Bob Lewis
Columnist

The reason corporations exist

analysis
Apr 20, 20082 mins

Dear Bob ...There is some value in your description of the purpose of running a business ("Of businesses and marketplaces," Keep the Joint Running, 4/14/2008). But really there is only one purpose, to make a profit.Everything else is secondary. No profit, no business.All of this talk about mission and survival and such is just a means to the end of making money.- Hard-headed PragmatistDear Pragmatist ...This is

Dear Bob …

There is some value in your description of the purpose of running a business (“Of businesses and marketplaces,Keep the Joint Running, 4/14/2008). But really there is only one purpose, to make a profit.

Everything else is secondary. No profit, no business.

All of this talk about mission and survival and such is just a means to the end of making money.

– Hard-headed Pragmatist

Dear Pragmatist …

This is more than opinion and less than settled fact: Your statement is only true of companies that aren’t going to be around very long.

No question, companies have to make a profit or they fail, for all the obvious reasons. That makes profit a necessary condition for success, not a purpose for existing. Money is the corporation’s food. It’s true that if you don’t eat you die. That doesn’t mean eating is the reason you exist.

Here’s why I take the position I do. Compare three companies.

The leaders of Company #1, from the CEO on down, focus on creating the best products in their marketplace.

The leaders of Company #2, from the CEO on down, focus on providing the best customer experience in their marketplace.

The leaders of Company #3, from the CEO on down, focus on maximizing profitability.

I don’t know who will come in first and second. I’m confident I know which company will waste most of its time and attention playing stupid financial games to make the books look good, eventually failing to compete the only place it counts – for the hearts and minds (and wallets) of the people who have to decide whose products to buy.

The leaders of the very best companies are like the best gamblers in Las Vegas. The money is interesting, but more for knowing who is winning, and for giving you what you need so you can play again, than for getting rich.

– Bob