Profit vs. Cause

Recently, a national magazine posed the question: which should be the focus of a business, profit or a cause, and they asked two entrepreneurs to make their case. It is true that under stable social conditions, a focus on profit is better than having multiple goals. However, neither mentioned the real reasons why a business needs to be more than purely focused on profit. When extremes happen, the businesses that are more than just profit oriented have better survival. The other reason is that a hard focus on profit often blinds us to how the market is changing underneath us.

Making a profit in business is not easy, just look at all the businesses that go under. Starting a business takes a lot of effort and getting customers to pay for what you offer is even tougher. But that cannot be the total focus of the business person. We also need to be part of the greater community we live in.

Civilization happens when unrelated people come together for mutual protection of life and property. When it starts to break down, when people start to believe that others are not being mutual, we return to family and clan. So, Rick Steves can point out a quaint merchant's house in a medieval city that was built as a fortified tower. Shortly after it was built, the city was unable to protect itself against invaders. The tower failed to protect the merchant.

A focus only on profit is a luxury that works only when society is stable enough or when you have enough armed guards to defend you. Throughout history, those who focused just on profit won for a while and then, lost everything.

In the documentary on the Detroit riots in the 1960's, it is stated that the first businesses that were ransacked and fire bombed were those that had been seeking profit over helping the community.

Back in the 1500's, Spain was shipping tons of gold and silver back from its colonies in the Americas and the Philippines. The Dutch, the English, and the French wanted some of that and sent ships to steal some of it. Ships or their cargo were seized and some sunk. Nearly all ships needed to be armed at that time. Property rights were only valued by how much you could protect them.

People steal from impersonal organizations. The more that an organization is perceived to be large and uncaring, the more people steal from it.

Part of the problem with the firm focus on profit is that such a focus often blinds us to how the community and our markets are changing. Every year, the market changes, sometimes a little and sometimes a lot. Competitors invent new ways to take market from us. New technologies change their costs. People and social norms change. As we participate in the community, we are more open to how to change our companies in order to continue to make a profit.

Long term, a hard focus on profit tends to fail while companies that are engaged with the community survive events and changes better.

Handling new ideas

Apple is known as an innovative company. However, they have killed far more ideas than they have brought to market and have killed a number of products that failed. Other creative companies have gone under. The challenge for the creative person is not in coming up with new ideas. The challenge is to limit which idea to follow. Often, we have to kill great ideas in order to profit. At the same time, we need to be always open to changing the corporate focus to follow where the profit is.

For a long time, large corporations were known as places where ideas went to die. They had been operating in a fairly stable environment and new ideas reduced profit. Lately, large corporations are recognizing that they have to run scared in order to survive and are innovating at a rapid pace. But, they are not always handling the creative ideas properly

Creative people can always come up with more ideas than any corporation can handle.

Continuous innovation requires a process by which ideas can be safely killed while not killing the enthusiasm of the person. This process cannot be simply a review by the current group leaders. That offers a way for those threatened by any change to kill a new idea. Instead, ideas need to be reviewed by a group consisting of some inside the organization and those outside it and reports to the CEO.

Ideas need to be recognized, the people rewarded for coming up with the ideas, and the ideas need to be killed in a safe way so that the truly important ideas can survive.

Risky World

Computers are often too literal and don't realize when someone types in a mistake. In Toronto, an Amber Alert was sent out and the computer voice reading it told people to call "September 1, 2001" (9/1/1) instead of 9-1-1.