Michael Dell

what’s the purpose of a business?

A philosophical question for you this morning: what’s the purpose of a business? The business school answer is simply to make as much money as possible for the shareholders. I’m not convinced.

The concept of a “business” is fairly new in terms of human history. For most of our time on this planet we survived with the very simple job title of “hunter/gatherer”. I imagine the division of labor was pretty simple – “you stab stuff, I’ll try to find plants, we’ll get back together tonight and see if we get to eat.” Organizations existed at the tribe level and the mission statement was: “Trying to live for one more day.”

Then, 10,000 years ago (give or take a weekend) agriculture was invented. People could stay in one place and a more stable food supply allowed people specialize in a craft. Occupations arose and business was born. People moved past daily survival and were able to amass a cushion of resources that allowed them to prosper (long-term survival). Then we spent the next 10 millennia taking a very simple concept (survival) and turning it into something really, stupidly complicated (business).

We tend to think of organizations as something sterile and separate from their founders. We forget that the people who started the business, started that specific business for a very particular reason. When we look at the biggest businesses today, chances are very high that their founders started them NOT because they thought it would be the highest return on their money but because they were hoping to make money (survive and prosper) doing something they found interesting. Steve Jobs, Bill Gates, Bill Hewlett and Dave Packard, Michael Dell, Edison, etc., etc. started in garages and dorm rooms building cool stuff. Or at least stuff they thought was cool. There was sweat, emotion, passion, and wonder as they figured out how to make money doing the things they were fascinated by.

Think of your own career. Why do you do what you do? Chances are you didn’t choose a field based solely on annual salary. You may not even be in a field that you started in or even knew about when you were deciding what to do when you grew up. When you decided on (or stumbled into) a career it was probably based on many things in addition money. Face it, if we were ONLY about the bucks, we’d all be hedge fund managers, drug lords, or working on oil rigs in North Dakota.

If the ONLY purpose of a business was to make money for the owners, no one would be in low margin / low profit businesses. No one would stay in dying industries. The problem is, as the business ages, as the owners retire or sell, we forget that the purpose of the business was originally to make money in a way the owner found interesting. We forget purpose and reason and treat it like a commodity rather than a legacy with a heritage. We lose sight of being interesting and compelling and begin playing the utterly moronic Maximize-Profits-This-Quarter-By-Cutting-Our-Throats game that gets played daily in corporations around the world.

How would that change business – our businesses – if we kept in sight the idea that we’re in hotels or banking or telecommunications or auto manufacturing or farming or whatever because it was once a way to make money (hopefully, good money) that was more interesting and compelling than all the other ways the founder could have made money? If we kept in mind that there was something about this business, this field, this industry that jazzed people?

I’m all for profit. But profit for the sake of profit is a snooze. Profit in pursuit of doing something cool, interesting, challenging, and amazing? That’s where the fun is. That’s where the purpose of a business lies.

What thinks you?