What's a Business For?

Hello again!

The readings and videos from this week were, once again, inspiring. I especially liked the 2002 Harvard Business Review article, What's a Business for? by author Charles Handy.

• Charles Handy discusses many things relating to businesses in our capitalistic society. In the first couple of pages, he poses a question: Could Capitalists actually bring down capitalism? Charles sees it as a distinct possibility, as do I. The current system of capitalism and wealth generation are governed by rules and laws. There is also a shared belief that one can trust and believe that those rules and laws will be followed. The stock market demonstrates this very well. It is an incredible engine to generate wealth and spur innovation and company growth. It is also a system to help identify areas / companies that are no longer relevant and tears them down to make room for new companies to take their shot. We invest in the stock market and base those decisions on information dispersed by the companies themselves (under strict regulation of course). There is a shared belief that this information can be trusted and that it is a good place to park your investment dollars. Now, if that trust is broken too often (more than just a few bad apples) and investors begin to feel like they no longer understand or trust that the market is playing fairly, they will go elsewhere. That is why I believe, and agree with the author, that virtue and integrity is vital for an economy to continue to thrive. 
• The real justification of a business, according to Charles Handy, is not for companies to just make profit or just provide shareholder value. The real purpose of a company is to do "something more or better" with those profits. And yes, the profits are necessary to achieve that greatness but it can not be the only goal. If that "something great" is sacrificed for short term greed, it will become easier to make decisions that do not benefit the customers, employees or society in general. 
• Charles Handy proposes several solutions for the issues discussed. I'll point out two that I agree with:
• Companies should take the lead in areas such as environmental and social sustainability. Many times, the government has to step in and enforce regulations to force companies to comply. This is because it can be a real risk to be the first to act. Many times, the more sustainable operation is slower or more expensive and this could put a company at a disadvantage. As consumers, it will be important for us to not be mindless and to ensure that the products we buy come from these forward-thinking organizations.
• Companies should be seen as an entity of collective members that work together to achieve something that couldn't be achieved individually. The focus must shift from the shareholders to the success and happiness of its employees.