Business 101b

Turning one's thinking around isn't really as difficult as most would make it out to be. You simply need to take a step back, move slightly to the side, and then take a new look at the old idea. Failing that, sometimes a gentle nudge from without can help. Let's see:

Peter Drucker, the grandfather of American business theory, maintained that the purpose of a business (organization) is to satisfy needs in markets. I know that last word is a red flag for some, but let's keep it simple: by market I mean any "place" (real or virtual) where value is exchanged. This can be a swap meet, a flea market, an online bartering site or a commercial or industrial trade sector, or more.

In a world as complex as ours is today, this definition of purpose easily accommodates both for-profit and not-for-profit organizations. If there is a need for, say, computers and you have a business than makes them, then you are satisfying that need. If there is a need for charitable assistance for homeless people, then if you organize to do that, you are satisfying that need. If there is a need for government oversight in some area of the economy, then that agency, by performing its function, satisfies a need. Now that everyone is accounted for, we can move on to more meaningful topics like strategy, operational efficiency, environmental effectiveness or anything else that might help us get more out of what we do ... and by "more", I certainly don't mean just money.

Profit is money, so if the primary purpose of business is profit maximization, then you are trying to maximize your money. It follows, however, that if this is your first purpose, any other purpose you have can be, at best, second or lower. And it is here that too many businesses become disingenuous and start losing credibility in many people's eyes ... and rightfully so. You can claim that "product quality" or "customer satisfaction" or "the health of the patient" is paramount, but if you believe the mantra, you are not telling the truth. Profit maximization means nothing less than money first, and everything else comes after that. The order in which they come is really not all that important, for what's important is money. Naturally this does not and cannot work for not-for-profit organizations, but over the long-term it's not good for for-profit businesses either. At some point the customer starts asking him or herself what their getting for their money. Theirs is less; the businesses is more.

I would be the last person to maintain that money isn't important. Just because it isn't the absolute top priority doesn't mean it has no priority at all or that we shouldn't care about it. Quite the contrary. It is essential for businesses to strive for sustainability, to ensure their long-term existence, not just for their owners, but for the employees, their families, the community and any other stakeholder in the business. In order to do this, it is absolutely necessary to take in more than you spend. This is just commonsense housekeeping. Making profit the measure of success, though, defeats this purpose because the needs that should be satsified by organizations become relegated to second-class status, then ignored, then forgotten.

We need a new measure of success, but we won't be able to find one till we are ready to give up on ideas that have proved themselves wrong. Profit-maximization is one of them. It's time to give another idea a chance.

Business 101a

The more things change, the more they stay the same. I earned my MBA a quarter of a century ago, and I spent the last twelve years tutoring on an internationally recognized MBA program, and I can assure you, not much has changed. In my day, the MBA mantra was simple: the purpose of business is the maximization of profit. But is that really the purpose of business?

To some it is. I'd be the last person to say it wasn't so. But just because we think something is a certain way, it doesn't mean that's the best way to look at it. Truth be told, that mantra is actually a formula for failure, and that is precisely what the lastest financial crisis has shown us. We don't have to learn from our mistakes, I suppose (though I'd prefer we would), but it would be worthwhile thinking about just why it failed.

I don't like talking about businesses as if they were all one and the same thing (and regardless of what the Supreme Court thinks, they are not "people" ... an incorporated organization is technically a juridical person, meaning that in terms of the law it is in some limited ways like a person, but that does not make it a person any more than if I act like the boss that this means I actually am the boss). It is much easier, and cleaner, to think of businesses as "organizations", that is, a collection of individuals who have associated themselves with one another to do something that none of them could do on his or her own. In financial terms, though, it is possible to distinguish between two primary types of organizations: those that generate a profit (for-profit organizations) and those that don't (non- or not-for-profit organizations). These latter types of organizations can take on different forms from government departments and agencies to charities and more.

It is quite obvious that the MBA mantra doesn't -- and cannot -- apply to not-for-profit organizations. Though the MBA mantra is still being preached (with unwavering fervor), but the number of students from not-for-profit organizations seeking a graduate business degree has been increasing dramatically and steadily for the last 10 years. One has to do a lot of mental gymnastics to contort oneself enough to bring all of this together in such a way that it makes sense. Besides, it all can be so much simpler. We humans have a knack for simply getting things backwards, so perhaps it is time to simply turn our thinking around. It might take a bit of effort, but it really shouldn't hurt.

Time to talk

Violence is a sign of total frustration. When someone is backed into a corner and escape seems impossible, a common response is simply violence.

It is particularly sad, however, when it is the government – be it municipal, state, or federal – which feels compelled to act this way, for they are, at least in theory, servants of the public. I know it doesn't seem like it. Politics and governance have appeared to take on a lives of their own, or at least they appear to be living in their own little world. That's another sign of being overwhelmed by reality: retreating into one's own world.

For a good number of people, this is the time to find the guilty and ensure they are punished, but that's a really bad idea. Not only is there no one single entity, institution, group or person who can be blamed. We're all to blame. As George Carlin once quipped, "You're here, you're guilty, end of story." Well, almost. This is not the time to fix the blame, it's time to start fixing the problem.

Why? Because we're so good at it? Hardly. Because we know what needs to be done? Not in the least? Because we have a good chance of coming to a consensus on the way forward? Absolutely not. No, we have to start working on the fix simply because we have no choice. We've ranted and raved, thrown things, broken lots of stuff, almost burned the place to the ground, but, as expected, none of that has helped. No, now we have to take a deep breath, get calm, look each other in the eye, and do what we've practically forgotten how to do: we've got to start talking with one another.

You'll notice I said "with" ... not "to" or "at", not "out", "down" or "up". No, with. We've got to re-learn the lost arts of listening, reflecting, considering, questioning, and discussing. None of these need to be done with complete objective coolness. Passion is allowed, but not obsession. Assertiveness is allowed, but not abuse. Vigor is allowed, but not violence. But we have to start talking again.

Discussion is not a financial or economic method, so the moment we exchanged our society for a mere economy, we took away from ourselves perhaps our most powerful human problem-solving tool. We exchanged cleverness for clubs, reason for rubber bullets, and common sense for sonic cannons.

A recent article in New Scientist [online] by David Sloan Wilson, entitled "Selfless evolution: An idea rejected" shows how even Darwin acknowledged the necessity for a group selection function in evolution, that the Spencerian notion of "the survival of the fittest" has only short-term, but never long-term benefits. And the recent financial crisis has shown -- once again -- what happens when you think short-term for too long a time. Cooperation, not competition, is the strategic approach, and societies are (or at least should be) based on cooperation. So, it's time to put the economy in its place, take back our society and start talking again. My grandkids will thank you all for it, believe me.

Party hardly?

Ding, dong Gaddafi's dead, the wicked wretch is dead …

Isn't that the background music to the latest distraction to what's really wrong with the world? I'm no fan, and I don't think he should have ever been running a country, but celebrating someone's death is just too morbid. It doesn't do anything for me. It's petty.

The problems we're facing, today, now, here, everywhere haven't become less complex, easier to solve, nor have they been moved closer to resolution. Nature and capitalism abhor vacuums, so you can bet any currency that the big, monied interests are sending in their national vassals to score some cake for them. In this case, there are deals to be made, profits to be generated, image to be enhanced, and self-satisfaction to be spread around like take-aways at a job fair.

Libya's hurting. The people are hurting. There is a lot of physical, emotional and psychological trauma that needs to be dealt with. There is an excess of human tragedy to be mitigated. If the Libyans haven't realized it already, they've probably hit bottom, and they hit it hard. It's good that they have oil, though, because if they didn't – like the Somalians, for example – there wouldn't be anybody singing or anybody championing big returns in the name of liberty, freedom and democracy.

It is especially worth noting, I believe, particularly in this moment of such widespread joy that the Yemenites and Syrians are in no better shape, but there's just no motivation (read: oil) to help them. This isn't a one-step-at-a-time affair. This is not the time for policy of small steps. It's time to realize that none of the suffering and the misery and the despair is going to be relieved in any way until it's not about business-as-usual anymore. But it is about business, isn't it. It's always about business.

The despot is dead. Long live the despot! Once again, the Devil takes flight from Beelzebub.

It's probably a good idea to let the Libyans have their moment. They're going to wake up from the party tomorrow, or maybe the day after, and realize that nothing has really changed (just ask the Egyptians, or the Wall Streeters, or ...), and all the really dirty, nasty, difficult, and hard work is going to have to be done all by themselves, and probably with little, if any, real support. We all know that priority #1 is to get the oil flowing again ... finally. And yes, once the dust and accounts have settled, our Libyan friends can then roll up their sleeves and prove to the investors that they were worth helping out in the first place.

Adolescents

When I was an adolescent I had it all figured out. Together with my fellow adolescents, we knew more than all adults combined. Well, that's what we thought. A couple of years, a couple of kids, a couple of jobs, and a couple of major moves have given me reason to suspect that I might have overestimated myself then. Oh the wisdom of age.

Of course, age is relative, but the principle applies: we know more when we're young and get smarter as we grow older. What's true for individuals is, I would think, true for other areas of life as well, like politics. Yes, I can understand how folks who have never really been anywhere, who have never really done anything, who have never experienced anything different, who are politically wet behind the ears can think that they have something to say. When I was an adolescent, I, too, thought I had something to say. My parents knew better, regardless of how much I thought I knew. And, the wisdom of hindsight assures me they did the right thing: they let me talk and went about doing what they had to do.

The events of the past week, in particular, have reminded me of my own youth. I sympathize with the Occupiers, because I've been there and done that, even though for different reasons. What appeals to me most is that it is not just young people, not just white people or people of color, but a real cross-section of those who got hit the hardest when the "best and the brightest" decided they couldn't have enough. Whether some people want to admit it or not, it was American (and British) bankers who went off the deep end (allowing all those who aspire to the nonsense that represents to try and jump on the bandwagon), and now to watch the mindlessness of the run-up to the Republican primaries and to hear the newest adolescent on the block tell the rest of the world how to handle their affairs, all I can say is, it's time to honor my own father and mother, just let them talk and go about doing what I have to do.