Why Profit Isn’t The Goal Of Business

In my seminars I will generally ask, “”What is the purpose of a business?” The answer is unapologetically, “To make a profit.” I  explain the error in this thinking in an age of intense competition where customers are more savvy than ever before. Profit is the result of an organizations purpose that is fully aligned with creating value for ones customers.

Purpose connects “positive” to “business.” When we work together for a common goal, time flies and reaching the objective becomes joyful. This effect can be achieved by working alone, but it is magnified when we work in teams, attaining the synchrony of accomplishment.

There are two ways to put these concepts to work in your organization. The first is to lay out concrete objectives that employees can hit, but with a significant effort—an approach I’ve discussed before. After the goal is reached, team members need to celebrate their achievement and take a short break to recharge their effort stores before they work on the next challenge.

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The second way to use purpose as a motivator is to identify and broadcast your organization’s “higher purpose.” Specifically, how does your organization improve customers’ lives? If you don’t know this, then you don’t know why you’re in business.

Doug Rauch, the now-retired president who turned Trader Joe’s into a national chain, told me that he realized during the company’s expansion that Trader Joe’s higher purpose was to give customers a delightful experience. It does this by selling customers healthy and unique foods, but Rauch realized that it was delight that makes the real difference. And all Trader Joe’s employees know this.

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When I visit companies, I find that employees at very few of them actually know their organization’s higher purpose. That is most unfortunate, as Peter Drucker reminded us. “The number of people who are really motivated by money is very small,” Drucker once remarked. “Most people need to feel that they are here for a purpose, and unless an organization can connect to this need to leave something behind that makes this a better world, or at least a different one, it won’t be successful over time.”

Follow Drucker’s lead and change work from being transactional to transformative. Productivity will go up, and so will joy at work. I’d call that positive business.

Adapted from  The Drucker Institute.

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Jim Woods is president of The Jim Woods Group. A management consulting firm. Go here to see his work www.jimwoodsgroup.com. He advises and speaks to organizations large and small on how to increase top line growth in times of uncertainty and complexity. Some of his speaking and consulting clients include: U.S. Army, MITRE Corporation, Pitney Bowes, Whirlpool, and 3M. See more at his website www.jimwoodsgroup.com.

Posted in Leadership
2 comments on “Why Profit Isn’t The Goal Of Business
  1. Neven says:

    Hi Jim, in principal I can agree with your article, even I would like to use it with some of my peers.
    My problem is how to acknowledge this theory if you are working with emerging markets.
    Here most of the people are lucky to have a job and be paid on time or be paid at all.
    Purpose of the business for those people is surviving.
    It’s very hard to motivate or expect people’s acceptance of higher purpose.
    Or do you think that even in such “unfriendly” environment we should look for higher purpose?
    Thanx for advice and opinion

    Like

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