The Purpose Of A Business

A number of former executives from some of America's high-profile businesses have been going to jail recently. The most visible, I suppose, is Enron, but there are others. They tried to "cook the books" to make their companies look good, and to make themselves rich, and in the process cast doubt on all publicly traded companies, and played hob with the stock market. They did damage to the American competitive free enterprise system. They deserved to go to jail.

It was more than a half-century ago that Peter Drucker, the father of modern business management, stated simply: The purpose of a business is to create and serve a paying customer. That's it. The purpose of a business is to create and serve a paying customer. It is NOT the purpose of a business to create jobs, although a successful business will do that. It is NOT the purpose of a business to make investors wealthy, although they should receive a reasonable return commensurate with the risk they are taking. It is certainly NOT the purpose of a business to make its executives filthy rich, although they should be well paid if they do a good job. It is NOT even the purpose of a business to make a profit, although every business must be profitable if it is to survive and grow. And it is ABSOLUTELY NOT the purpose of a business to grow itself by manipulating the stock market.

The purpose of a business in a free society is to create and serve a paying customer, and any time people who run businesses forget that they are headed for disaster. Those hot-shot executives either never knew that, or forgot it. Or else they were arrogant and greedy people unworthy of the position they held in a free enterprise business. Thank goodness they are a tiny minority of business managers in America today.

This is Gordon Sawyer, and may the wind always be at your back.

http://accesswdun.com/article/2006/9/104630