The standard story of business has at least four flaws. I'm going to talk about three of them in this video and save the fourth one for the next one. The first flaw is that business is not just about economics and the money. Business is not just about profits. This gets dressed up sometimes as, the purpose of any business is to maximize profits for shareholders. The purpose of any business is to maximize profits for shareholders. The best example I can give you of this is to say, well. You know, I need to make red blood cells to live. I, I think I'm on pretty safe scientific ground there. But making red blood cells isn't the purpose of life. Every business has to make money. It, it doesn't matter if you're for profit or not for profit, you've gotta pay the bills. You gotta have some way to generate cash. But it doesn't follow from that, that that's the purpose of the business. And furthermore business is part of society. It's not some isolated activity that's just about money and profit. I've known a lot of entrepenurs in my life. I've had a lot of students that have started business's, some of whom I hope you will meet. Most entrepreneurs I know don't start a business just because they want to make money and profits. Yeah there are a few. Most entrepreneurs start a business because they're absolutely on fire about something. And it doesn't matter whether you're Bill Gates and Steve Jobs, on fire about this personal computer. Revolution or a friend of mine who starts a car radio business who's on fire about being able to bring really good music to people when their in their car. Their trying to make their lives and the people they know, their trying to make their lives better. That's where business get its purpose. Its not just about money and profit. Don't misunderstand money and profits are important but purpose is something else and I think we forgot that real story certainly is. The second flaw goes all a bit like this. You know If I tell somebody I teach business ethics, which I do. they, they have to manage not to laugh. Or they say things like, yeah. Business ethics, a oxymoron. Two words that are contradictory, like, jumbo shrimp. Or, or, or, or they tell you some joke. I think I've heard them all. I didn't know business had ethics. It must be a short course. Must be a theoretical subject. There's this idea in the dominant story that business on the one hand, ethics on the other and they don't mix. My experience is really very different. Most business people I know actually want to and actually do act ethically and act with integrity. They want to do the right thing. They're no different than you or I. They don't automatically walk in the door of their businesses. And become, you know, g, sort of greedy, and only care about money. So this idea that business and ethics are separate is a deeply problematic idea in the old story. Well, so it's more than about money and profits. Business and ethics need to be connected and the third flaw. The third flaw is this idea that people are simple, they're motivated by money and self interested. One of my favorite management theorists was a guy name Harry Levinson. He was kind of a crusty old guy, used to hang out at the Harvard Business School a lot. And he would ask executives, whats the way most people are assumed to be motivated in most companies? And they would say, you know rewards and punishments are carrots and sticks. And he would go and draw a picture that looked like this. Only hopefully a little bit better than this. I have a daughter who is an artist who got absolutely none of her ability from me. Which I'm proving. Okay, so, just so you know, this is the carrot on this side and this is the stick over here. And Levinson would say, okay, what animal is in the middle of that? And people would say, as they still do, a jackass. And Levinson would say, maybe human beings are slightly more complicated than jackass's. And it's a little worse. When you start treating people this way, as if rewards and punishment are the only thing that matters. They start nosing for the carrot and trying to avoid getting hit with the stick. In short you turn them into jackasses. Human beings are complicated. We're complex creatures. Money's more than about profits. It's about purpose. Business and ethics have to be connected, and human beings are complicated. We need to use those ideas to build a new story of business and there's one more about globalization, which I'll talk about in the next video. I want you to think about the organizations you're involved with, maybe they're business schools or religious organizations business's or schools or civic groups or governments. What's their purpose? Do they act on that purpose most of the time? Is that purpose ever misunderstood? Let's have a conversation about purpose and its important role.
