The Purpose of Business is to Make Money September 15, 2014 14:46
This article originally posted May 1, 2014 on our tumblr blog http://meliorak.tumblr.com/
I heard this phrase again for the 4325rd time today, in a webinar geared towards assisting young engineers with their entrepreneurial aspirations. I’ve always disagreed with this sentiment, but to tell it to a group of young people with serious problem-solving chops, that have spent a recent four years creating multistory beer bongs out of various items from Home Depot strikes me as especially silly. If I walked onto the UIUC campus in the middle of the night during Engineering Open House and tried to insist that the purpose of duct tape was to seal ducts, I’d get some quizzical looks and then silence as the students went back to fixing all manner of last-minute structural problems with this tool. Just because something was invented for a specific purpose doesn’t mean that intended purpose is the only, or even the best, use of that item. We don’t still use Viagra to decrease back hair. Luckily for the test group of hairy dudes, and everyone in business, tools can be used for various purposes.
Many businesses are run with the ‘purpose’ of making money, correct. But that need not be the primary objective. A new kind of for-profit enterprise combines the best of what nonprofits do (activities to complete some mission such as reducing poverty, improving health, cleaning the air) with the best of what businesses do (come up with creative solutions and find a way to deliver them without relying on governments or private donors). This has been called many things, but Social Enterprise is one name for this approach.
I don’t disagree that profit is an important part of any business strategy. If businesses could not stand on their own financially, they cannot complete their other missions, whatever those may be. Business, in some people’s opinion, is a tool to create monetary value for shareholders. But for some, it’s a tool to create societal value through efficient and established processes. The inventors of duct tape and Viagra should rightly be proud that their inventions have gone on to serve more noble purposes than they envisioned, and it’s time we as a society gave business the same respect.