The Role of Business in the World

The purpose of business itself needs Evolution.

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Across the arc of history, commerce has served as a means for humans to coexist with each other and live their lives through the trading of goods and services. As people began to live in communities and evolve to adapt to harsh environments, they found human social ability as a mechanism to allow people to live and thrive together. Different people had different abilities and were able to contribute some part of their gift to the whole. Value was immediate given communities and tribes were smaller and the small web of relationships allowed for fairness and purpose. All parts had a more immediate feedback loop.

As the western world expanded across the globe, business grew with it and the first corporations were formed. These corporations had investors and more complex governance and operations and as a way to manage larger and more complex businesses, rules were written that reduced the chaos but robbed business of its primary and foundational value: to allow for society to function and thrive. There is a fallacy that pre-historical agrarian society was perfect. It was not. Mayans contributed to their own demise with the destruction of the rainforest in Central America and trade as we know it was built on the backs of slavery. However, some principles of earlier commerce such as purpose, relationship, and contribution are missing from business today as it is easy to make decisions that do not keep these principles in mind. Layoffs, fundraising, acquisitions, price controls, quality for profit margin, are examples of processes that many times lack a human-centric focus that creates the current business conditions in which we live. Even if they aren’t inherently bad, they do need evolution and to be connected to a greater perspective of what business is in the world. Part of our writing is to untangle this somewhat complex problem from a systemic perspective: the individual leader’s responsibility, the relational aspects of how coordinating and collaboration occur, and of course the technical and systemic issues in running a business. It truly requires all three dimensions to solve the challenges in the most sustainable way.

At the heart of the efforts must be a refocusing on business as a place of greater purpose, not just a mechanism to drive profit and revenue. Value can be received across the stakeholder chain and the mental model of a higher purpose is a critical start. This purpose may be the product mission and it also may be broader to include social causes and internal cultural principles. This purpose is what the axis of the business rotates around and can serve as a critical decision-making mechanism.

Supporting the web of relationships is also critical. Once a human impact is felt, be it, customer or employee, the initiator of a business function is forced to see the interrelatedness of the business and its stakeholder groups. This feedback loop is a return to the marketplace where commerce was truly a trade over relationships that had integrity and trust. This is accomplished by learning healthy relationship practices and investing in training, along with data that is collected from customers, employees, or other stakeholders that force a business to be in relationship with its environment and not merely a profit-driven entity.

Lastly, a business’s chief role is to create value in the world. This means broad value, not just value for a customer at the cost of other stakeholders. This means using creating value and being additive in any decision while struggling with the paradoxes business presents itself with. Investing in a community may be at the cost of full bonuses or cash reserves. These trade-offs are difficult, and why wisdom is the heart of leadership and why wisdom is the key practice of leaders. Grounding, consciousness, values-based discretion, and vision are all tools to allow for leaders to navigate the decisions of creating value where, and at what cost.

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The Leader’s Path

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The Tenuous Link Between Profit and Company Valuation