Leadership

The Function of Business

The function of business is not to make money. The function of business is to serve. Further, the purpose of business is not to make money. The goal and purpose of business is to serve.

There were two men, and they each made $40 million.

One man started fixing computers in his garage when he was fifteen. Eventually, he hired on a couple friends to help him. When he was thirty, he moved into an office setting with a full staff and in addition to repairing computers, he started developing them. Five years later, he opened a second office and started developing software for his computers. Ten years after that, he took his company public on the stock exchange as well as starting to ship internationally. When he retired twenty years later, he had $40 million in savings, stocks, bonds, and other assets. That was the first man.

The second man worked the same job for forty years and then won the lottery.

Which life sounds more satisfying and rewarding? Which one has a sense of purpose and meaning?

Probably the man whose money was a measure of his success, not the success itself.

Businesses cannot be machines for making someone money. Rather, they need to be facilitators of community. That claim might get me in trouble, so let me explain it a little bit. If you talk to a successful and happy person of business and you find out why they are happy, at the very root, it is not likely because of financial gain.

They may tell you that they are happy because their company is profiting and doing well financially. But if you get to the core of this, it still would be something more than simply financial profit.

What you might find is that they are pleased because the idea they have been working on is proving to be successful. The business idea which they have poured out blood, sweat, and tears to make work is finally being received by other people being counted worthy.

Or, it may be less about the idea or the business itself. The person may be pleased because they could observe, consider, and develop processes in a business in a way that improved efficiency and effectiveness and resulted in a profit. But this profit is not what made them pleased. Rather, it was that they figured it out. They showed themselves effective.

Why does this matter? It matters because we all know this intuitively. And yet we probably tell ourselves that business is about financial profit. “The bigger the profit margin, the greater the success”. This is not by necessity true. Let’s determine what is true. Let’s change our meaning of business, and in doing so, let’s change how we measure our success.

The meaning of business. Business is about facilitating community. The function and purpose of a business is to facilitate community in its particular sphere of influence. Let’s break this down by asking three questions.

1) What do I mean by “function and purpose”?

By purpose I mean the goal that the company is pushing toward. This might be contained in the vision and mission statements of a company. What is it that a company is trying to be. What do they want their relationship to be to those around them?

By function I mean something similar. If purpose is what the company is aiming to be, the end to which it is striving, the function is what it is now. While your purpose might be to become the industry standard for your field, your function is to be the standard for your field in your region. You are pushing towards your purpose, but your current role in your community is your function.

2) What does it mean to “facilitate community”?

It is important to first understand the scope of community. The idea of a community is not limited to the local neighborhood. It is a concept that can be applied in both narrow and broad ways. A community is the people and entities you relate to, who are benefited and hurt by you and by whom you are benefited and hurt. When we talk about facilitating community, we are talking about how an organization integrates into and builds up the community around it. The local business that contracts for cleaning schools helps provide a clean atmosphere for students to study. The business that contracts to clean up trash provides a sanitary place for community to grow.

As a final note, we use the word community here on purpose. When we talk about business, there can often be a temptation to think exclusively in the abstract. To think in numbers and graphs and not to ask ourselves how the actions are organization takes affect the people around us. We have to remember, whether we are a local mom and pop grocery store or a Fortune 500 company, to ask how different products and services either benefit or hurt those around us. Community is a helpful word because it takes away abstraction puts meaning back into business.

3) How do you determine a business’s “sphere of influence”?

You can think about it or you can look at it. You can think about it by asking, just logically, who your company’s target demographic is. Who is it that you are targeting? Or, you can look at it. Not who are you targeting, but who is paying for your products and services? Bring out those receipts.

It is important to remember your organization’s sphere of influence because that will be how you understand your relationship to the community around you.

It is important to remember the function of business as we seek to do our work. We must always be working to be a service and help to others. That’s the only way we’ll find success, anyway.

About Seth Reid

Seth is the Instructional Designer at Resolve. His job is to design courses and platforms that engage students with learning material that they can understand and effectively apply to their life and work. He's also the blogrunner here at Resolve. That mostly means that he picks the pictures for the posts. He is also an avid fan of chess and loves to study history. He is currently based in Jackson, Tennessee.

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