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.