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Opinion

Business: what’s the point?

  Is there a point to business? A purpose?If we were to conduct a street poll, what would people say in response to that question?I am guessing that the answers […]

NZBusiness Editorial Team
NZBusiness Editorial Team
February 19, 2012 4 Mins Read
333

 

Is there a point to business? A purpose?
If we were to conduct a street poll, what would people say in response to that question?
I am guessing that the answers would be many and varied. But I am also guessing that many of those answers would revolve around a common theme: “to make business people and shareholders rich and then to make them richer – and to do that at the expense of everyone else.”
Once upon a time it was believed that business had a strong social purpose as well as a purely commercial one. It was felt that a business should serve the community (of which it should be regarded a part) on a bunch of dimensions beyond simply extracting money from it.
It was believed that morality, integrity and ethics mattered – to all of us, including, not least of all, businesses.
Has this changed?
It has.
And what seems to have driven this change has been a continued acceleration of the characteristics of greed and avarice (the precise words used to describe the driving forces behind the Great Depression). 
‘Business friendly’ clergy in the Presbyterian Church at the time said, “The problem of the Great Depression was not capitalism but the foolishness and greed of the individuals at the helm of this economic system; captains of industry who pursued personal wealth at the expense of workers and the public”.
This description of the Depression as a moral failure on the part of the business leaders was common among Republicans at the time. As President Herbert Hoover stated in the early 1930s, “an economic system cannot survive unless there are real restraints [upon] manipulation, greed, and dishonesty” in the marketplace.
Are we experiencing similar issues today?
I think we are.
I think we are all suffering as a result of the “foolishness and greed of the individuals at the helm of this economic system”. 
Foolishness is, I would suggest, an entirely appropriate word to apply in this situation. It appears to be foolishness that results in a significant percentage of businesspeople believing that the sole purpose of their business is to line the pockets of their shareholders as well as their own, no matter what the cost to society.
It appears to be foolishness that prevents these people from appreciating some fundamental realities that have been proven time and again, but which many of the “foolish” seem to fail to grasp. Failing to grasp them results in businesses behaving in ways that risk not just themselves and their stakeholders but also the society of which they are a part.
The first reality is that there is only one place the money comes from in business – markets (i.e. customers). The only way to optimise the inbound flow of that money is for a business to know and understand that source and to nurture and nourish it. 
The second reality is that a business must have a stated purpose – a purpose which takes into account the needs and wants of all of its stakeholder groups, not just its shareholders. Where a business has such a purpose and that purpose drives the business’s strategies, those businesses are demonstrably more successful and create better long-term shareholder value.
(It’s worth noting that shareholder value should be a result or an outcome of doing great business, not a strategy in itself.)
The third reality is that a business is a marketing organism. As such, it needs to be nourished and nurtured if it is to survive and thrive. If this doesn’t happen it will wither away – eventually.
The fourth of those realities is that if a CEO is not the de facto, spiritual ‘Head of Marketing’ (and keeper and protector of the integrity of the business’s purpose), then what is he/she? 
The fifth reality is that many CEOs come from accounting backgrounds and, with a few notable exceptions, do not grasp, let alone lead and drive, the implementation of the marketing concept. In making this observation, I am reminded of the 19th Century Lancashire cotton mill owner who was chairing a board meeting at which the accountant made the mistake of speaking. The chairman replied “Just thou remember lad. Thou’s not on bloody team. Thou’s only here to keep score!”
But even scorekeepers need to know and understand the concept, rules and dynamics of the game. 
One exceptional multinational that understands the importance of having, articulating and abiding by a purpose is Proctor & Gamble. Read what they have to say about this at: 
www.pg.com/en_US/company/purpose_people/index.shtml 
Greed and avarice circumnavigates these realities and, in so doing, drives short-term gain but creates long-term pain, not just for the business itself but for its wider stakeholder groups and the society of which it is, inextricably, a part.
And that surely defeats the purpose of business.

Brian Meredith is CEO of The Marketing Bureau (www.themarketingbureau.co.nz). 
Email [email protected]

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