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Is making money the only purpose of your business?

Jul 12 2013, 18:30   |   By SME Mentor

By Ravi Kiran

In the last issue, I wrote about the importance of articulating a clear and inspiring purpose as a key responsibility of Leadership of a growth-oriented enterprise.

Interestingly, some people read that column and questioned me on whether it is indeed true for India. They said India is such a large market that no matter what business you start, you can grow as long as you manage the process of business building well. Many of them gave me examples of smart entrepreneurs who enter highly commoditized sectors, with near zero product or service differentiation and yet create sustainable businesses through sheer energy and diligence and without a 'lofty' purpose.

To an extent, there is a point in this argument. It is indeed possible to build a business of good size and profitability without having to write a bigger-than-self purpose as to why the business exists. In fact, during the initial stages (existence and endurance) of a new business, the entrepreneur is so busy making ends meet, working so hard, that the thought of writing a 'textbook style' purpose statement feels quite unnecessary to him. Making money (read profit) seems to be the biggest priority during these stages. This is understandable. In my view, it's similar to managing the business through passion rather than process when it's small.

Processes matter

However, anyone who has built a business through the growth stage knows that without the right processes, delivering a consistent product or service to customers and staying productive is very difficult.

It's the same thing with purpose. If the entrepreneur continues to hold the belief beyond the initial stages that earning money is the purpose of the business, the growth stage will pose challenges that will appear 'unusual'; quality, consistency and customer satisfaction will start to suffer. Sooner or later, other ways of 'earning money' will present themselves and the entrepreneur will find himself trying many different businesses in quick succession.

Good vs great

By focussing on the process of business building, the entrepreneur may be able to build several businesses of small and medium sizes, and become a 'well diversified group' quite soon. Unfortunately, soon a time may come when multiple businesses will fight for the entrepreneur's attention and hardly any one business will seem to have achieved its potential in terms of size, market share or even product quality. This is the classical dilemma of sustenance versus excellence, good versus great.

Excellent companies the world over understand that making profit is an outcome, not the purpose of business. To build sustainable, innovative and responsible businesses, business leaders need to think really hard about the purpose, define it in an uplifting way and communicate it through the organization.

Smart business leaders recognize before others that just because something seemed to work in the past does not mean it will work in the future. Employees, customers, suppliers increasingly want to work in and with a company that can think bigger than just money. Purpose is often that bigger thing, the glue that holds people together and helps provide a consistent experience to customers. As all of us understand, nothing is more important to a growth stage business than happy customers.

Ravi Kiran is the Co-Founder and Managing Partner of Friends of Ambition, a middle India growth advisory firm
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  •  SME Messenger |   Jul 12 2013,06:30