What is the purpose of a business? This question has been asked over and over again with varying answers. If you are sitting in a business school lecture you may hear many say, “To make money.” While this answer is correct in its own way, it may not tell the whole story.
As part of a business plan, strategies and models are created. These nearly always include a value proposition. Value is defined by the consumer and it is the job of the business to create the value that consumers are seeking. Whether this is long-term or short-term is also determined by the consumer. So, it could also be concluded that the purpose of a business is to provide sustainable value to its intended customer. Achieving what Peter Drucker said, “To create and keep a customer”
Phillip B. Crosby, author and quality management expert, once said the following concerning a company’s purpose, “A company’s purpose is to give people worthwhile lives by providing the opportunity for meaningful work, a decent living, and an opportunity to make a contribution to others. In pursuit of this purpose, a company has to make money, it has to grow, and it has to be successful.”
Crosby also states that making money is crucial to a company’s purpose but does not list it as the foremost purpose of the company. Making money is the means to an end or so it seems by his remarks. The company is responsible for creating meaningful work that not only brings value to the consumer but to employees and partner companies. Obviously that cannot happen if the company is not growing or producing profit.
There are still many other opinions of what the purpose of business is but I think we can draw some major themes from the few we have already mentioned.
1. A business must be successful at generating profits
2. The purpose of a business spans far beyond the sole objective of making money
New businesses drive economic growth, increase quality of life, and spur innovation. As we all undertake new ventures it is important for our visions and missions see beyond the objective of making money. There is an interesting chain that exists in the few examples we have shared. Money cannot be made without providing a product or service that consumers value. Without money it is impossible to provide meaningful work and decent lives to those involved with the business. So is it is the purpose of a company to simply make money? Absolutely, without it cannot fill the other needs for which businesses exist and provide us with the products and services we value. At the end of the day, businesses drive our lives, just as we drive them.
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