Making Money

What is the purpose of a business?

Many people think the purpose is to make money. Nothing more, nothing less. And the quest to make money excuses all manner of sins. If there’s nothing more to an organisation than to make as much money as quickly as possible, all sorts of things come out of it. Taking advantage of customers, employees, pension schemes, the environment, and more, all logically come out of the notion that only right now (or the next 3 months) matters. Raids on pensions, asset stripping, and reducing headcount to the bare minimum are all reasonable actions when this perspective is taken.

There’s no need to worry about what the future might bring if you’re only concerned with the present. In face, you’re encouraged to mortgage the future to pay for the present.

Eli Goldratt thought the goal was slightly different. He used to talk about the purpose of a business (any business) being to “make money now and in the future.” It’s remarkable, the enormous impact that can be had with the addition of a few small words.

“Now and in the future” means that maximising profits today may not serve the goal. It means the ability of the organisation to continue to earn more money in the long-term is a primary consideration for whatever we choose to do today. In fact, when we accept the implications of this subtle change, a massive change in behaviour is very common.

When you look at the consequences of only caring about profit now, it’s clear that in order to profit in the future, none of those things can happen. Employees and customers have to be looked after, pension/benefit schemes need to be protected, the environment needs to be considered, asset stripping is impossible, reducing headcount becomes a last resort, debt gets paid regularly, and shareholders get put at the end of the queue.

It’s amazing how a few words can turn conventional thinking inside out.