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Two Ways of Thinking about Business

17 September 2009

Broadly speaking, there are two ways of thinking about the purpose of a business.

The first – and most common – is that businesses exist solely to make money. Profitability is the everything. Cash is king. ROI is required. Shareholder return is the rule. Operating from this mindset, anything that makes the cash register sing is a good thing.

Businesses that operate from this philosophy (if they survive) sometimes bring in billions, but there are tradeoffs. If the company’s employees have to sacrifice their health, sanity, and family to close a big deal or meet quarterly earnings, so be it. If what you’re selling is snake oil, caveat emptor. If ignoring inconvenient externalities like waste and pollution improves the bottom line, ignore away. If you can bribe a government official to give you preferential treatment or limit your competition, start writing checks.

It’s a sad way to live your life. In the immortal words of Ralph Waldo Emerson: “Money often costs too much.”

The second – and less common – way of looking at businesses is that they exist as a creative endeavor that’s financially rewarding. Money is still important, but it’s a means to an end: revenue is what allows you to keep doing what you’re doing. Other considerations are allowed to take priority: creative expression, craftsmanship, and personal satisfaction come first. As long as you bring in enough funds to keep going, you can choose to prioritize anything you want. The entire business becomes a reflection of the proprietor’s values.

Both ways of thinking about business rely on the same fundamentals: creating something people want, marketing and selling it, delivering the value, and bringing in more than is spent. Beyond that, it’s a night and day difference.

Do you exist to serve your business, or does your work exist to represent you and your values? It’s a question worth asking. The world would be a better place with a lot less of #1 and a lot more of #2.

(Photo credit: neadeau on sxc.hu)

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