Investing 2
interior Planning The Business of Business
A YEAR or two ago the Harvard Business School had completed fifty years of existence and a conference of some two thousand business people was called together to consider how management was meeting the challenges of these times. Some twenty extremely provocative addresses, together with a certain amount of discussion, were published recently in a remarkable book called Management's Mission in a New Society, and it is particularly interesting that the first address of all, the pacesetter as it were, was by the only Englishman to speak, Arnold Toynbee, under the title 'How Did we Get this Way and Where are we Going?' interesting because, as the opening section in a later chapter will show, Europe (and Britain especially) has since the last war presented management with a host of entirely new problems. At Harvard, business leaders, statesmen, teachers, and observers were deeply concerned with problems ranging from national security to power and morality in business and asking themselves questions, not about the daytoday practices of management, but, so much more complex and bafHing, the 'whys' : what, in fact, the business of business is; what is, it all about? A book about management, however speculatively, indeed difEdently, it tackles it, must try to answefthe question.
Out of what must have been millions of words uttered with varying degrees of passion during those two important days in 1958 came a definition which is stimulating enough to warrant quotation.
It was that businesses exist to create and deliver value satisfactions at a profit. However much such a definition can be argued or adjusted, it contains within it the heart of business matter. The profitable creation of a market (and markets are people) must be and always will be the raison d'etre of a business. Profitmaking, though put at the end of the definition, is obviously as much a part of the business function as producing goods or services or distributing them, but in presentday trading conditions the relation of profit to the total business operation has considerably altered. This new relationship will be reviewed later in this chapter, but at this point it would be relevant to add that the 'profit motive' no longer dominates business thinking. Clearly, in the preliminary planning of any enterprise, profit is a motivation, and it would be naive to suggest otherwise. But if a detailed study were to be made of all the factors that go to the birth of a business, the 'creative' one would probably emerge every bit as strongly as the more obvious desire to make a profit. In any case this chapter is considering the purpose of business : it is arguable whether profit as such is as much a business purpose as so many accountants and economists would have the world believe. Another factor which must bear on the profit question is the growth of the public sector of business activity. Nationalized industries, with all too rare exceptions, have long since forgotten the word profit. Financehome