purpose of business

Business Purpose and success
It is a perpetual struggle for business to succeed. But businesses do not succeed automatically. It is for managers and leaders to navigate business in to success. This navigation is not as straight as it may appear. Business requires steering a disparate set of forces towards a common end. Understanding and internalizing this end is a great challenge for the top management.
Words as signs do not contain meaning rather the meaning is extracted by the interpreter. So the context of interpreter assumes importance. It is for this reasons success is defined in very individualized manner. Individually as a member, together as a clique, formally as a group and organizationally as a department the ‘success’ gets defined differently. By and large in a manner that is consistent with the thought process of the interpreter. These differences are bound to occur because the very term organization implies an ‘act of bringing together’ which otherwise would not assemble naturally. Organization is collection of parts which belong to their own turfs or domains. It is this domain context which plays significant role in interpretation process as to what success is. It is therefore there is nothing odd for people and groups in a business to have different perceptions as to what success implies. Some of the common territories in a business are known as marketing, human resources, research & development, finance and so on. Accordingly the concept of success and how it is to be achieved is territorially defined or defined in a context specific way. Take a dip stick survey in your organization to discover the meaning of success across different people and functions. In all probability it would reveal an interesting diversity of interpretations.
Business organization is not an outcome of an act of God. It is a created entity. It is one but it is made of parts. Hence there are two realities associated with organization: the local reality and global reality. And this shapes the perception of purpose. The lack of alignment between these realities makes a business system internally hollow devoid any common convergence of beliefs and actions. The resultant confusion and chaos renders the organization a team minus the members and members minus the team. An organization is an assembly for a purpose which is the rationale and reason of its existence. But that very purpose is misinterpreted by people and departments who actually are assembled to work for collective entity called organizations but end up working for them or for their territories created by the structure. Consequently the system is hijacked by a person or a group that emerges powerful as against the one legitimate. The hijacking of this kind causes fundamental dislocation of purpose. The organization becomes the means to satisfy a part (or insider). For instance finance may hijack the business into profits maximization or operations may drive it into minimizing costs. For R&D business system may be a platform to make scientific discoveries and human resource department may seek employee welfare. The reality is similar to a team where each player uses the team as a platform to achieve individual success without appreciating the significance of collective success for which they are assembled.
Why did Titanic sink? There are many explanations given to its sinking. Some attribute to ship construction while others blame it on to iceberg. Many others believe it was the poor visibility. But only few would attribute its sinking to the captain. The lure to make the Atlantic journey in the shortest possible time on its first voyage and make the headlines must have been a great pull for the top team including the captain. The purpose then became the headline making by breaking the time record and the means became Titanic and its speed. Is that the reason why Titanic came into existence or the purpose what to safely transport its passengers. In this context the instrumentality of the business organization must be correctly appreciated.
A business is an instrument created to perform a role outside. Poor performance on metrics like sales and profits indicate setting in of irrelevance. It is irrelevant when customers stop doing business with a firm. Like VCRs and typewriters became irrelevant to consumer so have many business firms. Business organizations are created for the role played by them in consumers’ lives. Business stays relevant as long as it plays an uplifting role in customer’s life. It must lift customers from lower states of existence to higher ones. There was a time when GE was promoted by the line ‘we bring good things to life’ and Philips ‘we make things better’. The lack of appreciation of this global role of business makes it vulnerable local pulls. This needs harmonization. It is for this reasons business should be seen from outside from the perspective of the ‘taker’ of its performance- the customer. Let every insider take a look at ‘what a business does and how it does’ wearing a customer centric lens to find out the gaps in perception. The final judge of what is ‘right or correct’ is not inside the business rather outside in the market. The both rights must concur. The disconnection of any kind makes the customer say ‘good bye’ which casts a death spell for business. Let the customer hijack the system not insiders. The business of business is not what managers what it to be rather what customers expect it to be.

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5 thoughts on “purpose of business

  1. I think modern day businesses confront an overwhelming tide of skepticism nowadays. It certainly has got a great deal to do with the financial crisis and how it was a by-product of capitalism’s “excesses”.
    Under such a circumstance, it is imperative for organizations to become “real”. The old methods of communication can no longer be an answer. I feel the next breed of successful organizations would be those which can communicate in a more “genuine” manner with its stakeholders. Those which do not get lost in jargon, or cliches.
    I really liked the part on the multiple realities within an organization.

    But Sir, I wish that you could shed some light on how distasteful it is when organizations indulge in copy-cat CSR. It is so evident that they want to use the pretext of “good deeds” to attract eyeballs and hopefully sales as well. I have come across “garage start-ups”, which have sections on CSR! Modern day companies must either practice meaningful CSR or stay away. As the legendary Milton Friedman put it succinctly: “The purpose of business is business”. You might agree or disagree but at least he is being honest.

    • Milton makes a very strong case in favor of ‘money making’ by business. Levitt adopts a little borader view and says there are two responsibliites of business- to seek material gain and obey elementary cannons of face to face civility. The these canons imply deception and fraud. Many others believe that business has responsibility beyond the pursuit of profit which stems from the fact that business is a part of larger society and there are externalities associated with doing business. Profit centric view fails to take cognizance of these unintended consequences. Therefore business must provide to compensate the society for these consequences. Busienss should be perceived as a subsystem of a big system. Lip service to CSR may work in the short run which means a business may gain at the cost of invisible damage to collective system which sooner or later would manifest.

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