What's a Business For?

 

Photo by Hannah Busing on Unsplash

Some thoughts on "What's a business for?" by Charles Handy in the Harvard Business Review for December 2002.

Why are virtue and integrity so vital to an economy?

    In the capitalist model, its greatest virtue according to Hardy is providing "a way for the savings of society to be used for the creation of wealth." But when the selfish interests of a few come into play, this model is prone to collapsing, on a small scale destroying companies, and on a big scale turning to rely on governments for the creation of wealth.

    Why does this happen? He says that "Markets rely on rules and laws, but those rules and laws in turn depend on truth and trust. Conceal truth or erode trust, and the game becomes so unreliable that no one will want to play." If we cannot trust the people and institutions that participate in business, eventually the potential for good will be lost.

    The current distortion in capitalism may be attributed to how we value a business. If greed or self-interest is the filter with which we perceive value, money will be our main goal and measure of success. It is totally different when the value is determined by how a business impacts others, its benefits for society, and the environment.

The “real justification” for the existence of businesses

    To explain the real justification of businesses, Hardy uses an analogy with food clarifying the wrong assumption of money as equal to value. He says "We need to eat to live; food is a necessary condition of life. But if we lived mainly to eat, making food a sufficient or sole purpose of life, we would become gross. The purpose of a business, in other words, is not to make a profit, full stop. It is to make a profit so that the business can do something more or better. That “something” becomes the real justification for the business. Owners know this. Investors needn’t care."

    This purpose is determined by how a business benefits the society it belongs to. For example, a technology company could help others to communicate or provide a democratic means for communication and learning. In my startup, the benefit is to improve education by making it more inclusive, innovative, and environmentally conscious. We aspire to contribute to shaping new generations with these main fundaments.

Solutions proposed by Handy I agree with

1. Companies should see themselves as communities "whose members have individual needs as well as individual skills and talents": I have worked for and served with others. I know that when we feel part of a community with shared values, and feel free to share our thoughts and make it better, not only our compromise increase but it creates a synergy to take things to the next level.
2. "Long work is not necessarily good work": working unnecessarily long hours can become a problem, when you have tired people, inventing things to do to comply with contractual hours.
3. "We need to associate with a cause in order to give purpose to our lives": As human beings, we must recognize that everyone has an inner voice telling them they have a mission to accomplish during this life. When people lose their purpose in life or do not find meaning in what they are doing it will hurt them and everyone around them. On the contrary, when they do have it, they become happier, more creative, with a better disposition to collaborate, providing a positive impact to them and society.

    I appreciate the new perspectives on business added by this author. I never thought about the benefits of capitalism or investigated the European economic model. It sparked my curiosity to learn more about it.