

Simon Sinek’s Website: http://www.startwithwhy.com

What is the Purpose of Business: http://www.aacsb.edu/publications/archives/janfeb08/54-55_yourturn_bized.pdf

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