Thinking Thursday – Does A Company Exist Just To Make Money?

Every business school will tell you a company exist to make money. I think this paradigm will lead to very poor businesses. A business does need to make money but if you look at the most successful businesses their primary goals aren’t to make money. In the book Build To Last the author talks about the secret to companies being successful. None of the top principles included focusing on share holder returns as a primary objective.

I would suggest a different paradigm. A company exists to fill a need, innovate, and be socially responsible. On top of that the people or person starting a company should be passionate about what they are doing. To me a company cannot last for a very long time if it doesn’t have these qualities.

Caring only about money is partly what got us into the financial crises of 2008. I don’t think there is anything wrong with making a profit but it should be more of a by product instead of the main objective. In a Lean company you care bout the customer and delivery superior value and the financial results will take care of themselves. In traditional companies too much emphasis is sometimes put on the bottom line so you end up with processes that aren’t so good for the customer.

One of my favorite examples is collections. In most companies collections usually is a very painful process where you will never see that customer again. If you truly want to serve the customer either make collections customer friendly or do not have collections. The message is do the right thing and the profits will come. Look at HP, Toyota (post recall), 3M, Disney, etc.
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