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What Is The Purpose Of Business?

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What Is The Purpose Of Business?

I have asked this question hundreds of times in classes and the standard response without too much hesitation is always “To make money” or to “Maximise shareholder value”. Sadly, this is the overwhelming focus for a lot of businesses out there. We have more than likely all been part of organisations like this. The meetings you attend are all about the numbers. What are the sales figures looking like? What does the balance sheet look like? It strikes me as a less than inspiring place to work.

Don’t misunderstand me. Money is an important part of any organisation. Like we need air to stay alive, companies also need to make a profit to stay alive. If a business is any good, it will make money, but it should never be the reason why the business is in existence. Having that kind of focus can kill your business.

“To say that the role of business is to make a profit makes as much sense as to say that the role of a person is to eat or breathe. If a company loses money it dies, as does a person without food, but that does not mean that the purpose of living is eating” – The Dalai Lama

As we move well into the second decade of the twenty first century, it is becoming more apparent that more people generally are looking for a different work experience. The aftermath of many corporate scandals, the consequences of the recent global recession and the continued greed shown by many industries has awoken the world to a future that needs to be different. Generation Y and Z in particular are showing that they will hold corporations accountable for a greater sense of social responsibility and the creation of shared value with the communities that they operate in. Profit is important as we said, but companies need to ask the ‘What for’ question.

The late David Packard, co-founder and inspiration of Hewlett Packard, one of the world’s most respected international businesses, put it this way before he died:

“Why are we here? I think many people assume wrongly that a company exists solely to make money. Money is an important part of a company’s existence, if the company is any good. But a result is not a cause. We have to go deeper and find the real reason for our being. As we investigate this, we inevitably come to the conclusion that a group of people get together and exist as an institution that we call a company, so that they are able to accomplish something collectively that they could not accomplish separately – they make a contribution to society, a phrase which sounds trite but is fundamental.”

The great Peter Drucker maintained that there can be only one valid reason for a business and that is to “create a customer”. It’s time to change our focus from meeting targets to meeting customer expectations. When we take the focus outside of ourselves and look to adding value and making a contribution, the money will come as a natural consequence. Perhaps some of the questions we need to be asking ourselves are as follows:

• How can my knowledge, skills and experience help my customer to grow?
• What are they trying to achieve in their business and in their personal capacities?
• How can I help them to meet their objectives?
• How can I achieve synergy through collaboration and partnership?

When we can find the answers to these questions we trigger the law of reciprocation. Customers almost feel a sense of indebtedness, a need to reciprocate in some way. One of the best examples I have seen of this kind of mentality is a scenario that started out in the 1980’s and is still going.

Onchocerciasis or River blindness as it is commonly known is a parasitic disease that affects millions of individuals in the tropical areas of Latin America and Africa. It is caused by a parasitic worm and results in amongst other symptoms intense itching which leads to people literally tearing their skin away, often committing suicide in sheer frustration. It also results in permanent blindness in many cases. It is contracted through the bite of the black fly from the genus Simulium, which breed in fast flowing rivers. The world health organisation estimates that there are around 100 million people at risk of contracting the disease and that there are 34 million infected individuals of which 800 000 are visually impaired and 270 000 blind.

The social and economic implications of the disease are massive as you can imagine. Images of young boys and girls leading the elderly blind through rivers to work in the fields are not uncommon. Many young people move away from their villages and leave prime, fertile land in favour of less fertile land, further from water and many are left completely incapacitated by the disease, unable to make any meaningful contributions.

In 1978, a researcher at Merck pharmaceuticals discovered the possibility that a drug called Ivermectin could alleviate the symptoms of river blindness and prevent further infection with a single yearly dose. After initial findings the drug was ready for clinical trials by 1980. Merck scientists worked for a further seven years until 1987 making sure that it was absolutely safe for humans. Although the final figures are not available, It is estimated that Merck spent hundreds of millions of US dollars getting the drug ready for market. Here’s the confusing issue, though – Merck recognised the immense cost it would take and the fact that the market the drug would be intended for could not pay for it. To date Merck have distributed over 2.9 billion Mectazan tablets at a distribution cost of five dollars a tablet. Why would they do that?. Why would they pledge to donate as much Mectizan as needed until river blindness was eradicated globally?

I believe the answer to that question lies partly in the philosophy of George W. Merck who took over the Presidency of the organisation from his father in 1925 – “Medicine is for the patients. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been.”

This philosophy, together with a written down assertion that the reason they were in business was to “Preserve and improve human life”, was a major contributing factor for this massive donation. Perhaps it’s time for us to re-examine our motives. Why do we do what we do? I think the world would be a far better place if we gave some serious consideration to that question and committed to doing more.

For more insights on leadership, book top business motivational speaker in Cape Town, Eddie Botes for your next event – 081 305 5825

About the Author

Eddie Botes is a motivational speaker and trainer based in cape Town, South Africa. He is the founder of Leadershift, an organisation dedicated to inspiring and developing greatness in leaders, by providing world class training programs, entertaining and research packed presentations and state of the art profiling and assessment solutions.

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