You go to any MBA program, and you will be taught the theory of the firm, that the purpose of the firm is the maximization of return on invested capital. I always thought this was a kind of lunacy.
Interpretation
The primary goal of a business should not solely be profit maximization, as taught in many MBA programs.
Peter Senge challenges the traditional business doctrine that prioritizes maximizing returns on invested capital as the sole purpose of a firm. He suggests that this narrow focus is misguided and may lead to ignoring broader responsibilities to society and the environment, indicating that companies should consider their overall impact rather than just financial success.
In practice
In a speech on corporate ethics, one might quote Senge to emphasize that companies should think beyond profits.
[Seeds Are Small.] Becoming a force of nature doesn't mean that all of our aspirations must be "grand." First steps are often small, and initial visions that focus energy effectively often address immediate problems. What matters is engagement in the service of a larger purpose rather than lofty aspirations that paralyze action. Indeed, it's a dangerous trap to believe that we can pursue onlhy "great visions."
I do not believe great organizations have ever been built by trying to emulate another, any more than individual greatness is achieved by trying to copy another 'great person'.
All human beings are born with unique gifts. The healthy functioning community depends on realizing the capacity to develop each gift.
Learning to see the structures within which we operate begins a process of freeing ourselves from previously unseen forces and ultimately mastering the ability to work with them and change them.
New insights fail to get put into practice because they conflict with deeply held internal images of how the world works...images that limit us to familiar ways of thinking and acting. That is why the discipline of managing mental models - surfacing, testing, and improving our internal pictures of how the world works - promises to be a major breakthrough for learning organizations.
In the absence of a great dream pettiness prevails. Shred visions foster risk taking, courage and innovation. Keeping the end in mind creates the confidence to make decisions even in moments of crisis.
China is very entrepreneurial but has no rule of law. Europe has rule of law but isn't entrepreneurial. Combine rule of law, entrepreneurialism and a generally pro-business policy, and you have Apple.
If your customer base is aging with you, then eventually you are going to become obsolete or irrelevant. You need to be constantly figuring out who are your new customers and what are you doing to stay forever young.
I strongly believe the business of a business is to improve the world.
Customers first, employees second, and shareholders third.
Money goes out first to pay expenses and then comes back as profits later - if at all. The high rate of failure of new businesses makes painfully clear that there is nothing inevitable about the money coming back.
Treat your customers like they own you. Because they do.
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