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>5. A company the focuses solely on profits ultimately betrays both itself and society. I think if you focus on long term profits, you don't fall into this tra

by drcube 15y ago

>5. A company the focuses solely on profits ultimately betrays both itself and society. I think if you focus on long term profits, you don't fall into this trap. The problem is short term thinking, not profits per se, or else what is a business even for? I can buy a house if I want a money pit.

shoham 15y ago
I think that these phrases and especially number 5 point to a different paradigm in business than we have today, unfortunately. Profits should really be there largely to help a company expand service, do R&D into new technologies, and keep the business afloat in hard times, not as the prime mover it all too often is. To your question: "What is a business for", I like this answer: #2: Set out to build a company and make a contribution, not an empire and a fortune. Even the meanest Robber Barren on the Gilded Age got this, I think.
ansy 15y ago
The key word there is "solely." If your company only exists to make money, it will tend toward a state that doesn't create real value. It will be a company of charlatans. The quote needs to be taken in context with the other quotes. The message is that companies need to aim for a higher purpose. This isn't just philanthropic white-washing, but this grounds the company and forces it to understand people and society. From that understanding the company can serve its customers better which is the true path to profitability.
cpeterso 15y ago
> The problem is short term thinking, not profits per se, or else what is a business even for? That is a good question: when is a business/company no longer necessary? As short term thinking approaches zero, when does a business simply devolve into just a value transaction? If investors or management want immediate revenue, they could liquidate the company's assets. If they want longer term profits, then they must define the expected duration for a return on investment. One quarter? One year? Or a sustainable, self-sufficient entity (cf. Built To Last: Successful Habits Of Visionary Companies)?
hammock 15y ago
Actually the idea is that if you focus on creating products that people want and are able to buy, the magic of capitalist trade is that the profits will come naturally. Focusing solely on profits (regardless of long/short term) and not putting the product first is what leads to bad decisions. It is the thinking behind why Jack Welch once said, "Strictly speaking, shareholder value is the dumbest idea in the world."

by drcube 15y ago

shoham 15y ago

I think that these phrases and especially number 5 point to a different paradigm in business than we have today, unfortunately. Profits should really be there largely to help a company expand service, do R&D into new technologies, and keep the business afloat in hard times, not as the prime mover it all too often is. To your question: "What is a business for", I like this answer: #2: Set out to build a company and make a contribution, not an empire and a fortune. Even the meanest Robber Barren on the Gilded Age got this, I think.

ansy 15y ago

The key word there is "solely." If your company only exists to make money, it will tend toward a state that doesn't create real value. It will be a company of charlatans. The quote needs to be taken in context with the other quotes. The message is that companies need to aim for a higher purpose. This isn't just philanthropic white-washing, but this grounds the company and forces it to understand people and society. From that understanding the company can serve its customers better which is the true path to profitability.

cpeterso 15y ago

> The problem is short term thinking, not profits per se, or else what is a business even for? That is a good question: when is a business/company no longer necessary? As short term thinking approaches zero, when does a business simply devolve into just a value transaction? If investors or management want immediate revenue, they could liquidate the company's assets. If they want longer term profits, then they must define the expected duration for a return on investment. One quarter? One year? Or a sustainable, self-sufficient entity (cf. Built To Last: Successful Habits Of Visionary Companies)?

hammock 15y ago

Actually the idea is that if you focus on creating products that people want and are able to buy, the magic of capitalist trade is that the profits will come naturally. Focusing solely on profits (regardless of long/short term) and not putting the product first is what leads to bad decisions. It is the thinking behind why Jack Welch once said, "Strictly speaking, shareholder value is the dumbest idea in the world."